United States
Environmental Protection
Agency
Office of
The Comptroller
(PM-225)
20M-2002
December 1989
Funding Our
Environmental Future
General Proceedings
Region 1 Conference On
Public-Private Partnerships
And Alternative
Financing Mechanisms
November 6-7, 1989
Northampton, MA
:
Printed on Recycled Paper
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Preface Conference Proceedings and Action Agenda
These proceedings are from the U.S. Environmental Protection
Agency Region 1 conference entitled Funding Our Environmental
Future: Public-Private Partnerships and Alternative Financing Mecha-
nisms to Support Local and State Environmental Programs held in
Northampton, Massachusetts on November 6-7,1989. This confer-
ence was cosponsored by the New England Interstate Water Pollution
Control Commission (NEIWPCC), the New England Water Works
Association (NEWWA), and the New England Waste Management
Officials Association (NEWMOA).
Included is an Action Agenda, developed during the conference,
which outlines roles for key players in both the Public-Private Part-
nerships and Alternative Financing Mechanisms Initiatives. We ask
that you provide us with your views and comments on the ideas and
suggestions presented during the conference. As you pursue these
options for financing environmental programs, we hope you find the
materials useful and informative.
Charles L. Grizzle J
Assistant Administrator
Office of Administration and Resources Management
U.S. Environmental Protection Agency
Lajuana Wilcher
Assistant Administrator
Office of Water
U.S. Environmental Protection Agency
Paul Keough
Deputy Regional Administrator
U.S. Environmental Protection Agency, Region 1
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Region 1 Proceedings Table of Contents
Page Title
i Preface
Dayl
1 Welcome
Ron Foltak
Executive Director
New England Interstate Water Pollution Control Commission
3 Opening Remarks
Paul Keough
Deputy Regional Administrator
U.S. Environmental Protection Agency
5 Keynote Address: Facing the Challenge
Charles L. Grizzle
Assistant Administrator
U.S. Environmental Protection Agency
9 Panel Session: Local, State, and Federal Perspectives on
Environmental Financing
Moderator: Patricia Meaney
Assistant Regional Administrator
U.S. Environmental Protection Agency
19 Panel Session: Public-Private Partnerships:
What are Public-Private Partnerships?
Moderator: David Osterman
Chief, Resource Planning and Analysis Branch
U.S. Environmental Protection Agency
Leominster, Massachusetts - Wastewater Treatment
Johnston, Rhode Island - Recycling Facility
Hull, Massachusetts - Wastewater Treatment
(Case Study not presented at the conference, but included as supplemental
material.)
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35 Panel Session: Alternative Financing Mechanisms:
Dedicated Fees
Moderator: Dean Marriott
Commissioner
Maine Department of Environmental Protection
New Jersey's Experience with Environmental Fee Systems
Littleton, Connecticut Wellhead Protection Program
Massachusetts' Dedicated Fee Systems
43 Luncheon Address
Lajuana Wilcher
Assistant Administrator
U.S. Environmental Protection Agency
47 Panel Session: Environmental Financing Through
Public-Private Sector Channels
Moderator: Larry Scully
President
Scully Capital Services
53 Panel Session: Public-Private Partnerships:
Privatization and Developer Financing
Moderator: Carol Ansheles
New England Waste Management Officials Association
Bristol, Connecticut - Solid Waste Resource Recovery
Kennebunk, Maine - Drinking Water
63 Panel Session: Alternative Financing Mechanisms:
Dedicated Fines and Taxes
Moderator: Robert Moore
Assistant Deputy Commissioner
Connecticut Department of Environmental Protection
Connecticut's Use of Dedicated Taxes and Fines
Washington State's Use of Dedicated Taxes and Fines
Using Dedicated Taxes and Fines to Support Environmental Programs
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71 Panel Session: Overcoming Barriers To Partnerships
and Alternative Financing
Moderator: David Lenart
Project Manager
Tighe-Bond
77 Panel Session: Public-Private Partnerships: Merchant
Facilities and Developer Financing
Moderator: Steve Allbee
Director
Office of Municipal Pollution Control
U.S. Environmental Protection Agency
Rutland, Vermont - Wastewater Treatment Pipeline
Manchester, New Hampshire - Drinking Water
87 Panel Session: Alternative Financing Mechanisms:
Management Funds
Moderator: Tex LaRosa
Chief of Operations
Vermont Department of Environmental Conservation
Kansas Corporation Commission - Management Funds
Rhode Island Aqua Fund
State and Local Fund Management Options
95 Panel Session: Making it Happen
Moderator: Dave Fierra
Director
Water Management Division
U.S. Environmental Protection Agency, Region 1
101 Closing Address
Paul Keough
Deputy Regional Administrator
U.S. Environmental Protection Agency, Region 1
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103 Action Agenda: Key Roles
107 Conference Attendee List
Alternative Financing Mechanisms and Public-Private
Partnerships Regional Coordinators
Office of the Comptroller
Public-Private Partnerships Staff
Office of Water
Alternative Financing Mechanisms Contacts
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Region 1 Welcome
Speaker Ron Poltak
Executive Director
New England Interstate Water Pollution Control Commission
Welcome to Funding Our Environmental Future: Public-Private
Partnerships and Alternative Financing Mechanisms to Support Local
and State Environmental Programs. This conference is jointly spon-
sored by the Environmental Protection Agency, the New England
Interstate Water Pollution Control Commission, the New England
Water Works Association, and the New England Waste Management
Officials Association.
The conference is geared to encourage discussion of our environ-
mental future, particularly with respect to the prospects for ade-
quately funding programs to meet our environmental challenges. We
will be examining two methods of financing that states and localities
are employing: public-private partnerships and alternative financing
mechanisms. We hope that these discussions will yield information
that is useful in supporting the evolving programs of localities, states,
and EPA as each seeks to develop and support the most effective and
efficient ways to fund our environmental future.
Speaker Julie Belaga
U.S. Environmental Protection Agency
Region 1
The prospects for environmental financing pose a great challenge to
us. Yet they are critical to the future of New England. We know now
that the federal government cannot and will not be able to fund all or
most of the environmental protection that we undertake around the
country. The public perception that the federal government will do
everything must change and is changing. It is our task to create and
maintain the partnerships that meet the challenges of funding pro-
grams that ensure an environmental future we all wish for. I hope the
results of this conference will contribute greatly toward this end.
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Region 1 Opening Remarks
Speaker PaulKeough
Deputy Regional Administrator
U.S. Environmental Protection Agency
Region 1
Region 1 has had a traditionally strong commitment to environmental
quality, with many of its accomplishments recognized nationally. But
faced with the reality of escalating costs, we are challenged to find
ways to fund our environmental future. State and local programs
have grown dramatically and dynamically over the last decade. But
new requirements and continuing, extensive infrastructural needs
have resulted in a significant shortfall of funding, amounting to bil-
lions of dollars nationally.
Potential Solutions to the
Among the solutions to the funding shortfall open to us are:
Funding Shortfall
Innovative forms of environmental financing at all levels of
government;
Public-private partnerships at the local level; and
Alternative financing techniques in state environmental
programs to augment revenues received from general budget
allocations.
Lessons to Learn In each case, there are several lessons to be learned. We must:
Document successes;
Understand contributing success factors;
Encourage partnerships in other localities;
Learn prospects for funding sources from colleagues and state
officials; and
Develop appropriate measures for specific state needs.
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This conference allows us to share ideas and successes from all levels
of government, and from the private sector, whose expertise, creativ-
ity, and financial support are invaluable resources for our environ-
mental programs. It is the first time that the Public-Private Partner-
ships and Alternative Financing Mechanisms Initiatives have shared a
common forum to address the environmental funding shortfall. It is
appropriate that they join forces as each seeks to ensure that we can
effectively fund our environmental future.
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Keynote Address Facing the Challenge
Speaker Charles L. Grizzle
Assistant Administrator
Office of Administration and Resources Management
U.S. Environmental Protection Agency
Our Most Difficult
Challenge is Paying for
Environmental Services
This is the third conference sponsored by EPA featuring public-
private partnerships, and the first to incorporate the concurrent theme
of alternative financing mechanisms. Both concepts, I believe, need to
be explored as innovative approaches to funding environmental pro-
tection. The single most difficult challenge we face in environmental
protection today is paying for necessary infrastructure and services.
Environmental issues appear to run in cycles. During the 1960s, this
country's first major environmental movement was forged in re-
sponse to deplorable environmental conditions. The turning point
came in 1971. That year, Congress created the EPA. And with that,
they went on to initiate the legislation that forms the basis of today's
fundamental environmental protection programs. The original laws
were bold, sweeping measures lifting environmental concerns to the
foreground of the public agenda. As a result, we now enjoy healthier
air, cleaner water and safer land.
Public Demands for
Environmental Protection
Continue to Rise
Still, public demands for environmental protection continue to rise.
One sign of this is the translation of expectations about EPA's per-
formance into legislative mandates for action. During the past few
years, there has been a high level of activity on environmental legisla-
tion. Past legislation was reauthorized, and new legislation passed.
In 1988 alone, Congress enacted seven important pieces of environ-
mental legislation.
State and Local
Governments have
Primary Roles for
Environmental Protection
At the same time, there has been a shift of responsibility for providing
environmental services. State and local governments now assume the
primary roles for implementing environmental policy. EPA used to
mandate environment services. But it was easy for us then since we
had the money to support the items on our slate. The Agency's re-
sources to assist state and local governments now are, and will re-
main, limited. The Agency has now moved to more of a support role.
The high costs of environmental service on state and local govern-
ments has brought us full circle to our second environmental cross-
roads how can we fund necessary environmental protection. Many
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of our nation's towns and cities, faced with the expensive problem of
complying with new regulations, still rely on antiquated facilities,
many showing the inevitable signs of decay. Traditional resources
just cannot provide the revenues needed to construct new facilities or
upgrade existing systems.
A Funding Gap of $20 The seriousness of this situation is underscored by a recent EPA study.
Billion Annually by the II estimates the difference between what we now spend for environ-
y 2000 mental protection and what the public sector will need to spend may
reach $20 billion annually within the next decade.
There are several key elements to President Bush's and Administrator
Reilly's philosophy on what we can do. We must:
Harness the forces of the marketplace to advance environ-
mental protection goals;
Reach out to new partners energizing corporate America;
Encourage local initiative;
Work together to overcome unnecessary public resistance to
innovative financing techniques; and
Develop and build the working relationships of the federal
government with its state and local partners.
Increased Public This conference provides an excellent opportunity to exchange ideas
Involvement is Critical both formally and informally. For instance, local officials frequently
mention to me that EPA and Congress pass on responsibilities to state
and local governments without first considering how these govern-
ments will be able to finance these requirements. Not only do I agree,
but I would go as far as to say it is symptomatic of a much larger
problem. EPA, try as it will, simply does not always understand the
needs and capabilities of state and local governments.
The Key to Finding
Flexibility and Innovation
is Communication
We need to gain perspective to become more effective in developing
regulations, implementing new programs and refining existing proce-
dures. We have also started to examine our regulations to assess their
impact on municipalities. We hope to empower local governments
with the flexibility necessary to cultivate innovation. I think the key
to finding flexibility is communication. We must communicate with
the private sector, the American public and other levels of govern-
ment.
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Communication is important for several reasons. We need to:
Harness the abilities of the private sector;
Gain support from the American public for new financing
concepts and innovative ways of conducting business; and
Work effectively with levels of government to effectively pro-
tect our natural resources.
The crossroads is before us. We can choose to make this a turning
point in the environmental movement or we can proceed along a path
that threatens to overwhelm us.
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Panel Session Local, State, and Federal Perspectives on
Environmental Financing
Moderator Patricia Meaney
Assistant Regional Administrator
U.S. Environmental Protection Agency
Region 1
Our purpose in the conference's opening panel session is to gain a
perspective from every level of government on environmental financ-
ing. Each panelist will address the problem from his or her perspec-
tive, and offer strategies for cooperation and information sharing.
Speaker Daniel Greenbaum
Commissioner
Massachusetts Department of Environmental Protection
What better time could there be to discuss how best to use increas-
ingly limited dollars to work for environmental protection? Nation-
ally, the federal government is contributing fewer resources than ever
before. In Massachusetts, our Commonwealth is in the midst of
discussions about cutbacks across all programs.
We are facing the challenge of environmental financing in two ways.
The first is through Departmental operating budget funds. The
sources of operating budget funds include:
50 percent from Commonwealth taxes for general revenues;
25 percent from federal grants; and
25 percent through fines and fee systems to support services.
With diminished funding from traditionally available federal grants
and Commonwealth revenues, the importance of obtaining funds
through alternative financing mechanisms has increased. Alterna-
tives include a designated use for fees and fines.
Massachusetts' Massachusetts currently uses a number of dedicated fees. They
Dedicated Fees include:
Transporter fees on hazardous waste movement;
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Wetlands permits fees for activities in wetlands areas; and
Impact fees assessed on developers seeking land use authoriza-
tion.
Massachusetts is looking to develop additional sources of designated
funds, among them a broad based fee to be collected from facilities for
all their discharges into water, air, and land.
The Value of Fee Systems
Fee systems like this and the ones mentioned above:
Collect funds to pay for the service affiliated with the activity
being assessed; and
Provide disincentives to those who may otherwise freely
appropriate natural resources for their own use.
Fines and administrative penalties dedicated back to the Department
amount to $1.5 to 2.0 million per year but of course cannot be consid-
ered a reliable source of revenue. The Commonwealth has elicited
involvement from the private sector in carrying out environmental
services. In the future, dischargers of effluent into surface waters
could be asked to conduct ambient monitoring up and downstream
from the discharge point. Localities too might play increasingly
important roles in planning, operating, and monitoring regulated
sites.
In addition to operating budget funds, a second source of funding for
environmental services relates to capital investment. Current esti-
mates identify needs in excess of $7 billion across Massachusetts for
wastewater treatment, water supply, and solid waste management
and disposal.
The Prospects of There are at least two problems with capital investment: first, con-
Capital Investment straints on local borrowing to raise funds for capital investment; and
second, a reluctance to adopt user fees that reflect the true costs of the
service. The unwillingness or inability of local authorities to assume
the necessary leadership role to overcome these factors assigns to the
Commonwealth, by default, a preeminent role in providing capital
grants and loans for environmental services. Unfortunately however,
with fewer dollars available, the share of Commonwealth subsidiza-
tion of capital projects at the local level is down perceptibly. As a
result, the collection of user and impact fees and the use of state
backed industrial revenue bonds and revolving loans will increase as
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means by which local capital programs can be undertaken. But in all
cases, there is a ceiling beyond which the use of these mechanisms
cannot be supported.
In summary, there is no way Massachusetts can forego the use of
dedicated fees to provide funding for its environmental programs.
We could not live without the money. But there are pitfalls, including
the potential for litigation challenging the validity of the fee and
referenda seeking to roll back their use. States can anticipate and
prepare for these challenges. Remember that the fundamental issue
for states to consider is how to balance the demands of environmental
financing with all the other public service financing it has responsibil-
ity to provide.
Speaker Philip Shapiro
Director
Finance and Development
Massachusetts Water Resources Authority
The budget needs of the Massachusetts Water Resources Authority
(MWRA) for the next decade will amount to nearly $5 billion, 68% of
which are for court ordered projects. This will require borrowing
$6.26 billion to cover these capital needs alone. Federal grants
through EPA Construction Grants, a traditional, primary source of
capital funding will end soon and will have provided between now
and FY 1994 only $129 million to Massachusetts, half of which will
likely be allocated to MWRA. This will cover only about 1% of the
Authority's overall costs.
EPA and Massachusetts have both indicated through the streamlining
of current budgets that the MWRA should assume a larger share of
the environmental financing burden than it has done in the past. But
both continue to assign additional requirements and compliance
responsibilities to the Authority without providing accompanying
resources to help MWRA carry out these responsibilities.
Rate Payers will have to Although Massachusetts' state revolving fund legislation is a healthy
Assume More of the steP forward, the Commonwealth's current fiscal health necessitates
Burden for Capital only mmimal funding for the State Revolving Fund (SRF) at this time.
r , , The net result of the federal and state withdrawal from funding water
services is that the MWRA rate payers will bear the full burden of the
Authority's capital program. Water and sewage rates have already
increased by 300% in the last five years. It is projected that the aver-
age household will be paying $100 a month by the year 2000, com-
pared to $30 a month today, up an additional 300%.
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The private sector residences, business, and industry already
are funding the program through the rates they are paying. The only
added role for the private sector that might be considered is an indus-
trial use permitting fee. The fee would shift the cost of cleaning up
industrial pollution to the discharger itself. This would not represent
a new income source for the Authority, it would simply constitute a
cost shift.
