1. Developing Appropriate Implementation Schedules Adrienne Nemura, P.E. Limno-Tech, Inc.

2. Developing Appropriate Implementation Schedules 2 Items to be Covered CSO Policy Financial capability Implementation schedules Examples “The Trap”

3. Developing Appropriate Implementation Schedules 3 What Does the CSO Control Policy Say About Implementation? The permittee should include all pertinent information in the LTCP necessary to develop the construction and financing schedule for implementation of CSO controls.

4. Developing Appropriate Implementation Schedules 4 What Else Does the CSO Control Policy Say About implementation? Schedules for implementation of the CSO controls may be phased based on the relative importance of adverse impacts upon water quality and designated uses, priority projects identified in the LTCP, and on a permittee’s financial capability.

5. Developing Appropriate Implementation Schedules 5 And …. Construction phasing should consider: Eliminating overflows that discharge to sensitive areas Use impairment The permittee’s financial capability

6. Developing Appropriate Implementation Schedules 6 What Does the CSO Policy Say About Financial Capability? …recognizes that financial considerations are a major factor affecting the implementation of CSO controls …allows consideration of a permittee’s financial capability in connection with the long-term CSO control planning effort, WQ standards review, and negotiation of enforceable schedules

7. Developing Appropriate Implementation Schedules 7 Financial Capability The financial capability assessment: Identifies the financial burden of CSO control costs May influence the recommended plan Can be used to establish a reasonable implementation schedule Can be used as a basis for water quality standards review when widespread social and economic impacts are predicted

8. Developing Appropriate Implementation Schedules 8 Determining Financial Capability A Two step process: Phase I—Residential Indicator Can the residents/community afford the controls? Phase II—Permittee Financial Indicators Is the permittee financially capable to fund and implement? Note: No special provision for low income groups, but often brought up by permittees

9. Developing Appropriate Implementation Schedules 9 Residential Indicator Average cost per household (CPH) for wastewater treatment as a percentage of median household income (MHI) to assess residential share of LTCP costs Financial Impact Residential Indicator (CPH as % MHI) LowLess than 1% MHI Mid-range1% to 2% of MHI HighGreater than 2% MHI

10. Developing Appropriate Implementation Schedules 10 How to Determine the Residential Indicator 1. Sum: current wastewater treatment costs, planned wastewater, & CSO project costs 2. Determine: residential share (versus commercial/industrial customers) 3. Calculate: average household cost 4. Determine: median household income 5. Divide: average costs by median income

11. Developing Appropriate Implementation Schedules 11 Permittee Financial Capability Indicators Debt indicators * Bond rating; overall net debt as a percent of full market property value Socioeconomic indicators * Unemployment rate; MHI Financial management indicators Property tax revenue collection rate; property tax as percent of full market property value * Debt & socioeconomic indicators are generally better measures than financial management indicators

12. How to Determine the Permittee Financial Indicator IndicatorStrong = 3Mid-Range = 2Weak = 1 Bond ratingAaa-ABaaBa-C Net debt< 2%2 - 5%Above 5% Unemployment rate compared to the national average > 1% point below ± 1% point > 1% point above Compared to the adjusted national average MHI > 25% above ± 25%> 25% below Property tax revenues Below 2%2 – 4%Above 4% Property tax collection rate Above 98%94 – 98%Below 94% Average score = permittee financial indicator

13. Developing Appropriate Implementation Schedules 13 Back to Springfield

14. Developing Appropriate Implementation Schedules 14 Are Springfield Residents Able to Afford CSO Controls? CPH to implement LTCP = $560/year MHI = $35,000 RI = ($560/$35,000) * 100 = 1.6% of MHI RI = Mid-range value, so advancement to the second stage of the financial capability assessment is warranted

15. Developing Appropriate Implementation Schedules 15 Is Springfield WWTP Financially Able to Implement Proposed Controls? Population: 10,000 Bond rating: Aaa Full market property value: $440 million Net debt: $26 million Unemployment rate: 5.4% Property tax revenues: $11 million Property tax collection rate: 93% Financial Capability Indicator = 1.8

16. Developing Appropriate Implementation Schedules 16 Financial Capability Matrix Permittee Financial Capability Indicator Scores Residential Indicator Low <1% Residential Indicator Mid-Range 1% to 2% Residential Indicator High > 2% Weak <1.5Medium Burden High Burden Mid-Range 1.5 to 2.5 Low BurdenMedium Burden High Burden Strong >2.5Low Burden Medium Burden

