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Sugar Land Mayor Wallace Testifies on Aging Water Infrastructure

By Judy Sheahan
May 10, 2004

Sugar Land (TX) Mayor Dave Wallace testified on April 28 before the Transportation and Infrastructure subcommittee on Water Resources and Environment on the status of the nation's aging water infrastructure and quality of the nation's drinking water supplies. Wallace, who serves as co-chair of the Conference's Urban Water Council, was joined by Jerry Johnson, General Manager of the District of Columbia's Water and Sewer Authority, Howard Neukrug, Director of Watersheds at Philadelphia's Water Department, and Ralph McCarter, General Manager of the First Utility District of Knox County, Tennessee.

All of the witnesses testified regarding the decaying status of the nation's water and wastewater infrastructure. EPA has estimated that the cost to meet current infrastructure and environmental needs is between $500 billion - $1 trillion. Requests in the proposed 2005 budget are $850 million for both the Clean Water and Wastewater State Revolving Loan Funds (SRFs).

"My purpose here today is to add the voice of the U.S.Conference of Mayors to the chorus of public interest groups that have been urging Congress to better appreciate the urgency of investing in the rehabilitation of our aging urban water infrastructure," Wallace said.

The Urban Water Council has identified three basic approaches to help cities finance the water and wastewater infrastructure development necessary to comply with clean and safe drinking water laws. These include grants, 30-year no-interest loans, and, greater use of Private Activity Bonds (PABs).

"The Urban Water Council has testified a number of times before this Committee about the need for changes in law to help cities renew their water infrastructure," Wallace said. "The Urban Water Council has urged Congress to make it easier for cities to take advantage of private activity bonds (PABs) to rehabilitate or construct new water infrastructure."

Currently the state volume cap, in conjunction with the highly competitive need for schools, housing and public safety facilities, has effectively limited the amount of PABs used for water facilities.

Wallace testified that SRFs might only account for 10 percent of the annual investment in water infrastructure in the United States with municipal and revenue bonds serving as the primary source of financing public water infrastructure.

"Local government, not the SRF provides the highest level of water infrastructure investment. The Conference seeks alternative financing approaches because we recognize that municipal bonds and the SRF combined still do not provide enough money to meet compliance with clean water law and regulation," Wallace said.

"Changing the tax code and exempting water and sewage facilities from the state volume cap for PABs could be one of the most fruitful financial incentives the Congress can provide," Wallace said. "It potentially could bring billions of dollars of additional and much needed investment to our facilities over and above what can be accomplished through the use of SRF loans."

Representative Jim Davis (FL) has sponsored a bill (H.R. 3410) that would remove the state volume cap for water and sewer projects using PABs. The legislation is similar to an earlier proposal by former Representative Karen Thurman (FL). The proposal was 'scored- by the Joint Tax Committee who estimated that the loss to the Treasury would be less than $150 million.

Subcommittee Chairman John Duncan (TN) asked Wallace, "Is water infrastructure a real high priority for the mayors?" Wallace responded, "It is among the highest priority for the mayors."

For a complete copy of Wallace's testimony, please visit the website