New Revenue Streams The MWRA believes new revenue streams should be identified to
Need to be Identified ensure that the full burden of compliance is not borne by ratepayers.
This could take place, using the proposition 21/2 philosophy that
would require the framers of the new regulations to identify the
source of each initiative's funding. This could include dedicated
revenue streams at the state level, local option taxes with proceeds to
fund environmental budgets, and a $1 per barrel charge on oil to fund
environmental clean up.
Speaker Brian Sarault
Mayor
Pawtucket, Rhode Island
I would like to discuss two environmental challenges Pawtucket has
had to face in recent years as it seeks to provide environmental serv-
ices to the community. They are its problems with the City's com-
bined sewer overflow (CSO) capacity and the upkeep of its drinking
water treatment facilities.
Pawtucket's 30 CSOs are pouring millions of gallons of polluted water
into Narraganset Bay and will cost more than $50 million to repair.
Its water system, which has been providing millions of gallons of
inadequately treated water into people's homes, will cost $23 million
to remedy.
Tax Burden on Home and Pawtucket is an older, fully developed, urban community, with a
Auto Owners population of 75,000. A tax classification plan implemented four years
ago has frozen the commercial tax rate until 1994, leaving home and
auto owners to absorb any additional tax burden.
The need to overhaul CSOs has existed for some time. In the late
1970s and early 1980s, federal and state funding was more readily
available through EPA's Construction Grants and the state's accompa-
nying matching funds. Unfortunately/overhauling CSOs was low on
the state priority list.
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The Initial Solution Failed
to Confront Several
Important Issues
In 1987, the state and Pawtucket entered into a consent agreement to
study how best to solve Pawtuckef s CSO pollution problem. But the
agreement was not clearly defined. Specifically, the agreement did
not include:
The approximately $1 million needed to pay for the study;
A study scope and timeframe;
Delineation of responsibility for the study; and
A decision concerning the inclusion of a neighboring commu-
nity's CSO in the Pawtucket system.
Since then, extensive negotiations have led to new legislation. The
legislation:
Assigns responsibility for the study and CSO repairs to the
Regional District Sewer Commission;
Extends the scope of the study to include the neighboring town;
and
Designates the potential source of funding to be the state's new
Environmental Fund (once rules for awarding the grant are
determined).
The source of the $50 million necessary to make repairs to the system
has not yet been determined.
Pawtucket 's Drinking Experts had estimated in the mid-1970s that the drinking water prob-
Water Problem
m Pawtucket would cost more than $20 million to correct. But
until we addressed the problem recently, only $100 thousand per year
was being allocated for necessary repairs. A recent study concluded
that creating a public building authority (PB A) would be the fastest
and most effective solution to drinking water problems. The PBA
would oversee the allocation of bonds for funding the $23 million in
repairs and improvements.
These considerations are complicated by the many other issues that
crowd a mayor's plate: labor, health, and education demands; emer-
gencies like the collapse of one CSO, requiring immediate repair; and
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efforts to constrain community authority to raise revenues. These
problems are not local to Pawtucket.
Reasons for Inadequate
The current state of our environmental infrastructure results from:
Environmental
Infrastructure * Ineffective environmental management at all levels to resolve
' issues of funding, jurisdiction, and responsibility;
A federal trend to impose regulations without providing suffi-
cient funds to carry out mandates;
Inflexibly imposed timeframes on local communities struggling
to respond to federal regulations; and
Little coordination among federal departments to delineate
mandates, timeframes, and regulations.
Given these concerns, it is important that government and non-gov-
ernment agencies at all levels involved with the problem work to-
gether toward solutions which meet everyone's needs and ensure that
time and resources can be spent where they should be.
Pawtucket's approach to solving these problems has and will continue
to focus on:
Pawtucket's Problem Lobbying for money from the federal purse. We cannot let our
Solving Approach legislators preach cleaning up the environment while ignoring
the lack of necessary funding;
Seeking alternative revenue sources like the PBA. The issu-
ance of bonds through the PBA would be repaid directly
through water rates, as opposed to property taxes; and
Adjusting our environmental management structures and
policies to make sure they also identify funding sources and
ways to distribute that funding.
Speaker John J. Sandy
Director
Resource Management Division
U.S. Environmental Protection Agency
I am here to talk about the federal perspective on environmental
financing, and wish to discuss, in particular, public-private partner-
ships. Partnerships are not a panacea, but there are success stories.
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They have great potential to help communities cope with the environ-
mental infrastructure problem.
Reducing the Gap Between The Public-Private Partnerships Initiative (P3) began as part of a Re-
Needs and Resources a§an Administration drive to contract out federal services. Then Ad-
ministrator Lee Thomas decided EPA needed to go beyond its tradi-
tional approach and use privatization to address the critical environ-
mental and resource needs facing the country. That is, help reduce
the growing shortfall between needs and resources.
The purpose of P3 is to help state and local officials find options for
financing environmental activities. Our goal is simple increase
private sector investment and participation in providing environ-
mental services.
Products of the Public- Our products and plans geared to these ends have included the fol-
Private Partnerships lowing:
Initiative _ . , ,, .,...
A national strategy document, a blueprint for P3 activities;
An Environmental Financial Advisory Board to provide advice
and counsel on new and innovative financing approaches,
legislative and regulatory options, and strategies for imple-
menting partnerships;
Case studies of successful public-private partnerships;
A Self-Help Guide for local officials on how to conduct a joint
venture with the private sector (to be available in February,
1990);
A national debate document reflecting diverse opinions on
environmental financing issues (to be available in the Spring of
1990); and
A series of P3 demonstration projects to help communities
create successful partnerships (two projects have already been
funded).
The Goal:
Institutionalizing
Partnerships and
Alternative Funding
We must do more work in integrating financing into our environ-
mental decision-making. We must think about how we are going to
pay for environmental decisions up front. No longer do we have the
luxury of assuming enormous cost burdens and then looking around
for someone else to pay the bill. It is our goal to institutionalize this
upfront consideration of public-private partnerships and other inno-
vative approaches in the Agency's decision making process in every
environmental area and for every piece of legislation.
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This is not a short term initiative designed to serve fleeting purposes.
It is a program set up to help address a long term challenge and it will
be active for many years to come. It will be successful only if we help
communities provide more and better environmental services at a
reasonable cost.
Speaker Rebecca Hanmer
Special Assistant
to the Deputy Administrator
U.S. Environmental Protection Agency
The State Funding Study In May, 1988, the Environmental Protection Agency initiated a State
Funding Study. Due to recent legislative changes in the Clean Water
and Safe Drinking Water Acts, states have to implement many new
activities to water programs, with little federal money available to
help them do so. The EPA undertook the study to help states find
new resources to support both their base programs and their new
responsibilities.
Purpose of the Study
The purpose of the State Funding Study was to:
Find out how much new money states would need to both
maintain their essential base water programs and carry out
all new requirements;
Identify ways to obtain the new money through federal and
state solutions;
Publicize the problem and its potential solutions to stimulate
action;
*
Stimulate and support state efforts to increase financial re-
sources through alternative financing mechanisms;
Chart a course for EPA to support state programs, both finan-
cial and technical; and perhaps most importantly,
Strengthen partnerships and increase collaboration among
EPA, states, and interest groups.
It's Critical to have Strong We are very aware that local governments bear a large share of the
State Programs costs °^ funding water programs. However, we must have strong
state programs to set good water quality standards and goals, ensure
that priority problems are addressed first, that downstream jurisdic-
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tions do not suffer from decisions made by upstream jurisdictions,
and that small communities that cannot afford to manage their infra-
structure are helped.
Out of this study have come a number of key recommendations. Let
me share them with you.
Study Recommendations:
I. EPA and the states must assess the needs of state programs.
The Study initially quantified state program funding needs
through 1995, but such an activity needs to be institutionalized
and updated periodically.
2. EPA needs to publicize the state program funding problem and
generate support for solutions.
3. EPA and states need to find new funds through state supple-
mental financing mechanisms. These mechanisms include
increased or new fees for services, special or dedicated taxes,
dedicated revenues from fines and penalties, dedicated man-
agement funds or special accounts, and dedication of funds
from a state lottery, tax check off, or sale of vanity license
plates.
4. State environmental programs should attempt to obtain addi-
tional funds from general state revenues.
5. EPA should provide federal grants to continue needed support
of state programs.
6. States and EPA can work to reduce the state financial burden
by implementing improved management efficiencies and regu-
latory procedures.
7. EPA should increase technical assistance to states and munici-
palities.
8. EPA and states should improve coordination among all
environmental programs and among other agencies.
9. EPA needs to coordinate efforts of each OW program office to
strengthen state capacity to implement water program goals.
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States and EPA must
Creatively Work Together
EPA is circulating these draft recommendations to all who have par-
ticipated in the study or who are affected by these issues. We seek
your advice and comment, and intend, with the consensus that comes
out of the discussions about these recommendations, to carry out
actions that help states find resources to do the environmental tasks
before them.
The bottom line is that we wanted action, and we found plenty of it
at the state level, at the local level, and among ourselves. I would like
to leave you with a few final thoughts on how to capitalize on that ac-
tion.
We must prevent pollution before it becomes an expensive
product that must be treated to render it harmless;
We must prioritize our actions, and spend our money where it
is most needed. One of the most powerful tools we have to
prioritize problems and solve them are State Clean Water
Strategies;
We must break the mold by thinking creatively and working
together; and
We must, when passing new laws and requirements, think
about how to fund them.
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Panel Session Public-Private Partnerships:
What are Public-Private Partnerships?
Moderator David Osterman
Branch Chief, Resource Planning and Analysis Branch
U.S. Environmental Protection Agency
This morning's session will consist of two segments. First, I would
like to give you some background information on what a public-
private partnership is and the different types of public-private part-
nerships that exist. Following this presentation, we will proceed with
the first two case studies on partnerships to be reviewed in the next
two days. In each case study we hope to provide the following infor-
mation: how the partnership was implemented, why the private
partner was chosen, what the financing and procurement arrange-
ments were, and what advantages and disadvantages were associated
with the partnership.
What is a Public-Private Partnership?
Definition of Partnerships
A public-private partnership is a contractual relationship between a
public and private party that commits both to providing an environ-
mental service.
Partnership Definitions:
At least five types of public-private partnerships exist. They involve
varying amounts of private involvement. The key features of each of
these types of partnerships are as follows:
Contract Services. In this type of partnership, the private sector is
contracted to provide a specific municipal service, such as garbage
collection or the maintenance and operation of a waste treatment
facility. The facilities are owned by the public sector. Found most
commonly in the solid waste area, the primary advantage is better
services or lower costs, although the municipality loses some control
over operations.
Turnkey Projects. In this type of arrangement the private sector
designs, constructs, and operates an environmental facility. The
facility is still owned by the public sector. The private sector assumes
more risk, and cost savings may result by working with only one
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contractor for design, construction and operation rather than two or
three. This type of public-private partnership is mostly pursued in
waste-to-energy and recycling facilities.
Developer/Municipal Financing. In this type of arrangement, the
private sector (usually private developers) finances the construction or
expansion of an environmental facility in return for the right to build
houses, stores, or industrial facilities. This type of partnership only
works in growing communities since those responsible for growth pay
for the expansion of the facilities.
Privatization. In this type of public-private partnership, the private
sector owns, builds, and operates the facility. It also partially or to-
tally finances the facility. Private investment reduces public need for
capital, but the municipality has reduced control over policy objec-
tives.
Merchant Facilities. In this type of arrangement, the private sector
makes a business decision to provide an environmental service to a
community with the expectation that it will make a profit from the
services provided. In merchant facilities not only does the private
sector own and operate the facility as in privatization deals, but it also
makes the decision to provide an environmental service to a commu-
nity. Facilities are usually completely financed with private sector
funds, but merchant arrangements will not work for all types of envi-
ronmental services.
A division of responsibilities for potential activities for the public and
private partner generally exists along the following lines for each type
of partnership:
Activity
Decision to
Provide Services
Financing
Design
Construction
Ownership
Operation &
Maintenance
Contract
Services
Public
Public
Public
Public
Public
Private
Turnkey
Facility
Public
Public
Private
Private
Public
Private
Developer
Financing
Public
Private
Either
Either
Either
Either
Privati-
zation
Public
Private
Private
Private
Private
Private
Merchant
Facility
Private
Private
Private
Private
Private
Private
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As private involvement increases, two things happen:
The private sector invests more of its funds; and
The private sector assumes more of the risk for the effective
operation of the facility.
Tradeoffs must be made On the other hand, the greater the private involvement the less control
between Investment, Risk tne municipality has over the delivery and cost of the service. In
and Control deciding what kind of partnership is most appropriate, communities
have to make tradeoffs between these three factors: private invest-
ment, risk, and control. Partnerships have to be tailored to the needs
of communities. Certain types of partnerships will work more effec-
tively than others, depending on the requirements and needs of the
community.
There are four considerations to keep in mind:
There are currently many partnerships that exist;
A partnership must be tailored to meet the needs of the com-
munity;
D To expand the market, there must be changes to tax laws and
regulations; and
Advantages to private involvement include lower costs, greater
expertise, improved performance, and faster completion.
In conclusion, as we listen to the case studies over the next day and a
half, we should seek to understand first, what makes them successful;
second, what was the advantage in using the private sector reduced
costs, speedier project completion, access to specialized expertise; and
third, what were some of the barriers that had to be overcome in
implementing the projects.
The first of these case studies will be presented by Donald Rogers of
Envirotech Operating Services, Inc. His company currently operates
and maintains the wastewater treatment facility in Leominster, MA, as
part of a partnership agreement. Today he is, in fact, substituting for
Stephen Perla, the Mayor of Leominster. Robert Murray is also with
us. He is an operations engineer with the Rhode Island Solid Waste
Management Corporation (RISWMC) and will speak to us about
RISWMC's contractual arrangements with the New England Con-
tainer Recovery, Inc. for operation and maintenance of its resource
recycling facility.
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Case Studies: Leominster, MA
Wastewater Treatment
CONTRACT SERVICES
Donald Rodgers
District Manager
Envirotech Operating Services
Johnston, RI
Recycling Facility
CONTRACT SERVICES
Robert Murray
Operations Engineer
Rhode Island Solid Waste Management
Corporation
The following case study was not presented at the conference, but is
included as supplemental material.
Hull, MA
Wastewater Treatment
CONTRACT SERVICES
Norman Rogers
Chief Facility Manager
Water Pollution Control Facility
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WASTEWATER
Leominster, Massachusetts
Contract Services
WASTEWATER TREATMENT PLANT
LEOMINSTER, MASSACHUSETTS
The City of Leominster, Massachusetts joined forces with a
private partner, Envirotech Operating Services, Inc. (EOS) for the
operation and maintenance of the Leominster, Massachusetts
Publicly Owned Wastewater Treatment Plant.
The construction of the facility was financed both by municipal
bonds and state and federal grants.
The public partner (City of Leominster) secures needed permits,
and the private partner (EOS), accepts the responsibility for
monitoring performance and assuring compliance with state
and federal regulations. Contracting with trie private partner
has improved the overall operation of the plant.
SUMMARY
The City of Leominster, Massachusetts worked together with
surrounding communities to plan the construction of the publicly owned
wastewater treatment plant. The plant has been designed to
accommodate the increasing demand for wastewater treatment in the
Leominster area. This facility services the City of Leominster
(population: 37,000) and fifteen other communities that contribute
privately-hauled wastewater to the plant for treatment.
In this public-private partnership Envirotech Operating Services, Inc.
(EOS) operates the publicly owned wastewater treatment plant for the
City of Leominster. The City contracted the construction of the new
facility with Barletta Construction Company in June of 1983. Work was
completed in 1983. The City then contracted the operation and
maintenance of the plant with EOS the private partner in this case
study. For this contract, the City used the request for proposal process,
interviews with bidding contracting firms, and negotiation of a long
term operation and maintenance contract with EOS.
This wastewater treatment project with EOS has contributed greatly
to alleviating potential health hazards and resulting economic burdens
on the community in and around Leominster that would have resulted if
this facility had not been constructed.
23
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PARTIES INVOLVED AND
TIMEFRAME
Public Partner
Private Partner
Population (Leominster Area)
Median Household Income
Form of Government
Project Initiated
Project Completed
Total Capital Cost
City of Leominster, Massachusetts
Envirotech Operating Services, Inc.
