1. Long-term Planning at North Carolina Water and Wastewater Utilities
NCAWWA-WEA Spring Symposium
March 26, 2018
Shadi Eskaf, Carol Rosenfeld, James Farrell
Environmental Finance Center at The University of North Carolina, Chapel Hill

2. How you pay for it matters
Dedicated to enhancing the ability of governments and other organizations to provide environmental programs and services in fair, effective, and financially sustainable ways through:
Applied Research
Teaching and Outreach
Program Design and Evaluation
How you pay for it matters

3. Utility Management Survey
The Water and Wastewater
Utility Management Survey

4. 2017-18 Utility Management Survey
Partner
Funder The North Carolina Policy Collaboratory Survey Responders All local government and large non-governmental water and wastewater utilities in North Carolina

5. Here’s what that looks like
Using guidance from the American Water Works Association (AWWA) and other sources, we developed a high level list of the types of long-term planning undertaken by water and wastewater utilities. We then distilled down each of those types of planning into its component “efforts.”
We identified one particular effort for each type of long-term planning that we use to determine if the utility has a particular type of plan (rather than asking directly if the utility has something they exactly call a plan).
Did this because wanted to make sure to capture the efforts of smaller utilities, who may not have a binder labeled “Asset Management Plan” but may nonetheless have done some asset management planning.

6. Process of reviewing rates Current revenues and financial practices
Topics
Planning
Financial planning
Asset management planning
Capital planning
Emergency / resiliency planning
Long-range water resources planning
Process of reviewing rates
Current revenues and financial practices
Current billing practices
Other info
Here’s what that looks like
Using guidance from the American Water Works Association (AWWA) and other sources, we developed a high level list of the types of long-term planning undertaken by water and wastewater utilities. We then distilled down each of those types of planning into its component “efforts.”
We identified one particular effort for each type of long-term planning that we use to determine if the utility has a particular type of plan (rather than asking directly if the utility has something they exactly call a plan).
Did this because wanted to make sure to capture the efforts of smaller utilities, who may not have a binder labeled “Asset Management Plan” but may nonetheless have done some asset management planning.

7. Survey Distribution
Distributed to 511 drinking water and wastewater utilities in North Carolina (serving nearly all of North Carolinians on centralized systems)
Input from State and local officials
Pre-tested the survey
Offered incentives
3+ months collection period
Distributed the survey to 511 local government utilities in North Carolina (basically all of them, except for 20 for various reasons).

8. Response Rate by Type
531 utilities active in early 2018, providing retail water and wastewater service in NC.
Of those, 511 were invited to participate in the survey (20 omitted, omission of 4%), because we did not have contact information for those utilities, or because we were not (yet) aware that they were active utilities.
Out of the 511 invited, 227 at least partially responded to the survey (44% response rate). There are others that opened the survey but did not complete beyond identification questions. The 227 utilities responding serve 65% of North Carolinians on centralized systems.
83 question/portion survey, 40+ min to complete
Data Source: 2017 NC Water and Wastewater Utility Management Survey (funded by the North Carolina Policy Collaboratory)

9. Response Rate by Size
531 utilities active in early 2018, providing retail water and wastewater service in NC.
Of those, 511 were invited to participate in the survey (20 omitted, omission of 4%), because we did not have contact information for those utilities, or because we were not (yet) aware that they were active utilities.
Out of the 511 invited, 227 at least partially responded to the survey (44% response rate). There are others that opened the survey but did not complete beyond identification questions. The 227 utilities responding serve 65% of North Carolinians on centralized systems.
83 question/portion survey, 40+ min to complete
Data Source: 2017 NC Water and Wastewater Utility Management Survey (funded by the North Carolina Policy Collaboratory)

10. Participating Utilities
Data Source: 2017 NC Water and Wastewater Utility Management Survey (funded by the North Carolina Policy Collaboratory)

11. Who Responded?

12. FOCUS ON PLANNING EFFORTS
Preliminary results:
FOCUS ON PLANNING EFFORTS
Results as of March 2018

13. Which Colour to Look At? Blue Orange Strengths Glass half-full
Opportunities to learn from/mentorship
Best management practices
Orange
Challenges
Glass half-empty
Opportunities to improve
Focused assistance

14. Financial Planning

15. Financial Self-Assessment

16. Asset Management Planning

17. Components of Asset Management Plans

18. Capital Planning

19. Components of Capital Planning

20. Capital Planning Horizon

21. Disaster / Emergency / Resiliency Planning

22. Vulnerability Assessment

23. Mitigation Strategies

24. Long Range Water and Wastewater Resources Planning

25. Public Participation

26. Integration with Other Local Planners

27. Partnering with
Other Utilities

28. Utility Non-Structural Partnerships

29. Capital Funding

30. Capital Funding in North Carolina

31. Extent of Rate Proposals
Asked more in-depth questions as well
Data Source: 2017 NC Water and Wastewater Utility Management Survey (funded by the North Carolina Policy Collaboratory)

