Lynn (MA) Mayor Patrick J. McManus, and Trenton Mayor Douglas H. Palmer Co-Chairs of the Urban Water Council (UWC), presided over the Council's meeting held in conjunction with the 69th Winter Meeting. Seventeen mayors were joined by another 30 local and federal government officials and private sponsors from the Water Development Advisory Board. The Co-chairs led the discussion on infrastructure investment, water regulations, and notice of municipal partnership seminars that will be sponsored by the UWC later this year.

Mayor McManus led a panel discussion on water infrastructure investment. He informed the participants that the Council is pursuing legislative changes in the 107th Congress that would substantially increase the federal role in infrastructure financing, and would modify the tax code to allow for increased investment through public/private partnerships.

The mayor pointed out that both industry and government estimates indicate a $23 billion plus shortfall in water infrastructure investment each year. Joining the Mayors was Dr. Michael Cook, Director for the Office of Wastewater at the U.S. Environmental Protection Agency. Cook stated that the nation continues to loose ground in this area because system owners (Publicly Owned Treatment Works POTWS) are spending more to maintain current water infrastructure so investments for new construction is often deferred. Cook expects that many facilities will experience serious system deterioration over the next two decades, and this will increase the need for new capital spending on water and wastewater. He also indicated that there should be an increased federal role in addressing the investment gap, but he also stated that state and local government would have to share the expenditure.

Mayor McManus stated that more investment is necessary, but it should be smart investment. He described the Lynn experience in complying with a court order to prevent wet weather overflows from the wastewater treatment plant. The city could have taken a traditional design, build, operate project approach that was priced at around $450 million. Instead, Mayor McManus pursued a public/private partnership approach that resulted in a $48 million solution. While more federal money should be devoted to local water infrastructure projects, Mayors should also take advantage of tremendous cost savings by seeking partnership alternatives.

Mayor McManus identified the Water Infrastructure Network (WIN) proposal that will soon be sent to Congress. WIN, a coalition of public and private sector entities engaged in water and wastewater management and services, is slated to ask Congress for a $61 billion federal water infrastructure program over the five-year period 2003-2007. $57 billion would be devoted to capital investment in the form of loans, loan subsidies and grants. The WIN proposal calls for establishing Water and Wastewater Infrastructure Finance Authorities (WWIFAs) who would be responsible for making loans and grants to communities.

The mayor also pointed out that the UWC is pursuing changes in the tax code related to Private Activity Bonds (PABs). A draft report commissioned by the UWC suggests that an estimated $25 billion of PAB financing of water infrastructure would result in a federal cost of $566 million in lost tax revenues. An assumption used in this analysis was that removing PABs for water infrastructure from the volume cap imposed on the total amount of PABs issued would result in increased investment and increased private sector participation.

Trenton Mayor Douglas H. Palmer, newly appointed Co-chair of the Urban Water Council, led a panel of mayors and EPA staff in a discussion of water regulations. Kevin Weiss representing EPA's Office of Wastewater Management explained the new Sanitary Sewer Overflow rule recently proposed by the Agency. Weiss explained that the rule would impact over 19,000 municipal sewage collection systems with new permit requirements to reduce overflows. The rule would include first-time requirements for satellite collection systems in 4,800 systems. The EPA estimates that the cost to comply with this proposed rule ranges from $93-$126 million annually.

Mayor McManus ended the Summit by stating his hope for all parties to come together to solve the water problems faced by the nation's cities. He announced that the Urban Water Council was planning to hold two municipal seminars on water infrastructure public/private partnerships next spring. Augusta Mayor Bob Young invited the Urban Water Council to Augusta in April (April 23-24) to participate in the "Partnership" seminar. Mayor McManus alerted the attendees to watch for a "save the date" announcement.

(More information can be obtained from Paulo Heyman, Urban Water Council, U.S. Conference of Mayors, 202-861-6780.)