37,000
$24,000
Mayor/City Council
July 1,1983
On-going (5-year renewals)
$20 million (1983)
WHY WAS A PRIVATE PARTNER
CHOSEN/OTHER ALTERNATIVES
Taxpayer burden reduced
More cost-effective
The first alternative considered, but rejected, was City employee
operation. A private partner was then.chosen because the annual
operations and maintenance costs were estimated to be lower with
Envirotech Operating Services, Inc. (EOS) when compared to City
operation. This arrangement reduced the taxpayer burden constraints
on how the city invests and spends its revenues.
Contracting with the private partner, EOS, has proven to be more
cost-effective. In addition, the technical expertise provided by EOS has
improved the operation and maintenance of the plant.
WHAT WERE THE FINANCING
ARRANGEMENTS?
Municipal bonds and federal grants
financed the project
The City of Leominster arranged the financing of construction of this
project by obtaining municipal bonds and state and federal grants (sewer
service fees provide collateral for this venture).
Sewage charges cover the costs of operating and maintaining the
facility.
WHAT WERE THE
PROCUREMENT
ARRANGEMENTS?
The contract services for the operation and maintenance of the plant
were arranged with the City of Leominster through the request for
proposal process, interviews, and ultimately, the negotiation of a long
term (5 year) contract with Envirotech Operating Services, Inc. (EOS).
WHAT WAS THE DIVISION OF
RESPONSIBILITIES?
The Citv of Leominster. Massachusetts Public Partner
Decided to build, obtain financing, and maintain ownership of the
wastewater treatment plant
Secured the environmental and building permits
Wastewatei Commission of Leominster
Represented the Leominster community by mediating public and
private issues
24
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WHAT WAS THE DIVISION OF
RESPONSIBILITIES?
(Continued)
EnvirotCCh Operating Services. Inc. (EOS) Private Partner
Operates and maintains the publicly owned wastewater treatment
plant
Complies with environmental and building permit requirements
HOW WAS THE PROJECT
IMPLEMENTED?
A Wastewater Commission was appointed by the Mayor of
Leominster, for the purpose of addressing any public and private
concerns.
WHY WAS THE PROJECT
SUCCESSFUL?
Cooperation between public and private
partners existed throughout the project
Contract operation (private sector) of the publicly owned wastewater
treatment plant is a viable cost-effective alternative to municipal
operation (public sector). Contract operation provides the owner with
guarantees for successful facility maintenance and performance, and
controllable costs for operation.
LESSONS LEARNED
The public sector can learn to have trust and confidence in the
private sector through the private sector's continued efforts to provide
high quality products and services.
The City of Leominster and Envirotech Operating Services, Inc.
continue to work at a public-private partnership of the highest quality
and integrity.
CONTACT
Mayor Stephen Perla
City of Leominster
25 West Street
Leominster, Massachusetts 01453
508-534-7500
Mr. Donald R. Rodgers
District Manager
Envirotech Operating Services, Inc. (EOS)
600 Unicorn Park Drive
Wobum, Massachusetts 01801
617-933-9220
Information is available to the public upon request.
25
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26
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Johnston, Rhode Island
SOLID WASTE
Contract Services
RECYCLING FACILITY
JOHNSTON, RHODE ISLAND
The Rhode Island Solid Waste Management Corporation
(RISWMC) contracts with New England Container Recovery
Incorporated for operation and maintenance of its resource
recycling facility.
Revenue bonds sold to finance the the facility will be repaid
from the sale of recyclables and revenue generated from tipping
fees from an adjacent landfill that is also owned by RISWMC.
The recycling facility has reduced the volume of waste going to
landfills by fifteen percent in the communities that are
participating in the recycling priogram.
SUMMARY
PARTIES INVOLVED AND
TIMEFRAME
The decision to build a resource recovery facility was driven by the
State's legislative climate. Prompted by the passage of the Rhode Island
Recycling Act, the Rhode Island Solid Waste Management Corporation
(RISWMC) was required to build and operate three resource recovery
facilities. The recycling act is part of a broader solid waste act that estab-
lishes flow control over municipal solid waste and sets a policy of
reducing, reusing, recycling, and recovering energy from solid waste in
preference to disposal in landfills. RISWMC entered into a contract with
New England Container Recovery Incorporated (NECRInc) to recycle the
plastic, aluminum, tin, glass, and paper that is generated by more than
380,000 households and 20 communities in Rhode Island. Limited
technical expertise in operating recycling facilities, coupled with the
belief that the private sector is better able to market the recycled materi-
als, influenced RISWMC's decision to contract for this service.
Public Partner
Private Partner
Population (Johnston)
Median Household Income
Form of Government
Project Initiated
Project Completed
Total Capital Cost
Rhode Island Solid Waste
Management Corporation
(RISWMC)
New England Container Recovery
Incorporated (NECRInc)
500,000
$25,000
Quasi-private agency
May 1989
May 1992
$55 million
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WHY WAS A PRIVATE PARTNER
CHOSEN/OTHER ALTERNATIVES
Two options were considered for providing this environmental
service. Rhode Island Solid Waste Management Corporation could
either choose to provide the service itself or they could contract for the
service. RISWMC decided that they would not operate the facility
because they felt that the private sector would be better at marketing the
recycled materials. Another factor that influenced RISWMC's decision to
contract was they lacked the necessary design, construction, and opera-
tion and maintenance expertise required to build and operate the facility.
WHAT WERE THE FINANCING
ARRANGEMENTS?
Both industrial revenue bonds and a
one-time grant were used to fund this
project
Capital Expenses
The initial capital costs associated with the facility were financed by
the issuance of tax-exempt municipal bonds and a one time cash grant
directly supplied by RISWMC in the amount of $500,000. In 1987,
RISWMC issued Solid Waste Disposal Revenue Bonds in the amount of
$3,800,000. Anticipated revenue from the sale of recyclables and tipping
fees from the adjacent landfill were used to secure these bonds.
Operational Expenses
RISWMC provides a materials recycling facility which currently
serves eleven municipalities representing approximately one-half of the
State's population. Disposal of recyclables at the facility is provided to
the municipalities free of charge and for a price that is one-quarter of the
commercial tip fee at the Central Landfill. The primary source of reve-
nue used to operate the facility is from the sale of recovered materials; a
secondary source of revenue is derived from landfill tip fees. The
revenue from the sale of recovered materials represents approximately
eighty to ninety percent of the funds necessary to pay for operation and
maintenance.
NECRInc shares in ten percent of the revenue derived from recov-
ered materials sold. NECRInc is also paid an operation and maintenance
fee which has both a fixed and variable component. The fixed compo-
nent is a standard monthly rate and the variable component is a function
of the production rate of the facility.
WHAT WERE THE
PROCUREMENT
ARRANGEMENTS?
Two separate contracts were awarded;
one for the construction of the facility
and the other for the operation of the
facility
WHAT WAS THE DIVISION OF
RESPONSIBILITIES?
In a competitively negotiated procurement process, RISWMC issued
a Request for Proposal (RFP) for two separate phases of the project. The
first phase of the project was the construction of the facility and the
second phase was for operations of the facility. After reviewing the
responses NECRInc was awarded a three year contract to operate the
resource recycling facility.
Rhode Island Solid Waste Management Corporation fRISWMO
Own recycling facility and the land on which it is located
Arrange for the financing of the facility
Provide for delivery of materials to the facility
28
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WHAT WAS THE DIVISION OF
RESPONSIBILITIES?
(Continued)
New England Container Recovery Company (NECRInc.1
Operate and maintain the recycling facility
Install processing equipment
WHY WAS THE PROJECT
SUCCESSFUL?
Public Education
Favorable market conditions
RISWMC, in conjunction with the Department of Environmental
Management, has invested considerable time, effort, and money to
educate the public on pertinent solid waste issues. A formalized
program entitled Ocean State Cleanup and Recycling (OSCAR) sponsors
seminars in which the public is provided a tour of the facility and given
literature regarding the importance of recycling.
Two market forces can help to explain why this recycling project was
successful. The first is that the costs to collect and process material at the
MRF (materials recycling facility) is comparable to the cost of disposal
through a resource recovery facility and it reduces the impact on
quantity of material to be landfilled. The second is that in spite of the
relative softness of the paper market (RISWMC has been successful in
selling all newsprint recovered to date), the other recovered materials
enjoy a steady demand and ever increasing attention from a variety of
companies interested in using recovered raw materials for their
manufacturing processes.
LESSONS LEARNED
The utilization of a full service vendor to provide contract services
can greatly improve the efficiency of a project. This project had four
separate contractors: one to design the site and building, two to develop
the site and construct the building, and one to install the process
equipment and operate the facility. RISWMC experienced difficulty with
the division of responsibilities between several contractors, and strongly
advises that if the procurement approach is used by other public entities,
close attention to coordination and information exchange be provided.
This coordination and its attendant risks may be significantly reduced by
employing a full-service contractor.
CONTACT
Robert Murray
Operations Engineer
Rhode Island Solid Waste Management Corporation
200 W. Exchange Street
Providence, RI 02903
(401) 831-4440
U.S. EPA Headquarters Library
Mail code 3201
1200 Pennsylvania Avenue NW
Washington DC 20460
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30
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WASTEWATER
Hull, Massachusetts
Contract Services
WASTEWATER TREATMENT FACILITY
HULL, MASSACHUSETTS
The Town of Hull contracts with Metcalf & Eddy Services, Inc.
for operation and maintenance of its sludge treatment facility
and cleaning of the Town's sewer collection system.
Metcalf & Eddy's ability to provide extensive operational and
maintenance support and to hire well-qualified personnel have
led to a successful public-private partnership.
SUMMARY
In the mid-1960s, EPA ordered the Town of Hull to stop its dumping
of sewage into the Atlantic Ocean. Through several private contractors,
the Town designed and built a sewage treatment facility for which 90%
of the capital costs were paid by EPA and the Commonwealth of
Massachusetts. Under the management of Hull, the treatment facility
(completed in 1978) was plagued by flooding, poor preventative
maintenance programs, inadequately trained personnel, and lack of
financial support from Hull residents. In January 1988, after a
competitive bidding process, Hull awarded a contract to Metcalf & Eddy
Services, Inc. for the operation and maintenance of the wastewater
treatment facility and its six associated pumping stations. The facility is
in full operation, and all equipment is on-line. Since the partnership
began, the Town has not been assessed any fines for failure to meet
environmental regulations.
PARTIES INVOLVED AND
TIMEFRAME
Public Partner
Private Partner
Population
Average Income (1987)
Form of Government
Project Initiated
Project Completed
Total Capital Cost
Town of Hull, Massachusetts
Metcalf & Eddy Services, Inc.
10,500 (year round)
20,000 (summer)
80,000 (summer weekends)
$18,222
Board of Selectmen
Town Manager
January 1988
June 1993
N/A
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WHY WAS A PRIVATE PARTNER
CHOSEN/OTHER ALTERNATIVES
The wastewater treatment facility suffered from extensive damage
caused by flooding during the "Great Blizzard of 1978." Under the
Town's management, the extensive flood damage was compounded by a
poor spare parts inventory, poor financial support from the Town, lack
of preventative maintenance programs, and, most significantly,
inadequately-trained personnel. Under Massachusetts labor laws, it is
very to difficult to fire workers; therefore, the Town believed the only
option available was to turn to a private organization with the
knowledge, reputation, resources, and benefits to attract qualified
people.
WHAT WERE THE FINANCING
ARRANGEMENTS?
To pay Metcalf & Eddy (M&E) for its services, the Town of Hull's
Sewer Commission assesses user fees and obtains a portion of the
income generated by the Town's leachate treatment and landfill services.
During the first year of the partnership, the money to pay M&E was
included in the Town's budget. Currently, the Town pays operational
expenses with user fees collected from residents and commercial
enterprises. The fees are based on water usage and are assessed twice a
year. The residential and commercial rates on which the fees are based
are the same. The average fee is $126 (for six months).
User fees account for nearly 80% of the costs of operating and
maintaining the facility and its six pumping stations. Additional income
from the Town's leachate treatment and landfill services covers the
remaining costs.
In the first 18 months of the contract, the Town paid M&E $45,000 a
month. After 6 months, the commission added $4,125 to the monthly
payments in order to finance the up-front corrective maintenance
required to put the treatment facility and the six pumping stations in
proper working order. While the $45,000 monthly cost is adjusted every
July 1st, the additional $4,125 per month remains the same for the life of
the contract.
WHAT WERE THE
PROCUREMENT
ARRANGEMENTS?
The Chief Facility Manager of the Hull wastewater treatment facility
consulted with professionals from Tighe and Bond, a private engineering
firm based in Westfield, MA, to develop a Request for Proposals (RFP)
for the operation and maintenance of the facility. In June 1987, the Sewer
Commission issued the RFP; in December 1987, the Commission entered
into a five-and-a-half year contract with Metcalf & Eddy. Although
M&E bid second highest, its track record with other public agencies and
its ability to provide extensive support and services led to its being
awarded the contract.
Among the requirements of the contract were that M&E retain Town
employees; however, at the time of M&E's takeover, only two Town
employees remained, both of whom left M&E after two months. M&E is
also responsible for making sure that the facility meets all environmental
regulations. If fines are assessed, M&E must pay them.
In July 1989, the Sewer Commission amended the contract to include
cleaning of the Town's sewer collection system.
32
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WHAT WAS THE DIVISION OF
RESPONSIBILITIES?
Town of Hull. Massachusetts
Own wastewater treatment facility, the land on which it is
located, and six associated pumping stations
Arrange financing of the contract services
Metcalf fc Eddy Services. Inc.
Operate and maintain the wastewater treatment facility and six
associated pumping stations
Clean sewer collection system
Pay any fines assessed for failure to meet environmental
regulations
WHY WAS THE PROJECT
SUCCESSFUL?
This partnership's success results from several factors. First, the
Town's Chief Facility Manager has established a good working
relationship with M&E communication lines are open. Second, the
Chief Facility Manager has the authority to make decisions concerning
the operation and management of the facility. Third, through
privatization, it has been possible to hire well-trained personnel to run
the facility. Finally, no state or local legislation or regulation stood in the
way of Hull's establishing a public-private partnership.
LESSONS LEARNED
Educating the public to the need for and costs of environmental
service is essential. The public believes that wastewater treatment is
inexpensive and easily implemented. In this case study, the Hull Sewer
Commission did not have a spokesperson to explain the costs and
complexities of sewage treatment to the public. As a result, the Town's
early sewage treatment services lacked public financial support.
Furthermore, it is extremely important to consult experts when
seeking to hire. The success of a project depends largely on the quality
of people working on it. Experts know best how to judge qualified
personnel and firms.
Obtaining a reputable private partner that meets stringent
requirements (in the contract and RFP) is a necessity. A reputable
private partner has a proven track record and wants to stay in the
business of environmental service. Thus, the private partner takes its
accountability to the public seriously and will provide good service.
CONTACT
Norman A. Rogers
Chief Facility Manager
Water Pollution Control Facility
Hull, MA 02045
(617) 925-1207
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34
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Panel Session Alternative Financing Mechanisms:
Dedicated Fees
Speaker William Nuzzo
Water Management Division
U.S. Environmental Protection Agency
Region 1
States' Share of As the U.S. Environmental Protection Agency and the states move
Environmental Protection into a new Pnase of water program management, an increasing share
Costs are Increasing of the fundinS bur>den likely will fall to the states. Several factors
* contribute to this: New requirements under the Clean Water Act and
the Safe Drinking Water Act place additional responsibilities on the
states; approximately 50 percent of the federal funds that states used
to support their water quality based programs in 1988 will disappear
by 1995 due to the termination of EPA's construction grants programs
and set-asides from them; the federal deficit makes new federal funds
difficult to obtain; and the Tax Reform Act changed the attractiveness
of some infrastructure financing mechanisms.
To fill the gap, we need new solutions and new partnerships to sup-
port state efforts to finance the protection of water resources. These
panel sessions on alternative financing mechanisms seek to identify
some of these solutions and partnerships that states have developed
to address their growing financial needs. The specific mechanisms we
will cover include fees, fines and penalties, and management and
revenue funds. In each session, we will have a presentation from a
national pacesetter state, experienced in the use of the particular
financing mechanisms as a supplement to the state's general revenue
funding for environmental programs.
Our states in New England have already begun using a number of
alternative financing mechanisms to fund water programs. Where
relevant, there will be presentations from them in each of the three
sessions to relate their approaches as well as the potential application
of additional mechanisms under development.
We have also arranged for presentations during these sessions to
discuss in general terms the use of dedicated fee systems, dedicated
taxes and fines, and management funds to support enviromental
programs. As we listen to our presenters, we need to learn from their
experiences how best we can create new solutions that can critically
35
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respond to a state's expanding and increasingly complex water pro-
gram. These solutions are necessary due to the inflexible and some-
what uncertain future of general revenue funding and budget deficits.
