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WHEREAS, the
nation’s water infrastructure must be updated to continue providing clean and
safe drinking water and waterways; and WHEREAS, the
Environmental Protection Agency reports that $530 billion is needed to invest
in water and wastewater infrastructure improvements over the next twenty years
to ensure the provision of safe water; and (2) $202.5 billion is needed for
publicly owned wastewater systems-related infrastructure needs over 20 years;
and WHEREAS, the
municipal bond market and State Revolving Fund programs are the primary sources
of financing for drinking water, wastewater projects, storm water and flood
control projects, but current financing levels are insufficient; and WHEREAS,
customer rates and local charges are the primary means of paying for water
service and infrastructure, but upfront investment needs are simply too high to
be met with traditional means alone; and WHEREAS,
State Revolving Fund (SRF) loans are helpful for small and moderate-sized
projects, but generally are not available for larger projects; and WHEREAS, an
innovative financing mechanism modeled after the Transportation Infrastructure
Financing and Innovation Act (TIFIA) program offers a mechanism to provide
direct loans and loan guarantees for water infrastructure projects at minimum
cost to the federal government; and WHEREAS,
enacting such legislation will substantially benefit the nation’s drinking
water and wastewater systems by reducing borrowing costs and thereby
accelerating infrastructure investment; and WHEREAS, the
budgetary costs to the federal government of this model are minimal and based
on the risk of default; and WHEREAS, in
the case of TIFIA, $122 million in annual budget authority translates into over
$1 billion in credit assistance – approximately a nine-to-one leverage ratio;
and WHEREAS, the
historical default rate on water and sewer bonds is .04 percent, the risk of
default on federal credit assistance is minimal, and the leverage ratio may be
even greater than for TIFIA; and WHEREAS, the
TIFIA program has been very successful and enjoys broad bi-partisan support;
and WHEREAS,
unlike transportation projects, water systems and utilities have a built-in
mechanism to repay federal credit assistance as they have existing revenue
streams, but need upfront capital to finance improvements or expansions; and WHEREAS,
making credit available based on Treasury borrowing rates can reduce borrowing
costs by up to 20 percent to accelerate water infrastructure investment; and WHEREAS,
federal credit in a project can also make the project more attractive for private
capital and lower interest rates on private lending; and WHEREAS, a
Water Infrastructure Financing and Innovation Act (WIFIA) modeled on the TIFIA
program would target the current gap in funding for large, regionally
significant projects; and WHEREAS, such
a program would benefit all water infrastructure projects by also making
available direct loans to State Revolving Funds for a program of smaller
projects; and WHEREAS,
enacting WIFIA legislation would therefore provide a critical additional financing
tool designed to complement existing financing mechanisms; and WHEREAS, such
legislation also works within the existing structure for water infrastructure
finance by (1) maintaining the primary responsibility of local governments for
the nation’s water infrastructure; and (2) leveraging federal credit assistance
to make it easier and less expensive for American communities to access public
and private capital; and WHEREAS, such
legislation will help meet the nation’s water infrastructure needs while
creating tens of thousands of jobs at minimal cost to the federal government, NOW,
THEREFORE, BE IT RESOLVED that the United States Conference
of Mayors supports the enactment of a
Water Infrastructure Finance and Innovation Act (WIFIA) and urges Congress to
enact such legislation to create a new and innovative financing mechanism to
help meet the nation’s critical water infrastructure needs. |
RESOLUTION ADOPTED JUNE 2012