32. Preliminary Results:
How Planning and Resiliency Correlate

33. Hypothesis
Utilities that undertake more or earlier long-term planning efforts benefit from more resilient finances and improved system performance relative to other utilities.
Next step is to match up with dependent variable data – financial stability measures, permit violations, etc.
Practical applicability:
Division of Water Infrastructure at the Dept. of Env. Quality very interested in results of research – together with the State Water Infrastructure Authority, responsible for creating master plan for water and wastewater in the State
If hypothesis turns out to be true, can encourage or require deeper levels of LT planning, benefits beyond just the plans themselves
If not… perhaps good for larger utilities to undertake, but smaller utilities may have other more immediate priorities
Spoke in previous session about how we defined long-term planning efforts: Financial planning, asset management, capital planning and funding, disaster / emergency / resiliency planning, long range water and wastewater resources planning.
Then we needed to make choices about dependent variables. How do we define resilient finances and improved system performance?

34. Current Expenditures Cost Recovery

35. Trends in Water Utilities’ Violations

36. What Hinders Performance
Small utilities face greater challenges.
Absence of a full-time Utilities Director greatly increases challenges.
~75% of utilities in the survey have a full-time utilities director.
FY2017 data. About 80 local governments’ data not yet available.

37. What Hinders Performance
Utilities that do not monitor recent financial performance against specific benchmarks or targets, and utilities that do not have a documented, published Capital Improvement Plan perform worse on financial resiliency than others.
Utilities without an Asset Management Plan have higher likelihood of having health-based violations than others.
And more…

38. Thank you. Shadi Eskaf Eskaf@sog.unc.edu 919-962-2785
11/19/2018
Thank you. Shadi Eskaf
Environmental Finance Center at the University of North Carolina
School of Government, Knapp-Sanders Building
CB #3330
Chapel Hill, NC
USA

39. Financial Training

40. Full-Time Leadership

41. Revenue Vulnerability

42. NC DWI Asset Management Guidance
Determining if utility applicant to subsidized funding is eligible for points under line item 3B of priority rating system:
Inventory of assets (including maps)
Condition assessment
A C.I.P. with projected cost estimates
An O&M plan for the assets

43. Surveyed Utilities Meeting DWI Criteria

44. Funding Programs

45. How to Pay for Capital Utility revenues and reserves Special fees
Commercial bonds/loans
Subsidized loan and grant programs
Division of Water Infrastructure (NC DEQ)
USDA
NC Dept. of Commerce (EDA, ARC)
Golden Leaf Foundation
WIFIA (EPA)
NRWA, more
See matrix with contacts and information at

46. Division of Water Infrastructure

47. Water Infrastructure Funding Programs
Clean Water State Revolving Funds (SRF)
$130 million/year
$30 million project funding limit*
Drinking Water SRF
$55 million/year
$20 million project funding limit*
Public utilities also eligible
CDBG-Infrastructure
Non-entitlement areas only
Towns and counties only
Water and sewer – $26 million 2016; $21 million 2017
$2 million grant maximum
Department of Environmental Quality
Slide from Kim Colson, Director of the Division of Water Infrastructure, NC DEQ

48. Water Infrastructure Funding Programs
State Reserve Programs
$10 million/year recurring appropriations for grants
Projects – loans and grants
Both drinking water and wastewater
Connect NC Bonds (finished in Fall 2017), but a permanent source for state loans
Maximums: loans – $3 million / year; targeted rate loans – $3 million / 3 years; and grants – $3 million / 3 years
Asset Inventory and Assessment grants
Drinking water or wastewater
$150,000 maximum / 3 years
Merger Regionalization Feasibility grants
$50,000 maximum / 3 years
Department of Environmental Quality
Slide from Kim Colson, Director of the Division of Water Infrastructure, NC DEQ

49. Summary of Fall 2017 Funding Applications
Project Type
Funding Requested
No. of Apps.
CDBG-I grants
$49.0 M 33
CDBG / DW Const.
$2.0 M 1
CDBG / WW Const.
$3.4 M 2
DW (SRF and State Reserve)
$166.1 M 37
WW (SRF and State Reserve)
$182.6 M 47
Asset Inventory and Assessment grants
$22.3 M
168
Merger/Regionalization Feasibility grants
$285,000 6
Total
$425.6 M
294
Department of Environmental Quality
Slide from Kim Colson, Director of the Division of Water Infrastructure, NC DEQ