Alternative financing mechanisms not only provide new revenue
sources, they can also creatively link the type of financing approach
taken to the specific water program it supports.
Moderator Dean Marriott
Commissioner
Maine Department of the Environment
This panel will discuss dedicated fee systems in use by four states:
New Jersey, Massachusetts, Connecticut, and my own State of Maine.
In Maine, expenditures for environmental programs have increased
from around $5 million in 1980 to nearly $18 million in 1989. Along
with the increase in expenditures, the use of dedicated funds as a
revenue source has grown from a little under $1 million to nearly $8
million.
In 1989, of the Department's budget sources:
35 percent came from the state's general fund,
22 percent from federal funds, and
43 percent from dedicated funds.
Although more than one third of the Department's budget currently
comes from the state general fund, this amount represents only 0.38
percent of General Fund expenditures in FY1988. Over the 19 years
that the Department has been operating, it has averaged state support
of less than 0.5 percent of the total General Fund budget.
Environmental Programs To obtain the additional revenues it needs to meet its expanding
in Maine Supported responsibilities, Maine has looked to alternative financing mecha-
by Alternative Financing nisms that yield dedicated funds for environmental programs. Funds
currently in use in Maine are:
Maine Environmental Protection Fund,
Dam Registration Fund,
Laboratory Special Revenue Fund,
Hazardous Waste Fund,
36
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Surface Oil Clean-up Fund,
Steps in Finding
Sources for Fees
Lessons from the Maine
Experience
Ground Water Oil Clean-up Fund, and
Dedicated funding for the Radioactive Waste Commission.
Finding sources for fee collection like those mentioned above often
require:
Looking at what sources provide revenues to the General Fund
(e.g., enforcement penalties);
Examining the services the Department is providing (e.g.,
information about existing or new regulations, and advice on
their impacts); and
Identifying how either of these can become dedicated sources
of revenues to support departmental activities.
There are several conditions under which fees have worked best for
the State of Maine. It has been useful to adopt fee structures in the
statute, not just the authority to charge fees. This allows the hard
questions of who should pay how much to be negotiated at the outset
when commitment and attention is the greatest, rather than after-
wards when interests have shifted or waned. Dedicated funding
programs have received start-up money to initiate the program, before
any dedicated funds can be collected. Finally, the fee system requires
dose and effective management. Staff duties should include:
Preparing fiscal and revenue projections and tracking expendi-
tures;
Developing fees with inflation adjustments; and
Using automated fee tracking systems to ease oversight and
fees management.
Most importantly, an effective fees program depends on the organiza-
tion knowing its program needs and the sources of fees in order to
manage revenue to meet the accurately measured costs of operating
the program.
37
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Speaker
Environmental Programs
In New Jersey Supported
By Alternative Financing
Elements of the New
Jersey Pollutant Discharge
Elimination System Fee
Program
Arnold Shiffman
Assistant Director
Ground Water Quality Management
Division of Water Resources
Department of Environmental Protection
New Jersey
New Jersey uses a number of fee systems to support its environmental
programs. They include:
A spill fund that serves as a dedicated tax on large petroleum
product storage facilities and finances both clean up and pro-
gram costs;
A dedicated water tax on public water supply systems to fund
safe drinking water programs;
One time permit fees for construction approvals for sewer and
underground storage tank construction; and
Yearly permit fees for the New Jersey Pollutant Discharge
Elimination System (NJPDES).
My discussion will focus on the last of these that I have mentioned:
the NJPDES and its fee system. The fees are:
Established by regulation, not by the legislature;
Deposited in a general fund and must be annually appropri-
ated back to the program. However, they are earmarked only
for the program;
Collected through permits which can be revoked for non-
payment;
Based on the estimated cost of the program, not the service cost
of individual permits. The state keeps track of program costs to
establish a budget, but not to justify an individual permit fee.
Shortly after the NJPDES fee system was established, the courts over-
turned the New Jersey fee system because it purported to, but in
actuality did not, include environmental risk, e.g., a pound of sand
discharged would cost as much as a pound of dioxin. This court
ruling for the first time established the polluter pays principle that
those who do the most to create injurious conditions should bear a
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Laws Valid if They Scale greater burden of regulatory costs. The court went on to say that if the
Fee Proportional to challenged regulation actually scaled the fee structure proportionate
Change to the deSree of harm threatened by the permittee's discharge, the
court would have no problem sustaining the validity of the regulation.
The fees are now proportional to the degree of risk threatened by the
discharge, and this has been upheld by the New Jersey Supreme
Court. The fees are assessed on the public and private sectors, ex-
empting only schools and religious organizations.
In terms of the scope of the NJPDES, New Jersey has about 2,000
permittees, and fees are relatively large. The annual fee is about
$8,000; however, permit fees range from $500 to about $500,000. There
is no maximum fee limit. The fees cover surface water and ground
water pollution control activities such as permit issuance, compliance
monitoring, pretreatment, and enforcement. The program currently
employs 246 people (FY1990), about 2/3 for the surface water and 1/3
for the ground water program. Over time, the permit fees have been
routinely substituted for inadequate or decreasing federal grants and
state general funds. The size of the budget and the level of fees has
recently caused resistance from permittees. The program budget can
no longer be significantly increased without a proportional increase in
the number of permittees.
Speaker Savos Danos
Assistant General Manager
Littleton Light and Water Department
Littleton, Massachusetts
Littleton, Massachusetts (population 7,000) has experienced rapid
industrial and commercial growth over the last ten years. The indus-
trial development in and around Littleton poses some risk to ground
water supplies, the sole source of the Town's drinking water.
Environmental Programs To protect its sole source aquifer, Littleton adopted a comprehensive
in Littleton MA wellhead protection by-law in 1981 that creates special protection
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Monitoring is Reimbursed
Through Fees from
Permittees
The by-law requires each industrial and commercial permittee in the
Aquifer and Water Districts to install monitoring wells and reimburse
the town for monitoring expenses. Of the $80,000 annual cost for
monitoring, $70,000 is reimbursed through fees from permittees. The
Department oversees the installation of wells and collects and tests
samples semi-annually, submits results to the health department, and
invoices the owners for the cost of the testing.
In sum, monitoring is the most costly activity in the Wellhead Protec-
tion Program, averaging from $400 per year for sites with only one
well to $10,000 per year for sites that require as many as seven wells
and testing for a large number of potential contaminants.
Speaker Ken Hagg
Deputy Commissioner
Department of Environmental Protection
Massachusetts
There are two recent developments to share with you on the subject of
dedicated funding in Massachusetts. They are the Commonwealth's
hazardous waste oversight cost recovery program and the Toxics Use
Reduction Act.
The hazardous waste oversight cost recovery program is neither a fee
nor a tax. It involves charging potentially responsible parties (PRPs)
for the Department's hourly and fringe cost of overseeing PRP clean-
up efforts. It is important to remember that PRPs are not the polluter;
they are just the entity currently holding the property where the
hazard is located. This cost recovery program is being challenged in
court as an unconstitutional tax.
The Toxics Use Reduction Act is a new law, developed cooperatively
by government, industry, and interest groups. Passing this law with-
out a funding mechanism would have posed difficulties in establish-
ing how to pay for the program. The law has expedited the Depart-
ment's efforts to implement the program by setting a fee structure and
making provisions for its management and any future adjustments.
The legislature also provided start up funds for the program to ensure
there would be no delays in carrying out the law's provisions.
Dedicated Fees Can Programs like these have created a greater reliance on dedicated fees,
Become the Primary so much so that they no longer supplement general revenue funding
Source of Program ^or some programs, but rather serve as the primary source of reve-
D ° nues.
Revenues
40
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Lessons from the
Massachusetts Experience
Massachusetts' efforts to develop dedicated funding for its environ-
mental programs have involved two key elements:
The Department of Environmental Protection has examined in
detail what new revenue generating alternatives are available
in each of its environmental programs.
Massachusetts has concentrated on resource protection, waste preven-
tion, and waste site clean-up. But in fact, there can be numerous fee
mechanisms open to government. One way would be to develop a
single facility fee to cover all pollution prevention and protection
efforts at a facility, not just for single resource protection services.
It has also examined ways to work more efficiently, in the face
of constrained resources.
This has involved seeking advice from environmental groups and the
private sector on how the Department can better operate its programs.
Both of these efforts identifying additional revenue sources and
working more efficiently will help the Commonwealth meet its
goal of continuing to provide needed environmental programs in a
cost effective way.
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Various Types of Fees
Fee
Definition
Example
Permit
Charge for permits issued
by government
One time permit fees for
construction of
underground storage tanks
(NJ)
Application
Charge for processing an
application for a
permit/variance
Landfill application
processing fee
Installation
Charge for the installation
of equipment
Installation charge for
environmental control
technology
Construction
Charge for the review of
construction plans of
system plans
Public Water Supply System
Review
Discharge/
Disposal
Charge for the discharge of
disposal materials
Industrial Waste
Monitoring/
Sampling
Lab
Charge for monitoring
operations, sampling water
supplies, and laboratory
analysis
Water quality monitoring
fee
Impact
Charge for the incremental
burden/impact placed on
public services by new
development
Developer fee for new
residences
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Region 1 Luncheon Address
Speaker Lajuana Wilcher
Assistant Administrator
Office of Water
U.S. Environmental Protection Agency
Adequate Funding, an
Environmental Ethic, and
Cooperation are Three
Critical Elements Needed
to Ensure Effective
Programs
Presidential and
Agency Priorities for
Environmental Protection
I appreciate the opportunity to be here today to discuss ways we can
ensure that we have enough money to accomplish the very important
goal of protecting the environment. Funding for environmental
programs is one leg of a three-legged stool. The other two legs are an
environmental ethic or public awareness to protect and preserve the
environment and cooperation among all levels of government, indus-
try and the public at large. If any of these legs are weak, the stool
cannot adequately provide support.
It hasn't been that long since the major problem for environmental
protection was too few people understanding that a problem even
existed. America grew up with a frontier ethic and a sense that the
country was so vast and so abundant that we didn't have to protect or
preserve our resources.
Today, I believe the American people are becoming keenly aware that
pollution is a problem. Now, we have to get them to support the idea
that environmental protection is an ethic, one that will require
changes in lifestyle, changes in thinking, and of course money.
You are to be commended for this type of collegial effort that is abso-
lutely necessary for us all to do our jobs during the next few years.
This frames our mission, which President Bush has called the "New
Spirit of Environmentalism."
During these next several years, the President and Bill Reilly intend to
focus the Agency on the following priorities:
Pollution prevention;
Cooperation with Congress, state and local governments, and
other federal agencies;
Protection of important habitats, especially sensitive aquatic
and marine systems;
A higher degree of international activity and coordination; and
An emphasis on science and surface waters.
43
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State Funding Study
Recommendations
We must overcome
Barriers and create
Incentives for Funding
Alternatives
As many of you know, the Office of Water at EPA initiated the State
Funding Study in May of 1988. The concern was that due to recent
legislative changes in the Clean Water and Safe Drinking Water Acts,
states are having to implement many new water program activities
with little new federal money to help them do so. The Funding Study
worked with a task force of state and federal officials which made
recommendations on three major issues.
Alternative state funding mechanisms need to be increased to
support the administrative and operating costs of state water
quality and drinking water quality programs;
Additional criteria for federal support of state water programs
must be developed; and
Institutional, management, and regulatory changes at the
federal and state level must be made to save money.
The recommendations of the study are now out for public comment.
I would be most interested in your comments and additional sugges-
tions.
This morning Charlie Grizzle discussed another source of alternative
financing that we are encouraging, one that as many as 45 or more
communities in New England are taking advantage of public-
private partnerships. Many forward-thinking communities are pro-
viding us with excellent examples of such partnerships. They are
successfully applying private sector resources and ingenuity to meet
their environmental capital financing needs.
We need to work together to address impediments to and create
incentives for the successful implementation of innovative funding
alternatives, including public-private partnerships. At times our
interests will clash, due to different priorities, constituent demands, or
other reasons. But there is one area where our interests should never
differ that is, doing all we can to find new ways to pay for our
environmental programs and projects.
We have a tremendous challenge ahead of us. We can meet this
challenge if we are a united group working for one goal, that of pro-
tecting our environment. Success will require close cooperation with
all levels of government, with the private sector, and with concerned
citizens and community groups. In order to succeed, we must usher
in a new era of reconciliation and cooperation, of responsiveness, and
44
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flexibility. Where innovation is needed, we must discover it; where
flexibility is needed, we must fashion it; and where assistance or relief
in meeting regulatory requirements is needed, particularly in small
communities, we must seek the appropriate remedies.
Close Contact with all Over the coming months and years we will stay in dose contact and
Participating Programs work cooperatively with EPA's Regional offices, state and .local au-
WZH ensure Consistent thorities'and our colleagues in other federal agencies to ensure consis-
, , ... tent and fair implementation of EPA's regulatory programs.
45
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46
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Panel Environmental Financing Through
Public-Private Sector Channels
Moderator Larry Scully
President
Scully Capital Services
Introduction
Alternative financing methods and public-private partnerships are
powerful tools that can be utilized to meet the increasing cost of
environmental protection. This panel will array the options that are
available to promote the successful implementation of alternative
financing mechanisms for federal, state, and local environmental
programs and the private sector's involvement in providing environ-
mental services.
Speaker George Ames
Executive Director
Council of Infrastructure Financing Authorities
The decline in the level of federal subsidies along with the simultane-
ous increase of spending on environmental programs produces a
funding gap. This revenue shortfall occurs because the cost of envi-
ronmental protection exceeds the current ability to pay for it. The
continuing passage of more stringent federal environmental legisla-
tion exacerbates this problem because it requires state and local gov-
ernments to expand and upgrade their environmental programs to
comply with new standards.
The Fiscal Impacts from Given the increasing demand for environmental services and the
Paying for Additional public's willingness to support new and more stringent environ-
*hmiM fo» mental legislation, the issue is how are we going to pay for all the
brwuiu uc programs that we have deemed necessary. The fiscal impacts of this
Known situation are determined at two crucial points:
When environmental legislation is initially developed, and
When the proposed rules are issued.
Although the economic implications of legislation are largely deter-
mined when the legislation is drafted, little formal evaluation is made
of the true costs of legislation.
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Problems for Small This lack of systematic review of the financial costs of legislation,
Communities coupled with limited flexibility in complying with the legislation, is
particularly troublesome for small communities who often do not
have the funds necessary to comply with the legislation. These small
communities often are faced with a dilemma: they do not have the
money on hand and thus need to seek outside financing, but they find
it difficult to secure outside financing because they have little or no
collateral.
An additional problem associated with the language of the legislation
is that its interpretation and operation affords state and local govern-
ments a significant amount of discretion when implementing pro-
grams. Thus, many of the goals and objectives that the legislation
intend are not realized because they were not made explicit.
Many strategies can be used to entice private sector involvement in
providing environmental services. The lack of tax incentives, coupled
with the large amount of risk associated with many environmental
programs has deterred greater private participation.
Strategies to Encourage
Private Sector
Participation
Finally, strategies that the public can adopt that will encourage private
sector participation include:
Reducing the term of loans;
Deferring debt payment until revenues are realized; and
Providing guarantees for local bank loans.
Speaker F. Charles R. Hindmarsh
V'ice-President
State Street Boston Capital Corporation
As an investment banker, I will speak from an equity perspective. I
feel the equity perspective should be stressed because of the high level
of risk that is associated with it. The willingness of the private sector
to devote its resources to public projects is directly related to the risk
associated with equity.
Factors Deterring the Several factors that influence the private sector's decision not to get
Private Sector from involved in the provision of public services include:
Getting Involved
A bad prior experience. Many private firms avoid financing public
projects because of a bad prior experience.
48
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To Encourage
Participation, Risk must
be Equitably Divided
The intervention of third parties (e.g. the Department of Labor and
the Inspector General's office). Although these oversight agencies
have a role to play that ensures fairness, their formal procedures
impose complex reporting and disclosure requirements that make an
already complicated transaction even more complex.
Municipal government barriers. Not only do federal agencies pres-
ent road blocks for the private sector, municipal governments also are
a source of impediments. Examples of local government impediments
include: conservative commissioners, opposition from zoning and
planning commissions, and citizen opposition to projects.
Propaganda generated by environmental and community groups.
These organizations are often responsible for distorting the facts that
can sway public opinion. Given public opposition to a project, firms
that were originally interested in the project avoid it because of the
potential for bad public relations.
