&EPA
United States
Environmental Protection
Agency
Office of Water
(WH-546)
EPA 832-F-93-004
May 1993
PARTNERS REBUILDING AMERICA
Public-Private Partnerships in
Wastewater Finance
A Working
Partnership
The Gap
Partners
Rebuilding America
- Filling the Gap
Making Partners
Rebuilding
America Work
For almost 40 years, the federal government has been a full partner with the States
and local governments in cleaning and protecting our nation's waters. Since 1972,
U.S. taxpayers have invested more than $53 billion in grants through EPA to nearly
6,000 wastewater treatment works and sewer systems nationwide. And since 1987,
federal tax dollars have been establishing State Revolving Funds (SRFs) to pay for
municipal wastewater treatment plants through low-interest loans. The repayments
of those loans with interest will "stretch" the original federal investment, buying up to
three times as much construction as grants would have bought.
President Clinton's "Vision of Change for America" recognizes this successful
federal-State-local government partnership, and proposes to continue it with a new,
Clean Water SRF program, funded through 1997 with approximately $7.2 billion.
EPA and the States have recently estimated current clean water investment needs
of more than $100 billion. Even the SRF cannot fill those needs. Local and State
governments face shrinking budgets and sharply increased funding demands for
serious and widespread pollution problems such as wet weather runoff. It will be
difficult for them to fill the gap through higher taxes or user fees. Communities need
more opportunities and more flexibility to finance their important wastewater
treatment needs.
One important financial opportunity is to broaden the partnership for clean water to
harness the power of America's private sector. EPA's Partners Rebuilding
America program gives communities, counties and special districts the opportunity
to sell or lease wastewater treatment plants, freeing badly-needed funds now tied up
in treatment works. Property and income tax rolls could expand as tax-exempt
public properties become tax-payers. And privately-owned wastewater treatment
works may even cost less to operate, as communities in Alabama, Massachusetts,
and even Great Britain have found. Local governments can maintain as much
control as they wish over facility budgets, personnel, user fees, and environmental
law compliance. Many municipalities now use public-private partnerships to provide
quality design, construction or operation of their treatment works. Partners
Rebuilding America helps communities to take full advantage of the power of
public-private partnerships.
Barriers in federal regulations and in the Tax Reform Act of 1986 have combined to
slow private investment in municipal wastewater treatment systems. But a 1992
Presidential Executive Order is increasing interest in the opportunities that public-
private partnerships present.
"Clean Water... A Better Environment"
Office of Wastewater Enforcement and Compliance (OWEC)
Printed on Recycled Paper
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PARTNERS REBUILDING AMERICA (continued)
Making Partners
Rebuilding America
Work (continued)
Questions and
Answers About
Partners Rebuilding
America
Contact:
The Executive Order declares that infrastructure, including wastewater treatment, is
critical to economic growth. It acknowledges that State and local governments
understand their own needs and how best to meet them. The Order directs federal
agencies to help create more public-private partnerships, and directs them to
remove obstacles in regulations and procedures. At the same time, the Order
protects the public investment by requiring that privatized plants continue to seh/e
their original purposes as long as needed, that user charges remain reasonabl , and
that federal officials help determine fair and reasonable sale, lease or transfer
prices. Sale or lease proceeds will first repay State and local government project
investments, then may buy additional local infrastructure or reduce taxes or de t.
Any remaining proceeds less depreciation return to the federal Treasury.
EPA-sponsored pilot projects in Indianapolis; the Miami Conservancy District ir
Franklin, Ohio; and Silverton, Oregon are further exploring opportunities in pub ic-
private partnerships. EPA has already held public meetings and begun work to
revise its regulations to comply with the Executive Order. There will be opporti nities
in 1993 for further public comment.
Why haven't investors bought wastewater treatment plants before now?
The availability of large federal grants and regulations requiring their repaymen
treatment works were sold, reduced the attractiveness of private investment to
municipalities and investors. Also, the 1986 Tax Reform Act made wastewatei
treatment works less attractive to investors.
Why should a private company be able to buy treatment plants paid for with ta.
dollars?
Selling all or part of a plant is one way to recover and reuse some of the public
past tax investment. Also, many municipal plants are approaching the end of t eir
useful lives, and replacement or improvement projects compete for increasingl
scarce tax dollars. Private firms provide financing, and often build and operate
plants less expensively.
How can we be sure that privately operated treatment plants will continue to
protect the environment?
EPA and States are charged by law to ensure that treatment works, whether
publicly or privately-owned, in no way avoid permit compliance or degrade wat
quality.
For more information contact EPA's Alternative Financing Section in the Office of
Water at (202) 260-4060.
Office of Wastewater Enforcement and Compliance (OWEC) • Mailstop WH-546
U.S. EPA • 401 M Street, SW • Washington, DC 20460
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