Water & Economic Development Nicholas Willis, Program Manager Environmental Finance Center at Wichita State University Presented: October 28, 2014 NADO Research Foundation Conference on: Linking Water Infrastructure to Community and Economic Development in Smaller Places

Headlines “Water Main Break Cripples Business at 12 Tideflats Companies.” The News Tribune, Tacoma, WA. October 22, 2014 “Amid California’s Drought, a Bruising Battle for Cheap Water” LA Times, October 21, 2014 “Oklahoma’s Dwindling Water Supply Takes Economic Toll on State, Officials Say.” The Oklahoman, October 23, 2014

Why the focus on water? Unlike land prices, highways, airports, waterways, labor pool, interest rates, existing business ecosystem, local leaders have a lot of control of the water supply. Local leaders deal with water and sewer frequently, may overestimate its importance in others’ minds. Most cities can – and many do – offer economic development incentive rates on utilities, including water.

Economic Development Rates Hidden subsidy & almost certainly minor in location selection Vast majority of systems are underfunded – is it wise to make them more so? Someone has to pay Eats up water & sewer capacity Encourages inefficient operations – Water & Energy are linked

Car Wash Example One of most water intensive businesses Very little employment per gallon 70 gallons is typical automatic car wash – Less than 70 cents in water and sewer charges If you incent – make sure it is beneficial to citizens. – Car washes, hotels, restaurants would all fail But/For test.

Site Selection Water needs are not in top 15 list for selection factors Water is minor expense for almost any business compared to payroll & materials

Hays, KS Source: Wikimedia Foundation

Hays, KS Water Two alluvial (streamfed) aquifers Renewable Drought Prone, neighboring Ellis & Victoria still ban outside watering 22 inches of rainfall on average. 14 inches in inches net evaporation Most plants common in eastern Kansas grow well with a lot of supplemental irrigation

Hays Historical Population CensusPop.%± — % 18901, % 19001,136−8.5% 19101, % 19203, % 19304, % 19406, % 19508, % , % , % ,3015.9% ,7679.0% , % ,5102.5% Est ,0382.6% U.S. Decennial Census

On ground experience Hays decided to not pursue certain high water using industries. Hays had no problem meeting demands from expansion of service industries. Hays optimized existing resources Hays has a diversified economy with two major employers – Fort Hays State University – Hays Medical Center

Historical Water Efforts Golf Course & Ballfields use 100% effluent 3000 toilets replaced in early 1990’s Time of use irrigation restrictions & runoff prohibition Tiered water rate structure Most parks are not irrigated Wellfield revamped to increase storage in drought Federal appliance standards

Recent Water Efforts Developed “all of the above” strategy Examined existing uses – New houses using more water on per capita basis than allowed by water rights – Determined new commercial buildings were being designed with landscaping from eastern KS Treat equally – No new out of town customers allowed because laws do not apply to them.

More recent efforts Charge more where excess use occurs – Irrigation rate doubled after a sensible amount Led by example – Converted part of park to irrigated native Buffalograss – Replace city plumbing fixtures with most efficient models Regulate sensibly – Capped irrigated areas – Adopted IAPMO Green Plumbing Code

Water Conservation Program 1 full time staff person Education Incentives – Toilets – Urinals – Showerheads & aerators – Soon lawns Expertise

Hays Growth Concentrated in Retail, Services and non-water intensive manufacturing Hays Med Hess Services – oilfield manufacturing Fort Hays State University Glassman Corp – HVAC manufacturing & service Nextech Wireless

Think of water productivity Hays bank branch moved to new location. Went from minimal drip irrigation to greater than 50,000 square feet in cool season grass. What benefit to community? Can Hays support growth when existing jobs begin to use more water? Massive water use completely unrelated to work.

A Cautionary Tale City of Russell, KS is east of Hays. Mid 1990’s a gluten plant was built ethanol plant constructed 70 full time jobs Both reliant on city water Russell long a water stressed community – Water supply is more than 20 miles away

Tale Continued Outdoor water use prohibited from July 2012 to October 2014 – Plant allowed to source from nearby Rural Water District – Plant underwent significant, award winning water conservation efforts What kind of impact did this have on other businesses, home building & eco devo efforts?

Russell Cont… Company planning to capture CO2 from ethanol plant and use for enhanced oil recovery Perfect example of what is desired in economic development – waste from one creates value added good in another But at what cost to the rest of the community?

Recipe in Hays Be lucky with location – UPRR, I-70, Land Grant for FHSU, oilfield Do not pursue opportunities you cannot support – no ethanol, packing plants, etc. Allow for local businesses to thrive Take advantage of assets/opportunities which are available – Ag, oilfield, professional services for NW KS

Takeaways Water is necessity, growth does not have to be water-intensive Hays did well with local entrepreneur growth Hays has avoided water intensive industries Focus on saving water & get rates right Think several steps ahead regarding whatever are your town’s limiting resources Water use is everywhere – Sensible regulations & limits needed