Legislative and regulatory barriers. These include the stringency of
existing state and federal environmental regulations and regulations
that are still evolving. The latter are of even more concern to the pri-
vate sector because of the uncertainty regarding the cost of compliance
and legal liability.
In order for the private sector to enter this market there has to be a
more equitable division of the project's risks and a reward that is
commensurate with the risks. Uncertainty in these projects can result
from many sources. A few of these sources include: increase in capi-
tal costs, change in the law, and unforeseen construction delays (such
as inclement weather and strikes).
Critical Need for Private
Sector Involvement
If the private sector is going to provide environmental services, de-
spite the previously mentioned disincentives, the length of the service
will need to be long (20 years or more) and the communities involved
need to be creditworthy.
Another component of service contracts is the payment of obligations
assumed by the public sector. It is recommended that the payment to
the private sector be composed of both a fixed and variable compo-
nent. The fixed component provides a minimal level of guaranteed
payment and reduces the amount of uncertainty that the private
partner has to assume. The variable component provides the private
sector with an incentive either to operate the facility more efficiently
or expand the level of operation, which would result in a net growth
49
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of revenue. This net growth in revenue would benefit both the private
and public partners. The need for the private sector to become in-
volved in the provision of environmental services and public works
projects is critical given the increasing demand for environmental
services and an aging public works infrastructure.
Speaker Robert Lenna
Director
Maine Municipal Bond Bank
Through the use of a state-wide survey, Maine has documented the
public's willingness to pay for increased levels of environmental
protection. When asked what they felt was the number one priority
that needed to be addressed, the citizens of Maine cited increased
environmental protection.
Like the citizens of Maine, the nation has developed a powerful envi-
ronmental consciousness, but this is only half of the battle in protect-
ing the environment. The remaining half of the battle is finding the
funding to pay for the programs that will meet the increased demand
for environmental services. The State of Maine estimates that it will
cost over $500 million during the period from 1989 to 1994 to comply
with the Safe Drinking Water Act and the Clean Water Act amend-
ments.
Bond Banks Secure
Funding for Small
Communities
One way for governments, especially those small in size, to gain
access to the capital markets is through bond banks. A bond bank
functions as an honest broker for municipalities and national capital
markets. These entities can pool the collective interests of many small
towns and districts and use it to secure funding that would have oth-
erwise been unavailable.
The money secured for these communities will be used to finance
small scale environmental infrastructure projects. Small communities
experience difficulty in single-handedly trying to obtain financing
because they are either too small to qualify for a bond rating or lack
sufficient collateral to secure loans.
Many of the Barriers to
Providing Adequate
Funding to meet these
Needs are Legislative
The barriers that are present in these service agreements are partially
attributable to legislative restrictions, particularly limitations enumer-
ated in the tax code. The types of service agreements authorized by
the legislation are subject to financial, legal, and management practice
constraints imposed by agencies such as the Internal Revenue Service,
the Department of Justice, and the Treasury Department. Such agen-
cies have a profound effect on the access that governments have to
capital markets and on the incentives that are present to induce pri-
vate sector capital use in financing public projects.
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Speaker Jim Dobbs
Vice President and General Counsel
Metcalf and Eddy
It is important to realize that despite the fact that fees can be used to
close the shortfall between environmental program costs and current
sources of revenue, they are not a panacea. Fees represent a limited
source of funding and relying too heavily on them would be a mis-
take.
The key to success for initiatives like public-private partnerships is the
ability to raise private equity to support state and local financing
efforts. Discussions on Capitol HiU are attempting to address the
ambiguities of financing public projects and the flexibility needed for
the private sector to participate in financing schemes. Some of the
measures under consideration are:
Congress is Addressing a
Number of Ways to
Ensure that Private Equity
can be Raised
Credit enhancements;
Rapid depreciation;
Infrastructure tax credits;
Tax exemptions; and
The use of facilities as security to pledge for additional reve-
nues.
Finally, states and localities must look beyond the simple issue of cost
when considering how to add to or replace its infrastructure. Risk and
life cycle costs are important factors when deciding what to build.
The cheapest is not necessarily the best to ensure long term use.
There is great interest from the private sector in EPA's Public-Private
Partnerships Initiative. Private firms are ready to raise the necessary
capital, but the public sector needs to identify and remove the road
blocks before significant infusions of private sector capital can take
place.
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52
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Panel Public-Private Partnerships:
Privatization and Developer Financing
Moderator Carol Ansheles
Manager, Solid Waste Program
New England Waste Management Officials Association
This afternoon's session on partnerships includes two presentations:
one on privatization and one involving developer financing. With us
to speak about Bristol, Connecticut's Solid Waste Resource Recovery
Facility is Jonathan Bilmes, its manager. David Sweet, Superinten-
dent of the Kennebunk, Kennebunkport, and Wells Water District,
will then discuss his district's efforts to arrange for developer financ-
ing to support increased drinking water services.
Case Studies: Bristol, CT
Resource Recovery Facility
(Mass-Burn Incinerator)
PRIVATIZATION
Jonathon Bilmes
Manager
Bristol Resource Recovery Facility
Kennebunk, Kennebunkport and Wells, ME
Drinking Water Supply
DEVELOPER FINANCING
David Sweet
Superintendent
Kennebunk, Kennebunkport and Wells
Water District
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54
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SOLID WASTE
Bristol, Connect/cut
SUMMARY
PARTIES INVOLVED AND
TIMEFRAME
Privatization
RESOURCE RECOVERY FACILITY
(MASS-BURN INCINERATOR)
BRISTOL, CONNECTICUT
Communities worked together to reach a privatization
arrangement with Ogden Martin to design, construct, operate, and
own a resource recovery facility.
The facility was financed by tax-exempt revenue bonds issued by
the Connecticut Development Authority.
Bristol receives tax revenues from the facility and fees from 10
other communities using the facility; tipping fees are reduced by
revenues from the sale of electricity generated.
Ogden Martin completed construction of the facility under budget
and 2 months ahead of schedule.
Connecticut communities worked together in a regional effort to
build a resource recovery facility. Eight communities entered into a
privatization agreement with Ogden Martin Systems of Bristol, Inc. to
build, operate, and own the facility. Subsequently, three other
communities joined. The Connecticut Development Authority issued
tax-exempt revenue bonds to finance the project A bond trustee, the
Connecticut Bank and Trust Company, collects and disburses revenues
from the facility.
The communities formed the Bristol Resource Recovery Facility
Operating Committee (BRRFOC) to oversee operation of the facility.
Participants agreed to provide a minimum tonnage of waste each year.
Their tipping fees are offset in part by revenues from the sale of
electricity to Connecticut Light and Power.
Public Partner
Private Partner (owner)
Population
Median Household Income
Form of Government
Project Initiated
Project Completed
Total Capital Cost
Eleven Connecticut communities
Ogden Martin Systems of Bristol, Inc.
62,410 (Bristol, 1988)
$19,357 (Bristol, 1979)
Semi-Strong Mayor (Bristol)
May 1984
May 1988
$66 million
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WHY WAS A PRIVATE PARTNER
CHOSEN/ALTERNATIVES
CONSIDERED?
Private partner had experience with
sophisticated mass burn technology
Private partner was considered more
efficient
Private partner accepted performance
risks
A study by independent consultants selected mass-burn technology.
The City of Bristol agreed to provide a site near its landfill to build a
resource recovery facility, but was not interested in ownership. The
communities chose private ownership because they decided that an
experienced private company would be more efficient and accept
performance risk for the project. The communities worked together to
select a private partner to build, own, and operate the resource recovery
facility located in Bristol.
WHAT WERE THE FINANCING
ARRANGEMENTS?
$18 million private equity
$2.5
million
bond
redemption
$73 million tax-exempt revenue bonds
WHAT WAS THE DIVISION OF
RESPONSIBILITIES?
WHAT WERE THE
PROCUREMENT
ARRANGEMENTS?
An RFP was issued and Ogden Martin
was chosen through competitive
negotiation
The Connecticut Development Authority issued $73 million in tax-
exempt revenue bonds to finance the facility. The 29-year bonds are
backed by revenues from the facility and guaranteed by Ogden Martin.
Ogden Martin contributed $18 million. As the facility did not cost the
full amount of the bond issue, $25 million in bonds were redeemed after
the facility was completed.
Revenues from the facility are deposited in a revenue account with
the Connecticut Bank and Trust Company, which acts as bond trustee.
Ogden Martin bills the BRRFOC monthly, which then pays the bond
trustee from payments received from the participating communities.
The City of Bristol receives a fee from each community through the bond
trustee.
The City of Bristol issued an RFP, and in conjunction with the other
communities, selected Ogden Martin through competitive negotiation.
The communities signed a contract with Ogden Martin to build and
operate the facility. Through an interlocal agreement, each of the
communities agreed to provide a minimum tonnage of waste per year.
City of Bristol
Sell the land for the facility to Ogden Martin
Operate a landfill for disposal of process residuals
Connecticut Development Authority
Issue bonds to finance the facility
Connecticut Bank and Trust Company
Collect and disburse revenues from the facility
Bristol Resource Recovery Facility Operating Committee
Set policy and oversee operation of the facility
Provide a minimum tonnage of waste per year through an interlocal
agreement
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WHAT WERE THE
PROCUREMENT
ARRANGEMENTS?
(Continued)
Qgden Martin Systems ftf Bristol. Ine.
Design, construct, own, and operate the resource recovery facility
Secure environmental permits
Comply with environmental permit requirements
Contract with Connecticut Light and Power to purchase electricity
generated
HOW WAS THE PROJECT
IMPLEMENTED?
Bristol conducted a study to evaluate
the potential for resource recovery
State legislation authorized the
communities to issue contracts for solid
waste management
The communities created the BRRFOC
Bristol hired independent consultants to evaluate the potential for a
resource recovery facility. Independent consultants assisted in selecting
and negotiating with the private partner.
The state passed special legislation in 1985 allowing the communities
to join together in a contractual relationship to manage solid waste
disposal. The original eight communities worked informally to sign an
agreement with Ogden Martin. After the project started, another three
communities became involved. In September 1987, the communities
agreed formally to create the BRRFOC. The BRRFOC is made up of
community officials from the 11 communities and meets monthly to
oversee operation of the resource recovery facility.
WHY WAS THE PROJECT
SUCCESSFUL?
Independent consultants
Financial incentives to site facility
Citizen involvement
State law requiring public utilities to
purchase electricity generated
CONTACT
Independent consultants provided valuable technical, legal, and
financial advice. Negotiating an agreement that protects the interests of
all parties involved facilitated cooperation among communities.
Included in the agreement are financial incentives for Bristol to locate the
facility within its boundaries. Bristol receives a fee from the other
communities and Ogden Martin is the second largest source of tax
revenues for the city.
Another factor contributing to the success of the project was citizen
involvement. A Citizen's Advisory Committee, formed during
construction of the facility, distributed information to the public and
helped raise support for the project
A state law requires that public utilities purchase excess energy from
resource recovery facilities. As a result, there was easy access to a
market for the electricity generated by the facility.
Local governments can work together successfully for a regional
solution to solid waste management. Careful negotiation can result in an
agreement that protects the interests of each party involved and provides
financial benefits to the communities. Direct input by community
officials kept the communities closely involved and committed to the
project.
Jonathan Bilmes
Manager
Bristol Resource Recovery Facility
225 North Main Street, Suite 311
Bristol, Connecticut 06010
(203) 585-0419
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58
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DRINKING WATER SUPPLY
Kennebunk, Maine
Developer Financing
KENNEBUNK, KENNEBUNKPORT and
WELLS, MAINE WATER DISTRICT UTILITY
KENNEBUNK, MAINE
The Kennebunk, Kennebunkport and Wells, Maine Water
District (public partner) established a developer financing
arrangement to support increased water services.
Financing for the expansion and enhancement of the water
system is obtained on a continual basis by the collection of an
impact fee from new developers and customers. The finance
arrangement is known as the "System Development Charge."
New water utility customers contribute monies to support
construction requirements in exchange for water services. The
Kennebunk District secures needed permits, designs, constructs,
owns, operates, and maintains the Utility, and accepts the
responsibility for monitoring performance and assuring
compliance with state and federal regulations.
SUMMARY
The Kennebunk, Kennebunkport and Wells, Maine Water District
worked long and hard to pass legislation allowing them to collect a
System Development Charge for the purpose of financing required new
construction to support increasing water demands. This area is a long
coastal, tourist region with a rapidly growing population and increasing
requirements to supply more and more water to the District. This facility
exclusively services the Kennebunk, Kennebunkport and Wells Water
District (population: 20,000) and portions of two other communities.
Developers and new customers of the Utility finance their own water
needs by paying a System Development Charge. Kennebunk,
Kennebunkport and Wells Water District is in charge of collecting this
impact fee from anyone adding demand to the system by increased
usage or physical expansion requiring increased usage this could be
industry, commercial businesses, or individual residents. Fees are used
for various projects, e.g., pipeline construction, storage construction, or
pumping services. Legislation was passed in 1986, and the collection of
System Development Charges began and continues today as more
and more new customers move into the Kennebunk area.
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PARTIES INVOLVED AND
TIMEFRAME
Public Partner
Private Partner
Population (Kennebunk Area)
Median Household Income
Form of Government
Project Initiated
Project Completed
Total Capital Cost
Kennebunk, Kennebunkport and
Wells, Maine Water District
New water supply customers, i.e.,
Industry, commercial businesses, and
individual residents
20,000
$25,000 (approximation)
Quasi Municipal District with 4
elected trustees
1984 (to obtain legislation)
1986 (to collect fees)
On-going
$13,985,000 (1989) revised annually
WHY WAS A PRIVATE PARTNER
CHOSEN/OTHER ALTERNATIVES
WHAT WERE THE FINANCING
ARRANGEMENTS?
Private developers and customers
financed the project
WHAT WAS THE DIVISION OF
RESPONSIBILITIES?
The first alternative considered, but rejected, was for the District to
borrow funds (paying interest), improve the utility, and then pass along
the charges to all customers through increased rates or a surcharge.
The Kennebunk District decided that the collection of the System
Development Charge was a more reasonable and equitable approach,
since only the new customers are charged for the new/added services.
This choice has another added benefit the District earns interest on the
fees collected, and re-applies those earnings to improving services.
This arrangement aids in planning for the water supply
requirements of the future since needs are identified prior to
construction.
The Kennebunk District collects a System Development Charge from
private developers and other customers requiring new or increased
water supply services. Those monies are used to pay for various projects
that need to be completed to accommodate future growth. The monies
are placed in an interest bearing account, and both the principal and
interest are used to replace spent resources.
This fee is collected from the customer before turning on the water,
The District of Kennebunk. Kennebunkport and Wells. Maine
Decides to build, design, construct, own, operate, and maintain the
Kennebunk, Kennebunkport and Wells Water District Utility.
Secures the numerous permits required.
Supported and assisted with passing needed legislation.
Customers of the Utility
Provide financing by paying for new and increased usage services
with the System Development Charge.
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WHAT WAS THE DIVISION OF
RESPONSIBILITIES?
(Continued)
Public Utility Commission
Approves and monitors System Development Charges.
HOW WAS THE PROJECT
IMPLEMENTED?
The collection of the System Development Charge required the
passing of a bill through Maine's State Legislature, known as "An Act to
Fairly Apportion the Cost of New Water Utility Services". Efforts to pass
this bill began in 1984 the bill was finally passed in 1986 with the
assistance of the Maine Water Utilities Association and a utilities lawyer,
well-versed in writing legislation.
The Public Utility Commission was tasked by the legislation to
support and accept the passage of this bill permitting collection of the
System Development Charge.
The District began implementation by requesting payment of the
System Development Charge before providing water service to new or
increased usage customers. This arrangement continues today.
WHY WAS THE PROJECT
SUCCESSFUL?
Press coverage increased public
awareness and support
The system development charge was
easily explainable
This developer financing drinking water supply project, with the
support of the citizens and District of Kennebunk, has contributed
greatly to alleviating the economic burden on existing customers and on
the District itself. The project was very successful due to the following
key factors:
1) The District Superintendent, Dave Sweet, remained in constant
contact with the press. From the passing of the legislation to the
implementation of the System Development Charge to the provision of
water services, good press coverage increased public awareness and
support.
2) The method derived for calculating the System Development Charge
was meaningful to everyone involved. It was easy to explain, easy to
understand, and a reasonable method.
LESSONS LEARNED
The best way to accomplish the tasks described in this effort is to go
out as boldly as possible and try to get support from those with the most
political influence and from the customers of the Utility.
