This presentation was delivered at NADO's 2018 Annual Training Conference, held in Charlotte, NC on October 13-16. For more information, visit: https://www.nado.org/events/2018-annual-training-conference/

1. Glenn Barnes
Environmental Finance Center
The University of North Carolina at Chapel Hill
919-962-2789
glennbarnes@sog.unc.edu
What You Need to Know About
Small Drinking Water Systems

2. • Who is regulated, and by what
• How drinking water finance works
• Infrastructure funding programs
• The role for Regional Development
Organizations
Our Session

3. Dedicated to enhancing the
ability of governments and other
organizations to provide
environmental programs and
services in fair, effective, and
financially sustainable ways
through:
• Teaching and Outreach
• Direct Technical Assistance
• Applied Research
• Tool Development

4. The Environmental Finance Center
Network (EFCN) is a university-based
organization creating innovative solutions
to the difficult how-to-pay issues of
environmental protection and
improvement. The EFCN works with the
public and private sectors to promote
sustainable environmental solutions while
bolstering efforts to manage costs.
Environmental Finance
Center Network (EFCN)

5. Smart Management for Small
Water Systems
Asset Management
Rate Setting and Fiscal Planning
Leadership Through Decision-
making and Communication
Water Loss Reduction
Energy Management Planning
Accessing Infrastructure
Financing Programs
Workforce Development
Water Conservation Finance
and Management
Collaborating with
Other Water Systems
Resiliency Planning
Managing Drought

6. Who is regulated, and by what?

7. How We Get Drinking Water
Private Wells Bottled Water Regulated
Drinking Water
Systems

8. 25 people
(or 15 connections)
60 days a year at least
Water is treated or altered in some
way
What Entities are Regulated as
Drinking Water Systems?

9. Local Governments
Mobile Home
Parks
HOAs and
Condos
Apartments Private
Water
Companies
$
What Entities are Regulated as
Drinking Water Systems?
Community Water Systems

10. Non-Community Water Systems

11. In the United States, there are
“public” drinking
water systems
147,413
Source: EPA SDWIS Database as of July 1, 2016

12. Most Water Systems are Small
They serve 10,000 or fewer customers
97%
Source: EPA SDWIS Database as of July 1, 2016

13. Collectively, Though, Large
Systems Serve Far More Total
People
21%
Source: EPA SDWIS Database as of July 1, 2016

14. • Public health
• Fire protection
• Livable communities
• Quality of life
• Economic development
Importance of Safe Drinking
Water

15. • Systems are responsible for public
health
• Safe Drinking Water Act
• Revised Total Coliform Rule (TCR)
• Groundwater Rule
• These are legally enforceable standards
Regulatory Framework

16. EPA, and Your Primacy Agency

17. Regulations go beyond just the
environment and public health

18. Regulatory Framework
Systems hire
people—labor
laws
Systems use
equipment—
occupational
safety laws

19. Regulatory Framework
Some are
governmental—
information
transparency
Systems are
monopolies

20. How drinking water finance works

21. • Water is not their primary business
• There are no direct charges for water
use. The cost of water comes out of the
overall budget of the entity
Non-Community Systems
Price of Gasoline Weekly Collections Admissions Ticket

22. • Some types of community systems don’t
charge directly for water. The cost of
water is captured in rent or other types
of fees
Community Systems
Monthly Rent Condo/HOA Fees Housing Fees

23. • Other community water systems do
charge for water directly, and usually
based on the volume of water received
• Water is a service or a commodity
Community Water Systems
Local Governments
$
Private Water Companies

24. • Base fee per billing period regardless of
usage
• Some charge based on usage
Funding Mechanism: Rates

25. Funding Local Government
Services
General Government:
Taxes
Enterprise Funds:
Rates & Fees

26. • Often their rates have to be approved by
the public utility commission within a
state (“public service commission”)
• In some states, governmental systems
also have to have their rates approved
by a utility commission
Private Water Companies

27. Rates come in all shapes and
sizes

28. This is a rate sheet...

29. So is this...
(Annual Rates)

30. And this...

31. And this...

32. Even this! (Please don’t do this)

33. Are our
rates right?
It depends...

34. Water System Objectives
Full cost
recovery/
revenue
stability
Encouraging
conservation
Fostering
business-
friendly
practices
Maintaining
affordability

35. Full cost
recovery/
revenue
stability
Encouraging
conservation
Fostering
business-
friendly
practices
Maintaining
affordability
Bring in enough
revenue to cover
the full cost of
running the water
system:
• O&M
• Capital needs
• Debt service
Why do this?

36. Full cost
recovery/
revenue
stability
Encouraging
conservation
Fostering
business-
friendly
practices
Maintaining
affordability
Use pricing to
encourage
customers to
reduce their water
consumption
Why do this?

37. Full cost
recovery/
revenue
stability
Encouraging
conservation
Fostering
business-
friendly
practices
Maintaining
affordability
Use pricing to
encourage
businesses and
agriculture to
locate to your
community or
stay in your
community
Why do this?

38. Full cost
recovery/
revenue
stability
Encouraging
conservation
Fostering
business-
friendly
practices
Maintaining
affordability
Ensure that all
customers in your
water system are
able to afford
enough water to
live on
Why do this?

39. • Charges for water cover the entire cost
of running the water system today and
into the future
“Full Cost Pricing”

40. Types of Costs
Capital Costs Debt ServiceOperating Costs

41. Water is “Capital Intensive”

42. http://www.infrastructurereportcard.org/
Aviation D
Ports C+
Bridges C+
Public Parks D+
Dams D
Rail B
Drinking Water D
Roads D+
Energy D+
Schools D
Hazardous Waste D+
Solid Waste C+
Inland Waterways D
Transit D-
Levees D
Wastewater D+

43. Infrastructure Wears Out

44. Infrastructure Wears Out
Water
Tank
Leak

45. How do we pay for this water
infrastructure?

46. Hope for Divine Intervention

47. • Pay as you go
• Save in advance and pay
• Borrow and pay later
• Grants (let someone else pay)
Ways To Pay for Infrastructure
Money
from
system
customers
Not easy to come by

48. The Infrastructure Needs Per
Residential Connection are Much
Greater for Small Systems
From 2007 DWINSA and 2006 CWSS

49. Infrastructure Funding Programs

50. Navigating to Funding Tables
Step 1: efcnetwork.org
Step 2: Select “Funding Sources by State or Territory” under the Resources Tab

51. Click on an
individual state
to view funding
table.

52. https://ofmpub.epa.gov/apex/wfc/f?p=165:1::::::

53. • Assist with grant and loan applications
• Facilitate discussions around
regionalization and partnerships
• Assist with mapping of assets
• Promoting broader economic
development
• Host and promote trainings
The Role for Regional
Development Organizations

54. https://www.nado.org/rdos-supporting-water-
infrastructure-and-improving-quality-of-life-2/

55. https://efcnetwork.org/events/webinar-regional-
development-organizations-supporting-water-infrastructure-
and-improving-quality-of-life/

56. What have you done at your
RDO to support drinking water
systems?

57. Glenn Barnes
Environmental Finance Center
The University of North Carolina at Chapel Hill
919-962-2789
glennbarnes@sog.unc.edu
What You Need to Know About
Small Drinking Water Systems