17. Developing Appropriate Implementation Schedules 17 Guidelines for Establishing Implementation Schedules Not intended to replace negotiations and deliberations necessary to balance all environmental and financial considerations that influence the site specific nature of controls and implementation schedules Source: EPA’s CSOs: Guidance for Financial Capabilities Assessment and Schedule Development

18. Developing Appropriate Implementation Schedules 18 Expectations for Implementation Schedule Phased implementation is common Schedule should reflect priority projects Schedule should reflect financial capabilities Implementation responsibilities need to be identified – design, operation, monitoring, maintenance, etc. Need milestones and interim reporting

19. Developing Appropriate Implementation Schedules 19 Expect Breaks, Lags & Lengthening of Schedules Breaks: demonstration or phased projects (to evaluate performance prior to further implementation) Lags: schedule based on planned CIP projects (same benefits as before but may result in pushing back project versus accelerating) Lengthening: financial capability analysis indicated medium or high burden in implementing controls

20. Developing Appropriate Implementation Schedules 20 Considerations for Phased Schedules Eliminating overflows to sensitive areas (expedite) Use impairment (expedite if significant) Financial capability Grant and loan availability Previous and current sewer user fees and rate structures Other viable funding mechanisms and sources of financing

21. Developing Appropriate Implementation Schedules 21 Example: Phased Implementation Under Presumption Approach

22. Developing Appropriate Implementation Schedules 22 Example: Seaford, DE Completes Sewer Separation in 18 Years Population = 6,699 Miles of sewer = 22.7 Combined area = 1.97 sq. miles (40% of city) Implementation schedule and cost: Eight phases, 18 years (due to construction and financial considerations) $2.2 million Efforts now directed at controlling resulting stormwater discharges

23. Developing Appropriate Implementation Schedules 23 Example: Bremerton, WA uses Mix of CSO Controls over 25 Years Population = 36,000 CSO area = 5.2 sq. miles Sewer separation began in 1983; removal of RDII; storage; treatment at CSOs Consent decree requires 1 OF/yr by 2008; City to pay for Financial Feasibility Study if schedule changes required Spent $17M; $27M more needed (as of June 2001) City has no bonding capacity until 2007 Heavy reliance on loans, grants, and user fees

24. Developing Appropriate Implementation Schedules 24 Example: Kokomo, IN to Spend to Affordability Limit in 20 Years Population = 47,000 300 miles of sewer (60% combined) Eliminated 18 CSOs since 1997 through WWTP upgrades 20-year schedule; eliminate all but 5 CSOs “Knee”LTCP # OFs/yr 12 Cost$57M$48M

25. Developing Appropriate Implementation Schedules 25 Paying for CSO Control is the Key Costs associated with technologies for controlling CSOs and SSOs are often substantial. Planning is needed to spread costs over time, as appropriate, in developing comprehensive, long-term programs. Source: Report to Congress on the Impacts and Control of CSOs and SSOs

26. Developing Appropriate Implementation Schedules 26 Funding Sources Used to Pay for CSO Control Self-financing State revolving fund Federal grants State grants Other capital funding options 2001 Report to Congress: Lack of funding is the most significant barrier to implementing the CSO Control Policy.

27. Developing Appropriate Implementation Schedules 27 The Trap Progress and some uncertainty vs. Delay and squabbling over schedule and endpoint The Boy and the Filberts A boy put his hand into a pitcher full of filberts. He grasped as many as he could possibly hold, but when he tried to pull out his hand, he was prevented from doing so by the neck of the pitcher. Unwilling to lose his filberts, and yet unable to withdraw his hand, he burst into tears and bitterly lamented his disappointment. A bystander said to him, "Be satisfied with half the quantity, and you will readily draw out your hand." Do not attempt too much at once.

28. Developing Appropriate Implementation Schedules 28 Financial Capability References Guidance for Financial Capability Assessment and Schedule Development (EPA, 1997) – Helpful for financial capability assessment Small Community Municipal Financial Capability Analysis: Self Evaluation Guidebook (EPA Region 5, 2002) – More detailed, helpful for determination of widespread economic and social impact for UAA