CONTACT
Mr. Dave Sweet
Superintendent
Kennebunk, Kennebunkport and Wells District
P.O. Box 88
Kennebunk, Maine 04043
207-985-3385
Information is available to the public upon request.
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Panel Sessions Alternative Financing Mechanisms:
~~ Dedicated Taxes and Fines
Moderator Robert Moore
Assistant Commissioner
Connecticut Department of Environmental Protection
People have accepted more environmental programs in recent years
and believe the level of environmental service should be increased.
Despite this, the public has given little consideration to how the costs
of operating these programs will be financed.
Many States are Turning One source of revenue that can be used to fund these programs is
to Taxes to Pay for dedicated fines and taxes. Many states currently use this method of
Programs ^mancmg- ^ trte State of Connecticut, a few examples of dedicated
fines include taxes on oil, refining, and hazardous waste generators.
The money generated from these taxes is pledged or directed to an
Environmental Spill Fund. This money is used to repair the environ-
mental damage caused by these industries. For example, this fund
might be used to supply potable water after an oil spill or to fund a
study that examines the effects pesticides have on drinking water
supply. In each case, a direct link exists between the source of reve-
nue and the application of funds.
Speaker Gina Terry
Water Quality Program
Washington Department of Ecology
Washington State uses several alternative funding mechanisms to
support environmental programs: taxes, fees, bond sales and citizen
participation programs.
The current sources of Department funds amount to:
40 percent from general state appropriations,
20 percent from federal sources, and
40 percent from alternative funding sources.
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Environmental Programs Every program in the Department receives some funding from alter-
in Washington Supported native funding sources. At least two programs (Litter Control and
by Alternative Financing Hazardous Waste Investigation and Clean-Up) are supported entirely
by alternative financing methods.
A more traditional source of revenue is derived from 'sin' taxes. The
Water Quality Grant program is funded using revenue derived from
taxes on alcohol and tobacco products. The trend more recently has
been to link the source of program funding with the beneficiary or the
origin of the problem.
Fees for Surface Water A good example of this occurred as a result of a citizen initiative to
Discharges revise legislation that required a fee be charged for wastewater dis-
charge permits. The 1988 legislation only authorized the Department
to charge fees to cover administrative costs by up to $3.6 million per
year.
Citizens were not content with this legislation and passed an initiative
the following November that removed the $3.6 million ceiling and
required the program to be self-supporting.
The initiative also changed the fee structure from a flat fee to a vari-
able fee that increased as the toxicity of the discharge increased. Since
the fee was tied to the composition of the discharge, it provided indus-
try and Publicly Owned Treatment Works (POTWs) with an incentive
to reduce the toxicity of their waste. The initiative also considered the
unique needs of small municipalities by placing a cap on the amount
that could be assessed on a residential unit.
Washington's Water Another source of revenue that is used to fund environmental pro-
Quality Account grams is derived from the Water Quality Account. This account was
established to clean up Puget Sound and other stressed waters in the
State of Washington. The law establishing the Water Quality Account
had bipartisan support and was opposed only by the Tobacco Insti-
tute. The law placed an 8 cent tax on each package of cigarettes, a
16.75 % tax on the wholesale price of all tobacco products, a sales tax
on materials used to build waste water discharge facilities, and a
guaranteed subsidy of $40 million from the general fund.
Washington State has been successful in implementing alternative
financing methods. Among the reasons are:
Cooperative Efforts
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Lessons from
the Washington
Experience
The Department of Ecology (DOE) does a great deal of political leg-
work when introducing new environmental programs and funding
devices. The organization elicits assistance from environmental,
economic, and public administration interest groups when drafting
new legislation. Once the legislation is passed, the DOE continues to
use these advisory groups in designing and implementing the regula-
tions or program.
Population Characteristics
Washington has a high per capita income and high level of education.
Many who live there are transplants who chose Washington because
of the environmental quality of life. Finally, the willingness of citizens
to pay for maintaining this high environmental quality of life supports
the state's efforts to finance its environmental programs.
Public Education and Awareness
The Department has put a premium on programs that involve citizen
participation and awareness. The Department aggressively seeks
programs that ensure increasing environmental intelligence on the
part of the citizens who will approve future funding decisions.
Speaker
Washington's experience provides several important lessons:
f-
Dedicated taxes and fines are only revenue enhancers; the pri-
mary source of revenue is still derived from the general fund.
Environmental agencies should bear some of the responsibility
involved in securing funds for environmental programs.
Dedicated fines are useful but officials must be careful to allow
some flexibility for shifting the funds to tangential purposes
and programs.
William Graham
Senior Finance Analyst
Government Finance Research Center
I will discuss taxes as one of several alternative financing mechanisms
available to states to raise revenue, but first let me discuss briefly how
we can assess the effectiveness and efficiency of taxing mechanisms
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Criteria to Measure the
Effectiveness of Revenue
Sources
we might choose to meet financing needs. Every government revenue
source, whether used for on-going operations or capital projects,
whether raised through debt or on a current basis, has eight criteria to
measure its effectiveness and efficiency. No revenue source will meet
all these measures fully, but the more measures addressed in a reve-
nue source, the "better" it is.
Criteria to measure the effectiveness of revenue sources include:
Equity reflects the fairness of the distribution of the funding
burden among individuals. In environmental programs, equity
can be approached from two directions: those who create the
environmental problems should bear the funding burden (the
'polluter' pays) or those who benefit from the program should
bear the funding burden (the 'beneficiary' pays).
Legislative acceptability reflects the political attractiveness of a
financing mechanism. There are unique legislative predisposi-
tions in each state that often influence the choice of a financing
mechanism.
Public acceptability reflects the willingness of those subject to
a fee or tax to pay, or the willingness of the public to make a
particular sector pay.
i
Feasibility relates to the legal authority to impose a fee or tax
as well as to factors that affect the workability of a financing
mechanism.
Revenue potential is measured by the amount of money that
can be raised with a particular financing mechanism, and
whether a mechanism provides a one-time or continuing source
of revenue.
Flexibility reflects the ability to use revenue from alternative
financing mechanisms as needed for a variety of program
activities.
Administrative requirements relate to the effort needed to
implement an alternative financing mechanism, including start-
up costs and on-going collection and management funds.
Impacts relate to whether a financing mechanism creates incen-
tives for desirable behavior, and whether it places an undue
financial burden on industry or general taxpayers.
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Types of Taxes A tax is generally a charge against sales, income, or property. Taxes
are typically used when program funding needs are large and when
the benefits of an activity are widespread. Unlike fees, there may be
less of a direct relationship between the tax and the use of the funds.
For state environmental programs, taxes on sales or income could be
used. A sales tax could be levied on products that contribute to pollu-
tion, such as gasoline, pesticides, or other hazardous materials. An
income tax could be imposed on those businesses whose industrial
activities contribute to pollution. The link between revenue and their
uses need not be, and often is not, direct.
Advantages of Taxes
Depending on the base, a tax can build directly on the principle that
the polluter or beneficiary pays. For example, a tax on products that
contribute to pollution problems (such as gasoline or pesticides) fall
on 'polluters/ while a tax on protected resources (such as water) fall
on 'beneficiaries' of water quality program activities. Another advan-
tage of taxes is that a low rate of taxation can result in substantial
revenue when the tax base is broad. A final advantage of taxes is that
their imposition and collection may be relatively straightforward.
This is because commodities on which a tax is levied generally have
value and are tracked more closely than items with lesser value. Fur-
ther, the mechanisms of existing state agencies may be used to collect
revenues.
Disadvantages of Taxes Legislatures may resist dedicating certain tax revenues to particular
programs. Instead, they may reserve their taxing authority for general
state programs. Also, in today's anti-tax climate public resistance to
new taxes is high. For taxes not directly related to a particular pro-
gram there may be competition from other programs or from the
state's general fund for those revenues. The relationship between the
tax base and target populations (polluters or beneficiaries) is tenuous,
at best. Some taxes may be difficult to justify beyond the fact that they
raise needed program funds. Given that taxes can be either progres-
sive or regressive, the tax may place an undue burden on certain
parties.
Sixteen states collect thirty-seven taxes related to environmental
issues. Of the $492 million raised from these sources in 1988,82 per-
cent of the revenue was dedicated to funding state environmental
programs. Examples of these taxes are listed below:
Sales Taxes levied on products that contribute to pollution or on
commodities that benefit from program activities.
Income Taxes imposed on businesses who contribute to pollution or
on businesses who benefit from pollution control.
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Excise Taxes levied on specific goods or types of transactions.
Examples include hotel/motel room taxes, gasoline,
alcohol and cigarettes. Excise taxes may also be levied
on the privilege of conducting a certain type of busi-
ness or transaction.
'Sin' Taxes a type of excise tax, levied on commodities ciga-
rettes, tobacco, and alcohol. Virtually every state
imposes some type of tax on these items. Taxes of
these items are effective generators of revenue be-
cause demand for these commodities does not fall sig-
nificantly when prices are increased.
Special levies usually limited by either tax rate or total dollar
amount and by the period over which the tax can be
collected. For example, voters may give the county
the authority to levy a $1.00 per $1,000 property tax
for three years to raise funds for new water supply
facilities.
Two examples of taxes that have been effective are listed below.
Examples of Washington Litter Control Tax. The State of Washington assesses an
Environmental Taxes annual tax on all businesses engaged in the manufacturing, wholesal-
ing and retailing of products commonly associated with litter. The tax
is levied on gross sales for wholesalers/retailers and on the value of
products for manufacturers. The tax rate is .015 percent of gross
receipts or value of the product. From 70 to 80 percent of the revenue
generated by this tax is dedicated to litter control along Washington's
roads and highways. The remaining 20 to 30 percent is dedicated to
state recycling programs.
Oregon Tire Sales Tax. The State of Oregon assesses a $1 sales tax on
each tire sold in the state. Collected at the retail level, the tax provides
a net 80 cents per tire for state program administration, tire site clean-
ups and reimbursement of users of recycled tires. The remaining 20
cents of the $1 that is assessed is consumed by program administra-
tion and operating costs.
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Various Aspects of Types of Taxes
N. Type
\.
d ^^t
Aspect x.
Purpose
-
Advantage
Disadvantage
-
Sales Taxes
Discourage use
of products that
cause
environmental
harm or simply
a source of
revenue
Small tax on a
large base yields
a significant
amount of
revenue
Often not a
direct link
between the tax
and the use of
the funds
Income
Taxes
Recover
damage from
industries that
produce
products that
harm the
environment
Small tax on a
large base yields
a significant
amount of
revenue
Could deter
industries from
locating in an
area
Excise Taxes
(including sin
taxes)
Discourage use
of certain
products or
simply a source
of revenue
Imposition and
collection are
straightforward
Often not a
direct link
between the tax
and the use of
the funds
Special
Levies
Finance a
particular
project
Can be a useful
source of
temporary
revenue
Usually require
voter approval
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Panel Sessions Overcoming Barriers to Partnerships and
Alternative Financing
Moderator
Dave Lenart
Project Manager
Tighe-Bond
The implementation of public-private partnerships and alternative
financing methods are not without their challenges. This panel will
examine some of the typical barriers that are encountered at the
federal, state, and local levels. The panel will also discuss ways to
address these barriers and strategies that can be used to permanently
remove these barriers.
Speaker Harvey Pippen
Director
Grants Administration Division
U.S. Environmental Protection Agency
Existing Sources of Federal The federal government tries to promote public-private partnerships
Revenue may restrict anc* alternative financing mechanisms by making available grants and
Local Provision of ^oans *° communities. However, these monies are not without their
P , , restrictions. The 'strings' that are attached to this revenue often act as
a disincentive for municipalities or private sector firms to provide
environmental services.
Federal, state, and local governments are also responsible for creating
legislative and regulatory restrictions. The legislative restrictions can
occur when a stringent tax or environmental code is enacted without
considering the true cost of complying with the code. The regulatory
impediments are operationalized as either environmental policy or
grant procedure limitations.
Services
EPA Seeks to Eliminate
These Barriers
EPA realizes there are unintended effects that result from its grant
policies and has taken the following steps to alleviate these barriers.
The Agency has:
Formed a work group to identify the barriers;
Composed case studies that document successful public-
private partnerships; and
Begun research to identify barriers that are attributable to the
language used in legislation.
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Not only EPA, but all levels of government can adopt policies that will
promote public-private partnerships and alternative financing mecha-
Steps to Overcome
Barriers
msms.
Where appropriate, EPA, OMB, and Congress could:
Issue formal policy statements and memos endorsing the use of
public-private partnerships and alternative financing mecha-
nisms;
Promote pro-privatization conditions in the grant selection
process;
Assume a more flexible approach to public-private partner-
ships and alternative financing mechanisms that will allow for
deviations on a case-by-case basis; and
Examine how the existing regulations can be amended to pro-
duce an environment that is more conducive to establishing
public-private partnerships and alternative financing mecha-
nisms.
State and Local
Approaches
Likewise, state and local governments may wish to consider policies
that:
Provide grants for public-private partnerships and alternative
financing projects,
Form legislation to meet the needs of public-private partner-
ships and alternative financing, and
Provide information to the public in the form of handbooks,
tours of existing public-private facilities, and conferences.
Speaker Robert Varney
Commissioner
New Hampshire Department of Environmental Protection
New Hampshire's Sources Revenues for the Department of Environmental Protection are derived
of Environmental from two primary sources: 'sin' taxes and a real estate transfer tax.
Revenues ^e ^tate °* New Hampshire nas no sales or income tax. Tradition-
ally, New Hampshire emphasizes local and regional approaches to
solving problems. An example of this is the $3.00 surcharge that is
levied on automobile registration. The money for this program is
collected at the municipal level in order to minimize the role of the
state.
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Strategies that the Department of Environmental Protection (DEP)
employs to overcome barriers include:
Strategies to Overcome Communication. DEP officials meet regularly with the Governor and
Barriers members of the legislature to keep them abreast of the Department's
activities and concerns. It also gives the DEP a chance to informally
'test' the feasibility of new ideas. Not only is it important to commu-
nicate with government officials, it is also important to keep the gen-
eral public well informed. For this reason, the DEP regularly releases
press releases and periodically sponsors conferences that address
environmental issues.
Internal Management. Every organization has room for improving
its operations. By applying time management and project manage-
ment techniques, the performance of most organizations can be im-
proved without increasing the level of funding. Essentially, efficiency
gains can be realized if managers examine new ways to deploy their
resources. Efficiency gains can be documented and will serve as pow-
erful ammunition when trying to secure additional funding. The leg-
islature is more likely to fund an agency that it believes will produc-
tively use the resources.
Alternatives/Options. It is advised that the agency thoroughly evalu-
ate more than one option in detail and be ready to suggest alternatives
if their original plan is rejected. An example where a back-up plan
proved invaluable was when the DEP recommended a fee that was a
fixed, flat rate. The legislature was opposed to this because they
questioned the equity of this type of assessment. They were ready to
support a variable fee, and the DEP had already prepared a detailed
analysis of a variable fee and was able to present this option to the
legislature.
Lessons from the
New Hampshire
Experience
There are several lessons from the New Hampshire experience for
others to consider:
Take caution not to dedicate too large a portion of the dedi-
cated fee fund for one purpose or program;
Citizens should be able to redirect their tax dollars as priorities
change; and
The revenue derived from fees should not only be applied to
fund new programs and personnel costs but should be used to
assume a growing portion of the existing operating budget.
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Michael Meotti
Senator
Connecticut State Senate
Barriers to Implementing Many barriers are encountered when trying to implement public-
Alternative Financing private partnerships and alternative financing methods. From a
legislative perspective, here are a list of some of these barriers:
Current public opinion opposes the imposition of new
taxes and locks elected officials into a position where they
will not support additional taxes;
Some government managers and elected officials oppose dedi-
cated funds on the grounds that dedicated funds lead to a lot of
off-budget maneuvering and a subsequent distortion of fund-
ing efforts and priorities;
Government agencies may refuse to suggest or support fines
for activities they already conduct, such as permitting, because
this places an additional administrative burden on the agency;
and
The lack of awareness of general tax subsidies for certain prod-
ucts and services such as solid waste disposal and drinking
water leads many people to believe that they are paying the
true market cost for the good or service.
Operational Difficulties There can be operational difficulties associated with the collection of
the tax, fine, or penalty. It is not always clear what state agency
should collect the money and where the revenues should go. Like-
wise, officials must establish a clear scale of fines to address whether
those subject to paying a fine will pay a constant amount or a gradu-
ated rate, depending on the severity of the incident for which it is
being fined. There are implications for this. For instance, the imposi-
tion of a quantity-based tax on pollutants would create major incen-
tives to underreport discharges. If the discharge data that is collected
in these reports has future value, the integrity of this data could be
compromised by underreporting.
