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Senators Push Private Investment in Water Programs

Senators writing a water resources authorization are proposing a pilot program modeled on a popular highway financing mechanism that would promote private investment in municipal water and sewage systems.

Senate Environment and Public Works member Jeff Merkley, D-Ore., has introduced legislation (S 3626) to create a system of loan guarantees, direct loans and other financial instruments to help states and municipalities partner with private investors on clean-water and sewage projects.

Committee Chairwoman Barbara Boxer, D-Calif., included Merkley’s plan in the draft water resources bill she hopes to mark up in December.

The idea is based on the Transportation Infrastructure Finance and Innovation Act program, popularly known as “TIFIA,” which offers low-cost credit to states that stretch those dollars by leveraging them with private investment. Authorized funding for the program — which is helping to finance such major projects as building a new Tappan Zee Bridge north of New York — was boosted in the recently enacted surface transportation authorization (PL 112-141) to $1.75 billion over two years from $122 million a year.

Merkley said he wants to apply the TIFIA model to drinking water and sewage project financing.

“We have so many counties and cities wrestling with either replacing aging infrastructure or upgrading infrastructure to meet modern standards or preparing infrastructure to enable the economic expansion of the community,” he said before the Thanksgiving recess.

Details of the plan remain to be worked out, including whether a pilot of the new program would cap available funds or the total number or projects that could be financed.

Leveraging greater private investment through the new program is seen by aides and lobbyists as a way to help meet the infrastructure investment needs at a time when government funding is tight.

Groups including the Association of Metropolitan Water Agencies and the American Water Works Association have expressed support for the proposed investment program.

Still, an official with the water works group warned that private investment is not a substitute for adequate federal spending and that a backlog of projects could easily overwhelm any new financing options. The association estimated earlier this year that “the cost of repairing and expanding U.S. drinking water infrastructure will top $1 trillion in the next 25 years and $1.7 trillion over 40 years.”

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