FUNDING WATER REUSE PROJECTS

FUNDING WATER REUSE PROJECTS

Stephen M. Jenkins, P.E., CFM

1

Agenda

• Costs of source development

• Funding alternatives

• System operating costs

• Setting water reuse rates

2

Costs of Source Development

• Conveyance costs

– From treatment to point(s) of use

• Additional treatment costs

– Direct nonpotable: Type 1 or Type 2

– DPR

• Industrial pretreatment program

• Seasonal demand and storage

3


• DPR vs. direct nonpotable

– Balancing treatment against dual conveyance systems

4


Direct Nonpotable Reuse

• Less treatment

• Dual conveyance

• “Drought proof” revenue

Direct Potable Reuse

• Higher level of treatment

• Existing distribution system

• Drought restrictions apply

5

Water Reuse Funding

You can't always get what you want

But if you try sometimes well you just

might find

You get what you need

You Can’t Always Get What You Want – Rolling Stones (1969)

6

Water Reuse Funding

�What funding sources are available?

�What strings are attached?

�How to compete effectively?

7

Water Reuse Funding

• Revenue Bonds

• General Obligation Bonds

• Certificates of Obligation

• Grants & Low Interest Loans

– Federal

– State

8

Water Reuse Funding

Grants, Matching Funds, & Low Interest Loans

�Federal and State sources

�Highly competitive

�Environmental review

9

Planning, Design, & Construction

• Bureau of Reclamation

– WaterSMART: Title XVI

• Texas Water Development Board

– Regional Facility Planning Grants

– Clean Water State Revolving Fund (CWSRF)

– Drinking Water State Revolving Fund (DWSRF)

– State Water Implementation Fund for Texas (SWIFT)

10

WaterSMART: Title XVI

• Up to 50% matching funds

• New sources of water supplies using water recycling and reuse technologies.

• Up to $75,000 for feasibility studies completed in 18 months.

• Up to $300,000 for feasibility studies completed in 36 months.

• Focus on municipal water reclamation and reuse, industrial, domestic or agricultural wastewater, and naturally impaired groundwater and/or surface waters.

11

WaterSMART: Title XVI

Subject to annual appropriation

– Maximum of $4 million per applicant with 5 to 10 awards.

– Up to 25% of project cost.

– Planning, design, and construction.

– Requirements:• Determination by Reclamation that feasibility study meets Title XVI.

• Compliance with NEPA.

• Local share.

• Congressional authorization.

12

WaterSMART

Good news: We don’t compete with all 50 states.

Bad news: We compete with 17 western states.

• California

• Arizona

• Washington

• Oregon

13

Texas Water Development Board

• Regional Water Supply and Wastewater Facilities Planning Program

– Studies to evaluate alternatives

– Regional water supply and wastewater facility needs

– Solutions consistent with regional & statewide plans

– Matching funds

14

Drinking Water State Revolving Fund

(DWSRF)

Low interest loans for planning, design, and construction:

– water treatment facilities

– distribution systems

– upgrade or replace water infrastructure

– address standards from the SDWA

– consolidation of systems

– source water protection

– reuse15

Clean Water State Revolving Fund

(CWSRF)

Low interest loans for planning, design, and construction:

– wastewater treatment facilities,

– collection systems

– wastewater recycling and reuse

improvements

– stormwater pollution control

– nonpoint source pollution control

– estuary management16

State Revolving Funds (SRF)

• Interest rate subsidy of 120 - 125 basis points off the city’s credit rating.

• Loan terms of 20 – 30 years.

• Planning, acquisition, design, and construction.

• Limited loan forgiveness

– Green Project Reserve

17

SRF Green Project Reserve

• Green infrastructure

• Water reuse is categorically eligible

• Other environmentally innovative activities

18

SRF Green Project Reserve

Limitations

• Availability of GPR funds.

• Highly competitive.

• Project Rank + Order of Submittal.

It ain’t easy being green…

19

State Water Implementation Fund for

Texas

• Financial assistance for projects that are in the State Water Plan.

• Planning, acquisition, design, and construction.

• 20% of SWIFT to support conservation and reuse projects.

20


Texas

• Low interest loans

• Deferred loans

• TWDB participation

• Multi-year commitments for projects spanning several years.

21


Texas

Prioritization

– Local financial participation

– Readiness to proceed with project

– Priority given by regional planning group

– Ability to leverage with local and federal funding

22

Competing for Funding

• Start early.

• Make sure that your project is in your regional water plan.

• Improve position with more “green.”

• Understand the terms of the funding.

23

Reuse System Operating Costs

• Cost of water (no cost; marginal cost; indirect reuse; etc.)

• Treatment Costs: discharge permit is the line of demarcation between wastewater utility costs and reuse utility costs.

– Tertiary treatment

– Treatment after discharge

24


• Pumping costs

• Line repairs

• Storage

• Administration

25

Setting Utility Rates

Debt Service

+


=

Water Reuse Cost of Service

26

Setting Utility Rates

• Rates should be cost based and equitable

• Rates should be easy to understand and

administer

• Rates and the process of allocating costs should conform to generally accepted rate setting techniques

• Rates should not be unduly discriminatory

27

Setting Water Reuse Rates

• Enterprise Fund(s)

– Water, sewer, reuse

• Define objectives & benefits

– Reduce peak potable demand

– Reduce demand on limited supply

– Manage drought limitations

– Supplement utility revenues

– Encourage reuse as alternative to potable

28


Reclaimed water costs more than potable water.

� True

� False

29



� True

� False

� It depends

30



� True

� False

� It depends

31


Variables

• Potable supply & treatment cost

• Intended use drives treatment cost

Discharge < Type 2 < Type 1 < DPR

• Distance between treatment & use

32


If water reuse costs more than potable, then its price should be set higher than potable.

� True

� False

� It depends

33


If water reuse costs more than potable, then its price should be set higher than potable.

� True

� False

� It depends

34


• Enterprise Fund(s)

– Water, sewer, reuse

• Define objectives & benefits

– Reduce peak potable demand

– Reduce demand on limited supply

– Manage drought limitations

– Supplement utility revenues

– Encourage reuse as alternative to potable

35


“The pricing of reclaimed water is ultimately a public policy decision that considers more than just straight line

economics.”

Water Reuse Rates and Charges, 2000 and 2007 Survey Results, AWWA.

36


Policy decisions

– Self-sustaining or subsidized?

– Size of subsidy?

– Who will pay the subsidy?

– Are the benefits (monetized & non-monetized) derived from the subsidy sufficiently defined?

37


Rate setting considerations

• Promote water reuse

• Market rate

• Cost of service

• Percentage of potable water rate

38


AWWA, June 2008

39


What can be addressed using Water Reuse Rate Structures?

• Revenue stability

• Moving high volume customers to water reuse

• Allocation of a scarce resource

40

Conclusions

• Water reuse costs are site specific.

• Grants & low interest loans can be used for planning, design, and construction costs.

• Sound public policy analysis is needed in setting water reuse rates.

41

Thank you.

Stephen M. Jenkins, P.E., CFM

(214) 709-631942

Documents

FUNDING WATER REUSE PROJECTS