From our experiences in Connecticut, there are several strategies to
consider when trying to overcome operational barriers:
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Lessons Learned from
the Connecticut
Experience
Use transactional fees to support dedicated funds and have a
logical mechanism of collection;
Communicate or signal the true market price of a good with
targeted taxes;
Develop support for public-private partnerships and alterna-
tive financing methods with top-level initiatives from the
governor and tax committee chairperson; and
Focus/mobilize grassroots political pressure to support the
implementation of public-private partnerships and alternative
financing methods.
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Panel Public-Private Partnerships:
Merchant Facilities and Developer Financing
Moderator Steve Allbee
Director
Office of Municipal Pollution Control
U.S. Environmental Protection Agency
This session will consist of two segments. First, we will have a case
study that highlights the use of a merchant facility to provide a waste-
water pipeline. The second case study shows how developer financ-
ing can be used to expand a drinking water supply plant. In each case
study we hope to provide the following information: how the part-
nership was implemented, why the private partner was chosen, what
the financing and procurement arrangements were, and what advan-
tages and disadvantages were associated with the partnership.
Case Studies: Rutland, VT
Wastewater
MERCHANT FACILITY
Frank Heald
President
Pico Ski Resort
Mark Youngstrom
Engineer
Wright Engineering, Ltd.
Manchester, NH
Drinking Water Supply
DEVELOPER FINANCING
David Kittredge
, Director
Manchester Water Works
U.S. EPA Headquarters Library
Mail code 3201
1200 Pennsylvania Avenue NW
Washington DC 20460
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WASTEWATER
Rutland,
Vermont
SUMMARY
Merchant Facility
SEWER PIPELINE
RUTLAND, VERMONT
Private citizens from four communities worked together to build
a sewer pipeline through the formation of the Alpine Pipeline
Company. Wright Engineering, Ltd. served as the planning,
design, and construction consultant for this project.
The facility was financed both by private user shares and
industrial development bonds issued by six local banks.
The private partner accepts responsibility for performance and
guarantees compliance with environmental permit requirements.
The area along the Route 4 corridor, between Rutland and the top of
Sherburne Pass, had been experiencing sewage disposal problems for
twenty years. Attempts were made to secure federal and state funding
to alleviate this problem, but these attempts were to no avail. Finally, the
decision was made by several key landowners that a sewer had to be
built even if federal and state dollars were not available. The
construction of the pipeline required that the towns located along the
corridor forfeit some or all of their ultimate oxygen demand (UOD)
capacity to the Alpine Pipeline Company. This sewer project has done
much to alleviate the potential health hazards and resulting economic
burdens experienced by businesses and residences located along the
corridor. Prior to the pipeline's construction, businesses used septic
systems and were forced to pump them regularly. Another undesirable
condition that the pipeline alleviated was stunted commercial and
residential growth along the corridor.
PARTIES INVOLVED AND
TIMEFRAME
Public Partners
Private Partner
Population (Rutland Area)
Form of Government
Project Initiated
Project Completed
Total Capital Cost
City of Rutland,
Town of Rutland,
Town of Sherburne, and
Town of Mendon
Alpine Pipeline Company
18,000
Board of Aldermen
December 1983
December 1984
$2.5 million
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WHY WAS A PRIVATE PARTNER
CHOSEN/OTHER ALTERNATIVES
Urban Development Action Grant
(UDAG) Funding was not available to
fund this project
Business officials joined local
communities to pursue a solution to the
sewerage problem
One alternative that was considered for building a pipeline was to
establish a fire district. However, this option was quickly rejected
because of the legal responsibilities and obligations that the residents of
the fire district are required to assume. Not everyone located along the
corridor was willing to be held legally and financially accountable for the
success of the project.
The next option that was considered was to establish a legal entity
that would be able to obtain Urban Development Action Grant (UDAG)
monies through the City of Rutland. This option was not feasible since
UDAG funding is traditionally only available for interceptor sewers
and the EPA classified this project as a collection sewer. These sewers
are not eligible for EPA funding. Another factor contributing to the lack
of federal dollars to defray the costs of this project was the small size of
the customer base.
Without this assistance, one of the few remaining alternatives to
building this pipeline was to establish a for-profit corporation to provide
this environmental service. Several key landowners located along the
corridor incorporated themselves and formed the Alpine Pipeline
Company to build the pipeline.
WHAT WERE THE FINANCING
ARRANGEMENTS?
Both user shares and industrial
development bonds were used to
finance the project
Capital Costs
This project was financed totally through private funds. In the fall of
1983, the Alpine Pipeline Company was formed and financing
arrangements were reached with six local banks. The banks required
Alpine Pipeline Company to pre-sell $1,000,000 in user shares prior to
the banks financing the bonds for the remainder of the project. The
participating banks issued $1,650,000 in industrial revenue bonds that
were equally held by six banks. Thus, each bank issued $275,000 worth
of bonds. Beneficiaries of the pipeline were also the investors. That is,
residents and businesses located along the corridor were also purchasers
of user shares. The company maintains a substantial cash balance and
this year may be able to pay off the bonds in their entirety only five years
after the construction of the pipeline.
Operational Costs
Operations and maintenance cost will be covered by annual usage
fees that will be levied against both residential and commercial users.
The monies generated from the collection of annual usage fees will also
be used to cover debt service expenses.
WHAT WERE THE
PROCUREMENT
ARRANGEMENTS?
Public notice was given regarding
contractor selection. Two separate
contracts were awarded to Cooley
Construction Company
In a competitively negotiated procurement process, the Alpine
Pipeline Company, with the assistance of Wright Engineering, issued a
Request for Proposals (RFP) for two separate phases of the project. The
first phase of the project was the construction of collection sewers and
the second phase was for the construction of two pumping stations with
a forced main. Alpine Pipeline pre-qualified several contractors and
after reviewing the proposals, selected Cooley Construction Company
for both phases of the project. Cooley Construction produced the lowest
bids for both phases of the project and this was a contributing factor to
their selection.
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WHAT WAS THE DIVISION OF
RESPONSIBILITIES?
Alpine Pipeline Comply
Own, operate, and maintain the sewer system
Collect user fees directly from customers
Comply with environmental and building permit requirements
Obtained financing for the project
Wright Engineering Ltf,
Designed the plans for installation of the pipeline
Secured the environmental and building permits
Cooley Construction Company
Constructed collection sewer
Constructed two pumping stations with a forced main
HOW WAS THE PROJECT
IMPLEMENTED?
E Local residents provided the impetus to
construct the sewer pipeline
Cooperation among the towns located
along the corridor was secured
Legislation that would allow the
construction of the pipeline was enacted
A local group of residents and business owners who were directly
affected by the sewerage problems along the corridor worked together
to explore options for constructing a pipeline. They considered forming
a fire district, securing federal grant monies, and forming a corporation.
The latter option was ultimately implemented and resulted in the
formation of the Alpine Pipeline Company.
The financial attractiveness of building the pipeline hinged on
getting all of the towns located along the corridor to surrender a major
portion of their water capacity to the Alpine Pipeline Company. At a
public hearing, each of the towns was assigned an Ultimate Oxygen
Demand (UOD) limit. This numerical limit was based on a scientific
review of the receiving waters and the water treatment method
employed at the City of Rutland's water treatment facility.
Operationally, the UOD determines the capacity allotted to the town
which is measured in millions of gallons per day (mgd). Alpine Pipeline
Company had to convince each of the towns that assigning them part or
all of their UOD was both financially and environmentally attractive.
Once the corporation was formed, construction of the pipeline was
not able to proceed. Before the pipeline could be constructed, state
legislation had to be ratified that allowed a privately constructed sewer
of this magnitude to be built in a state highway right-of-way. Local
government and business officials worked with state representatives
and the Vermont Department of Transportation to support legislation
that would allow private construction to take place on public lands.
Once the legal barriers that blocked this project's implementation were
eliminated, construction of the 11-mile sewer pipeline was able to begin.
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WHY WAS THE PROJECT
SUCCESSFUL?
Cooperation between public and private
partners
Local control of the project avoided the
overhead costs associated with
government grants and out-of-state
bonds
Expedient invoice payments induced the
contractor to complete the project on
time and under budget
Many factors contributed to the success of this project. One of the
most important factors was the cooperation between public and private
partners throughout the project These groups worked closely together
and were willing to forfeit some or all of their ultimate oxygen demand
(UOD) limits to Alpine Pipeline in order that the pipeline could be built.
Another factor contributing to mis project's success was that it was
handled locally. Wright Engineering estimated that the total project
cost was 25% less because the overhead costs associated with
government grants and out-of-state bonds were avoided. The
cooperative spirit was also encourage by Alpine Pipeline's commitment
to pay invoices within five days instead of the traditional 30 day period.
This quick turn around provided an incentive for the contractor to
complete the project on time and under budget.
LESSONS LEARNED
A confident and enthusiastic group of
private citizens can successfully tackle
environmental projects
Private citizens do not need to totally rely on the government for the
provision of environmental services. However, this project's success
still depended on getting cooperation from both the state and local
governments. The initiative demonstrated by local residents who
identified the problem and worked to find a solution was a contributing
factor to the success of the project.
CONTACTS
Frank Heald
Pico Ski Resort
Sherburne Pass
Rutland, VT 05701
(802) 775-4345
Mark P. Youngstrom
Wright Engineering Ltd.
12 Wales Street
Box #176
Rutland, VT 05702
(802) 775-2511
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Manchester, New Hampshire
DRINKING WATER SUPPLY
Developer Financing
MANCHESTER WATER WORKS' SOURCE
DEVELOPMENT CHARGE
MANCHESTER, NEW HAMPSHIRE
The Manchester Water Works established a developer financing
arrangement that supports increased water services
requirements.
Financing for this venture is obtained on a continuing basis by
the collection of an impact fee from new customers in
Manchester and the surrounding area.
This arrangement has contributed greatly to alleviating the
economic burden on existing customers and on the water works
utility itself.
SUMMARY
Manchester Water Works is a municipal water works servicing
approximately 24,000 customers within the City of Manchester and
approximately 3,000 customers in five surrounding towns; it also
provides wholesale water to a sixth town, two municipal water precincts,
and to an investor-owned water company. Manchester Water Works
functions under New Hampshire law as a public utility and is regulated
by the New Hampshire Public Utilities Commission. The population of
the Manchester area has increased dramatically since 1980, thereby
requiring that Manchester Water Works increase its public utility
franchise area to meet the increased demand for water.
New customers and local citizens and developers finance their own
water needs by paving an impact fee. The impact fee has two
components: 1) A Capital Cost Charge which requires new customers
either to pay at the outset for all costs to upgrade the water works, or to
enter into a contract that provides for new customers to recover some of
their costs when additional, new development occurs; and, 2) A Source
Development Charge where new customers outside the franchise limits
pledge funds to be used for future expansion of services. In April 1987,
Manchester Water Works received the Public Utilities Commission's
approval for the impact fee, and instituted the charging in May 1987.
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PARTIES INVOLVED AND
TIMEFRAME
Public Partner
Private Partner
Population (Manchester)
Median Household Income
Form of Government
Project Initiated
Project Completed
Total Capital Cost
Manchester Water Works
New water supply customers
105,000
$15,608 (from 1980 census)
Mayor and Board of Aldermen
May 1987
On-going
$13.1 million (for 1992)
Projected engineering and construction
costs
WHY WAS A PRIVATE PARTNER
CHOSEN/OTHER ALTERNATIVES
The first alternative considered, but rejected, was for the Manchester
Water Works to borrow funds, improve the utility, and then pass along
the costs to the customer with increased rates or a surcharge.
The Manchester Water Works decided that the collection of the
Capital Cost Charge and the Source Development Charge was a more
reasonable and equitable approach, charging only the new usage
customer for the new services.
WHAT WERE THE FINANCING
ARRANGEMENTS?
The City of Manchester collects an impact fee consisting of a Capital
Cost Charge and a Source Development Charge. The Capital Cost
Charge is the fee collected from property owners and developers who
require water system extensions. New customers pay all costs of
extending water services to them upfront; or, alternatively they enter
into a contract whereby they can recover some of the costs when
additional, new development occurs. The Source Development Charge
is the fee collected from new customers outside the franchise limits, in
exchange for water supply services. These funds can only be used for
future expansion of services. The charges are not a system buy-in, but
instead constitute a customer's capital contribution to a proportionate
share of this water supply project These charges are based on the
product of estimated usage (based on meter size) in gallons per day and
estimated cost per gallon per day of the project.
Water works expansion and the operations to support these new
users will be fully and exclusively funded through the Capital Cost
Charge and the Source Development Charge. It will take into
consideration that the cost of the project included interest payments on
funds that Manchester Water Works borrowed under the City's general
obligation bonding.
Manchester Water Works is required by the New Hampshire Public
Utilities Commission to file an annual report of costs, revenues, and
construction timing for the purpose of annual recalculation of the Capital
Cost Charge and Source Development Charge.
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WHAT WAS THE DIVISION OF
RESPONSIBILITIES?
Manchester Water Work ff
Decided to build; obtains approvals for financing and studies; and
designs, owns, inspects, operates and maintains the water utility
New Hampshire Public Utilities Commissi^
Approved the Source Development Charge; required filing of a
franchise expansion plan; and reviews the Manchester Water Works
annual report for re-approval of the charge
Customers of the Utility
Provide financing by paying for new water services with the Source
Development Charge
Board of Water Commissioners of Manchester Water Works
Reviews and advises on community issues
HOW WAS THE PROJECT
IMPLEMENTED?
The collection of the Capital Cost Charge and the Source
Development Charge required obtaining approval of the project from the
New Hampshire Public Utilities Commission. Additionally, the
Commission required Manchester Water Works to file a franchise
expansion plan. The approval occurred in April 1987. The charge was
then implemented in May 1987.
In general, Manchester Water Works determines how best to provide
water supply services to its customers, including the appropriate design,
operation, and maintenance for all services. The private customer
provides the financing (through payment of impact fees) and also
arranges for the construction required for new services. Construction
efforts are approved and continually inspected by the Manchester Water
Works.
Currently, Manchester Water Works is working with a down-stream
hydro-electric plant (the Public Service Company of New Hampshire) to
resolve issues concerning the diversion of water from the Merrimack
River. If Manchester Water Works' activities significantly affect the
hydro-electric plant, they may be required to obtain a license from the
Federal Energy Regulatory Commission (FERC).
At this time, no special legislation has been enacted.
WHY WAS THE PROJECT
SUCCESSFUL?
The project has been very successful because the Manchester Water
Works decided that the collection of the Capital Cost Charge and the
Source Development Charge was a more reasonable and equitable
approach; thereby, only charging the new customer for the new services
and causing no direct impact on rates to existing customers.
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LESSONS LEARNED More time and money should be spent on the front end activities, in
this case the initial research and background work. For this project, the
initial revenue projection from population growth was off the mark. The
economic downtrend that Manchester is experiencing is also causing a
funding deficiency for the project. This error in projection will most
likely cause the original plans for this project to change dramatically.
CONTACT Mr. David Kittredge, P.E.
Director
Manchester Water Works
281 Lincoln Street
Manchester, New Hampshire 03103
603-624-6494
Information is available to the public upon request
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Panel Session Alternative Financing Mechanisms:
Management Funds
Moderator Tex LaRosa
Chief of Operations
Department of Environmental Conservation
Vermont
This session will focus on alternative financing experiences from
Kansas and Rhode Island as well as a brief discussion about some of
the financing options open to state managers and the advantages and
disadvantages associated with them. By way of introduction, Ver-
mont's circumstances are worthy of mention. Historically, Vermont
has funded wastewater treatment, water supply, and solid waste
programs. It has more recently developed an underground storage
tank initiative, and a mini-Superfund for hazardous waste clean-up.
To fund these programs, the Department obtains dedicated receipts
from tank fees, tipping fees, and a gas tax. The largest contribution of
funds comes from an annual capital appropriation.
Vermont's Third When the state assessed its infrastructure needs for the next ten years,
Century Fund & determined that it would need $500 million to fund improvements
for a population base of only 550,000. Vermont realized it could not
fund this level of program by traditional means. At the behest of the
Governor, state officials have begun exploring the idea of a Third
Century Fund. The Fund would serve as a special account or trust
fund, supported by dedicating existing revenues to it and finding new
sources to augment them.
Short term needs from 1992 to 1994 will be particularly great, so
officials hope to be able to leverage the funds to sell public bonds.
The concept is still in the planning stages. Vermont hopes to have
legislation authorizing the Fund by early 1990.
