Blog  /  September 2017  /  Designing the Financial Bridge Needed to Pay for Water Infrastructure

Blog Post Teaser

Everybody knows….

  • Water is, in many ways, life.
  • Affordable access to clean drinking water and safe wastewater systems is essential to public health, thriving economies, and national security.
  • There is a funding gap for water infrastructure.

 

Everybody in the water industry also knows….

  • Water infrastructure is an expensive long-term investment.
  • Utilities are suffering from generations of deferred maintenance on their water infrastructure.
  • Operators are caught in a budgeting catch-22 as they struggle to balance affordable rates with necessary maintenance costs.

 

Everybody “should know” how to get funding for their water infrastructure project….

  • Technically, there is enough money for every water infrastructure project; the challenge is harnessing the political will, operational know-how, and public support to affordably get it.
  • Communities that embrace a lifecycle strategy to figuring out how to pay for their water infrastructure will be economically more stable in the long term.

 

Yet, the Age-Old Problem of Paying for Water Projects Remains the Same

Since 2007, I have overheard many voices passionately speak about the value of water, unequal access to water, deferred maintenance, and who should pay for it.  Yet, despite this passion, the problems facing our water infrastructure remain the same -- important water infrastructure projects remain unfunded.  This problem is particularly acute for small, medium, and rural communities.

To fully understand the problem, I embarked on a discovery tour to learn why we fail to secure infrastructure financing for our most precious commodity -- water. I have had countless conversations with utility managers, municipal leaders, government agencies, project finance experts, infrastructure planners, lawyers, investors, regulators, engineers, academics, entrepreneurs, farmers, and your average Joe and Jane.  I discovered many others are working on this problem.  These smart, thoughtful, and dedicated individuals all have something to add.  Yet, in listening to the many voices that care about this industry, I’ve also come to realize that, to overcome the barriers to successful project funding, these voices need to be identified, connected, and better shared with stakeholders and decision makers.

Information (or lack thereof) is a common thread to the following categorical barriers to financing: Money, Legislation, Perception, Knowledge, Communication, and Affordability.  By sharing information and insight needed to overcome these common barriers, we can begin to design a Financial Bridge for accelerating water infrastructure rebuild and rehab.

 

Designing the “Financial Bridge” That Can Pay for Water Infrastructure

Water Infrastructure

The “Financial Bridge” is simply a metaphor for the processes, frameworks, and mindsets needed to access the money to pay for the projects.  Historically, the government has provided financial bridges in the form of grants, loans, and bonds to support the very largest water projects.  Unfortunately, the current capital need far exceeds what the government can bear.  Yet, there are billions of dollars in private equity and new investment vehicles waiting on the sidelines to make an impact on water infrastructure.  But this money is useless if stakeholders and decision makers do not see the opportunity and learn the mechanics of building the financial bridge that will convey their project financing.  As the team from TableRock shared, “In the end, the barriers are rarely financial or technical in nature, but human.”  WaterFunder helps small, medium, and rural communities envision a plan that will build the financial bridge they need to pay for their projects.

 

Knowledge, Insight, and Skills Required to Help Others Bridge the Funding Gap

Water sector leaders make good decisions that prioritize public trust, affordability, conservative fiscal responsibility, and minimal operational risk.  Most water utilities have a near zero default rating on the debt they do incur.  On the whole, these are well-run businesses. Unfortunately, the habits and priorities from the past are not enough to quickly build the much-needed infrastructure.  In the last decade, there have been a handful of project acceleration risk takers that have leveraged community support for partnerships and responsible private capital to launch some well-publicized P3 projects.  The adoption of partnerships and new ways of procuring and paying for projects has had slow adoption from water and sewer utility managers.  As with anything new, some were deemed successful and some were not -- due in much part to the barriers mentioned above.

 

Exploring Approaches to Solving the Funding Problem

Helping communities figure out how to pay for their water infrastructure is more than just finding the money.  I founded WaterFunder in 2015 to accelerate water infrastructure projects by evangelizing emerging project delivery frameworks and connecting stakeholders to alternate sources of money.

In the next few months I will share stories of these barriers and some creative approaches to navigate, mitigate, collaborate, or accept them.  Next month, I will be taking a closer look at the money needed to build the bridge over the funding gap.  I look forward to continuing this conversation about all of these barriers and I encourage your comments, observations, recommendations, and suggestions.

 

Upcoming Articles:

Designing the Financial Bridge for Water Infrastructure:  Money Section

Financial Bridge for Water Infrastructure Money Section

 

Designing the Financial Bridge for Water Infrastructure:  Legislation Section

Financial Bridge for Water Infrastructure Legislation Section

 

Designing the Financial Bridge for Water Infrastructure:  Perception Section

Financial Bridge for Water Infrastructure Perception Section

 

Designing the Financial Bridge for Water Infrastructure:  Knowledge Section

Financial Bridge for Water Infrastructure Knowledge Section

 

Designing the Financial Bridge for Water Infrastructure:  Communication Section

Financial Bridge for Water Infrastructure Communication Section

 

Designing the Financial Bridge for Water Infrastructure:  Affordability Section

Financial Bridge for Water Infrastructure Affordability Section

 

About WaterFunder LLC

WaterFunder (www.waterfunder.com) is an advisory and professional services consultancy that addresses the gap in water infrastructure funding by connecting private capital to broadly defined water projects though direct investment.  The organization builds alliances with investors and works with stakeholders to accelerate the development process and find the right balance of debt and equity financing, thereby allowing the project team to do what they do best -- design, build, and maintain the asset.