Speaker William Bryson
Intergovernmental Coordinator
Kansas Corporation Commission
Many here have tried innovative ways to raise money to fund envi-
ronmental programs. Kansas has relied on general revenues and
some periodic attempts at innovative funding reform. These innova-
tions have not often worked; the legislature has changed the funding
level and allocation on many after their initial designation.
Despite new and increasing demands for greater environmental pro-
tection, there is no real way to estimate ahead of time what any of
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Priorities Need to be these programs will cost, since a complete understanding of the re-
Established First quirements will require an inventory of the sources of pollution. In
the area of water quality, Kansas assumed that the State needed to
establish a list of priorities for the next five to ten years. Kansas Water
Authority and the River Basin Advisory Committee identified water-
shed protection (including surface and ground waters), nonpoint
source pollution, and clean-up of major sources of contamination to
water resources as its highest priority. How to fund these initiatives
became the next issue for resolution.
For many years, Kansas' Health and Environment Department sub-
sisted primarily on general fund money and an assortment of permit
fees for various primacy activities, including the National Pollutant
Discharge Elimination System (NPDES) program, the Public Water
Supply System (PWSS) program, waste management, and landfill
uses.
By comparison, the Kansas Corporation Commission regulates envi-
ronmental activities related to oil and gas. About 70% of the Corpora-
tion's $4 million annual budget comes from assessments on oil and
gas. These are assessments on per barrel or per million cubic feet.
Kansas also passed a severance tax in 1985 on oil and gas which is
based on the dollar value of the asset. Depressed oil prices have
severely reduced revenues from these sources.
Environmental Programs In 1988, the water agencies in Kansas assembled a package of dedi-
in Kansas Supported cated funds to support water activities, knowing that fewer Federal
by Alternative Collars would be available. The legislature has approved dedicated
,-,. . and general funding at around $16 million for a number of water
Financing ^ activities.
The sources of dedicated revenues that comprise the Water Protection
Fees include:
3 cents per 1,000 gallons of water (gw) sold at retail by public
water supply systems;
3 cents per 1,000 (gw) appropriated for industrial use;
3 cents per 1,000 (gw) for stock watering for commercial feed-
ing operations;
Pesticide Fee of $100 for each agricultural chemical registered;
and
Fertilizer Inspection Fee of $1.40/ton inspected.
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Additional Funding For Additional funding will come from:
Water Programs
Fines and penalty receipts (roughly $100,000 per year);
Proceeds from the Kansas Economic Development Initiative
Fund ($2 million); and
$6 million infusion from state general funds.
Lessons from the
Lessons from the Kansas experience suggest that officials should:
Kansas Experience
Develop detailed and accurate workload models to assess
program resource needs and project the return from the inno-
vative sources of funding that are proposed;
Involve the legislature from the early stages to incorporate their
adviceand support in the funding proposals;
Include financing details in the legislation to avoid drawn out
debate at the implementation stages; and
Try these approaches on a small scale to ensure their workabil-
ity.
Speaker Edward Syzmanski
Chief
Water Division
Department of Environmental Management
Rhode Island
Historically, Rhode Island's Federal Construction Grants funding has
been insufficient to pay for the eligible costs of upgrading secondary
wastewater treatment facilities. The state has provided some state
grants to those communities which did not receive full project funding
with a federal grant. However, those funding attempts were only for
the highest eligible projects, namely secondary wastewater treatment
facilities.
Lessons from the Rhode Because many other needs remained unfunded, Rhode Island was
Island Experience forced to find another method of providing for necessary environ-
mental projects besides treatment facilities.
In 1988 the State General Assembly created the Rhode Island Aqua
Fund. This fund was established to be a multiple-purpose, compre-
hensive approach to focus state resources on the environmental prob-
lems associated with cleaning up the Narraganset Bay. It was also to
be available for projects which would prevent future pollution of the
Bay. The fund would approach this clean water goal through pro-
grams such as: industrial pretreatment, sediment and sludge abate-
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Use of the Aqua Fund
ment, non-point sources pollution reduction, wastewater treatment
facility upgrading, and stormwater management.
The Aqua Fund has an Advisory Council consisting of 21 members.
The General Assembly obviously intended for the program to be open
to all environmental concerns. Its membership includes 13 appointed
positions and 8 ex officio members.
The appointed individuals must meet requirements set forth in the
legislation. The initial council members serve terms of from 1 -3 years,
and replacements are appointed for full 3-year terms. All council
members are non-compensated.
The Aqua Fund consists of $15 million to be obtained from the issu-
ance of general obligation bonds and notes. The Director of the De-
partment of Environmental Management (DEM) is authorized to
approve funding for projects. He does so with the advice of the Advi-
sory Council.
The $15,000,000 fund is divided into five specific categories:
Planning and Program Implementation ($250,00) grants for
preparation of statewide programs and pollution projects;
Pilot and Prototypical projects ($750,000) grants for
new, innovative projects sponsored by communities or non-
governmental entities;
Wastewater Treatment ($7,000,000) loans to private entities for
WWTF grants and to municipal WWTF projects;
Pretreatment Facilities and Equipment ($4,000,000) loans to
municipalities and private entities. It can also be used for
administration, monitoring and enforcement work; and
Urban Runoff Abatement ($3,000,000,50 percent loans and 50
percent grants) to municipalities for prevention programs and
administration.
The Advisory Council is authorized to spend up to $50,000 each fiscal
year for professional services and support staff. Also the DEM may
set aside 4% of each of the five categories for its administrative ex-
penses.
The Council has received many requests for funding. However, they
have not yet issued approval for any projects. An environmental
planner started working for the Council recently and is now preparing
rules and regulations. Once these are adopted, the Council will be
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able to review the projects and begin to award the grant funds. The
rules and regulations should be in place in early 1990.
Speaker Ann Carey
Vice President
Apogee Environmental Research, Inc.
Once a state has gone to the trouble of securing revenues for a particu-
lar program, it is equally important to manage these funds effectively.
The most important reason program managers seek to establish some
sort of financial management mechanism is to ensure that revenues
from a particular source are used for their intended purpose. Addi-
tionally, they provide continued funding for multiyear projects, guar-
antee repayment of bonds for capital investments, and capture interest
earnings on fund balances, where allowed.
Types of Management
Funds
Four management fund options are commonly available.
A Special Account is set up within a general fund, but its revenues
can be used only for specified purposes. The main advantage is that it
is easy to do and may not require legislation. The disadvantage is that
it is possible that funds could be diverted by the state for other pur-
poses.
A Trust Fund is similar to a special account and may be set up within
or outside of a general fund. Its advantage is that it is potentially
more secure and may earn interest The disadvantage is that it may
require constitutional or legislative authority to establish. Trust Funds
are beginning to be viewed by budget officials and legislators as a way
to circumvent the formal appropriations process.
Enterprise Funds support services that are self-supported through
user fees. These services include water and sewerage, electric and gas
utilities, airports, and transit activities. The main advantage is the
fund's dear linkage between fees and services. The disadvantage if
not structured properly, or for a service where the resource is under-
valued (such as water), the activity may not be self-sufficient. Some
enterprise funds need to operate with a periodic infusion of capital.
Revolving Loan Funds provide loans for capital investments. Repay-
ments to the fund provides resources for additional loans; hence, its
revolving nature. The advantage of revolving loan funds is the lever-
aging of initial resources used to establish the fund. The disadvan-
tage is the significant amount of start-up capital needed, a difficult
task in this time of diminishing resources.
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Several examples illustrate how some of these management options
have been used in conjunction with a dedicated funding source.
Examples of Dare County, North Carolina, assesses a 3% occupancy tax on hotels
Management Funds *^at S068 to a special account to pay for infrastructure investments,
including a wastewater treatment plant, a water supply plant, a new
school, and a new jail. Corpus Christi, Texas, levies impact fees on
new developments that go to four trust funds to pay for water and
sewer infrastructure.
In Riverside County, California, a 25 cent surcharge on the local solid
waste tipping fee goes to an enterprise fund to pay for closure and
replacement of landfills. These revenues are insufficient to pay all the
costs, and are supplemented from other funding sources.
Washington's "Centennial Clean Water Fund" is funded by a combi-
nation of tobacco and sales taxes that generates up to $40 million a
year. These funds are deposited to a "Water Quality Account" main-
tained as a revolving fund by the State treasury. The Department of
Ecology makes loans (and some grants) from this fund for local water
quality initiatives.
Nantucket, Massachusetts, employs a 2% real estate transfer tax whose
proceeds go into a "Land Bank," which acquires shoreline property
for public access & recreation.
Puget Sound, WA Finally, Puget Sound, Washington, has proposed creation of a "re-
gional utility" that would provide water quality services across mul-
tiple jurisdictions bordering the Sound, financed through a household
or business fee of from $4.80 to $12.50 per residential, commercial, or
business unit per year.
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Various Aspects of Fund Types
\. Type
Aspect >v
Purpose
Advantage
Disadvantage
Special
Accounts
Ensure that
revenues from
a particular
source are used
for a particular
purpose
Easy to establish
and probably
won't require
legislation
May have
funds diverted
to other
accounts
Trust
Fund
Ensure that
revenues from
a particular
source are used
for a particular
purpose
More secure
than a special
account and can
earn interest
May require
legislation
Enterprise
Fund
Support
services that are
self-supported
through user
fees
Clear linkage
between fees
and services
May not be
truly
self-sufficient
Revolving
Loan
Funds
Provide loans
for capital
investments
Initial resources
can be
leveraged to
establish the
fund
Requires a
significant
amount of
start-up capital
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Panel Making It Happen
Moderator Dave Fierra
Director
Water Management Division
U.S. Environmental Protection Agency
Region I
Introduction
This panel will discuss how to secure the necessary resources needed
to fund environmental programs and examine strategies that will
encourage private participation in the provision of these environ-
mental services. Not only is it important to secure more resources; it
is equally important to effectively apply the existing resources to our
environmental goals.
Speaker Elizabeth Miner
Chief
Regulatory and Program Analysis, Water Policy Office
U.S. Environmental Protection Agency
Before we discuss how to implement alternative financing mecha-
nisms for water programs, we must realize an essential fact. The
drinking and wastewater services in this country are relatively inex-
pensive because we have chosen to publicly subsidize them.
The Public is Willing to Poll after poll has documented the public's willingness to pay for
Pay for Clean Water mcreased levels of environmental protection. We must link this
willingness to pay more with the reality of doing so. And we must,
when we pass new legislation or contemplate a new environmental
program, assess its true cost, and how we are going to meet that cost.
There are number of things that are responsible for transforming an
idea for an alternative financing method into reality. The need to
involve all sectors affected by the environmental programs and their
financing methods is crucial. This involvement should begin when
the legislation is being drafted or the programs designed, and should
continue through the implementation stage.
Programs Need to Set The need to set priorities for environmental activities is a must. The
Priorities and Be public should be involved in this process to ensure that its money is
/- i directed to combatting environmental problems of greatest concern.
Creative Wafer Strategies ^Q a gooci way to do this for water
programs.
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Governments need to be creative and realize that there is no single
solution to the funding shortfall. Rather a mix of revenues derived
from fees, fines, and taxes is optimum to ensure a stable, continuous
funding base. Aggregating revenues into specially managed accounts
or funds which grow over time is also a growing and highly success-
ful tool.
Creative Approaches For:
Fees
The Office of Water State Funding Study made a number of findings
with regard to specific mechanisms. With regard to fees, do not spend
a large amount of resources to collect small amounts of money. It is
often best to incorporate the fee structure in legislation and include a
clause allowing the agency to alter the actual fee rate if necessary.
When designing the fee system, determine the full cost of the water
quality program the revenue from fees must support. This cost
should include the base elements of the program such as monitoring
and enforcement. Where possible, add the collection of the fee to an
already existing collection process so as to minimize administrative
costs. Convince the regulated community that they will receive better
services if the program is adequately funded. A user fee on drinking
water can be effective at yielding high revenues with low impacts.
Fines Fines are a useful supplementary source of revenue and should not be
viewed as a stable revenue stream for base programs. In the unfortu-
nate case of an extreme environmental accident, a large fine can pro-
vide the basis of a fund that can generate future revenue. If fines are
dedicated back to the water quality program, place the revenues in a
separate account so they are not directly funding the portion of the
program that collects them. This avoids the appearance of conflict of
interest.
Taxes Taxes are often based on the beneficiary pays principle. Other forms
of taxes are product taxes. Taxes can be levied on products that con-
tribute to water pollution, such as pesticides. Even a small tax can
generate a large amount of revenue if the tax base is large.
Need for Balanced
Funding for State and
Federal Sources
There is a trend to increase the number of dedicated funds that are
used to fund environmental programs. Despite the fact that dedicated
funds are a desirable funding mechanism, and where used, have
generated large amounts of money, they can have their disadvantages.
These disadvantages include the potential for raiding from other
programs if the Fund income grows substantially and the tendency to
rely too heavily on these funds as a substitute, rather than a supple-
ment, for funding.
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We must also not forget that most of these programs are directed at
raising revenues from point sources of pollution, yet non-point
sources constitute some 65 per cent of our current pollution problem.
We should consider how to raise revenues from noripoint sources; for
example, products that pollute, or fees on transfers of land slated for
development.
As direct federal funding diminishes, Congress is also looking at new
ways to institute alternative financing. Senators Lautenberg, Chafee,
Bradley, Mitchell, and Baucus and Representatives Studds and Nowak
have all introduced or are considering bills that include innovative
ways of financing water programs.
Finally we must not forget that it is not just new money that we need
if s also efficiencies, institutional changes and technical assistance
to reduce the need for the money in the first place.
Speaker Len Bechtel
Outreach Specialist
U.S. EPA
Resource Management Division
Based on comments that have been made in our sessions the past
two days, two issues need to be addressed. First, the advantages of
public-private partnerships will be further discussed. Then, some
actions you may take to facilitate partnerships in your communities
will be presented.
The Importance of Some people have mentioned that they believe the main advantage to
Partnerships Stems from public-private partnerships is to reduce the level of resources needed
Their Ability to to P61*01"111 an environmental service. This assessment may not be
T c accurate. In fact, a municipality should not enter into a partnership
Improve services ^Q^^Q^ solely to save money. It should, however, build partner-
ships with the private sector if it wants to improve, expand, or en-
hance environmental services in the most cost efficient manner.
Each type of partnership offers something different to both the public
and private partners. Municipalities need to establish their goals and
incorporate them into the contract. The written agreement between
the local government and the private sector must clearly delineate
mandatory performance levels and risks.
What State and Local Several activities you should perform prior to entering into an agree-
Governments Can Do ment to get you over the liump' are:
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Homework. Although the information provided at this conference
has been quite helpful, you need to prepare in greater detail before
engaging the private sector. Localities should thoroughly research
companies, past partnerships and other financing options to assess
what approach is best for them.
Understanding the Need for Assistance. The fact is, you can't do it
alone. Go to the state or to EPA when you run into trouble. Help is
available. In addition, always have experienced legal counsel when
negotiating the contract, even if you have to go out-of-house to get it.
Mutual respect Each party has different interests. The public sector
wants to provide top quality environmental services at a reasonable
cost, while the private sector needs to make a profit in the long run to
survive. Both parties must try to reach a mutually satisfying agree-
ment, which is only accomplished if each party respects the other's
interests.
Public Support. No government activity can be successful without
public support. This is especially true with environmental services
due to their high visibility. An educated public is usually a suppor-
tive public when a partnership is being pursued for the proper rea-
sons. Efforts to disseminate information to citizens must begin very
early in the decision making process.
Public-private partnerships might not work in all cases, but they have
been effective in many situations. They give municipalities another
card to look at when considering financing options. Occasionally it
will be the trump card in a game we cannot afford to lose that of
defending our natural resources.
Speaker Arlene O'Donnell
Assistant Commissioner
Massachusetts Department of Environmental Protection
The previous panels of the conference focused on how to design and
operate public-private partnerships and alternative financing mecha-
nisms. I want to focus my presentation in a broader policy context;
how to more effectively spend the money that comes in and how to
promote environmental programs by emphasizing their long-term
economic benefits. Three examples of what Massachusetts is doing to
better link environmental programs with economics include:
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Building Support for Public Programs. The regulated community
and the taxpayers are willing to pay more money if they can see tan-
gible signs of improved service. We are also involving the public in
setting the program's priorities. Currently the DEP is ranking water
bodies in terms of their water quality. The DEP also plans to conduct
systematic reviews of its programs and will communicate the results
of these reviews to the public via press releases and publications.
Focus on Pollution Prevention as a Cost-Effective Approach. A
model case of pollution prevention was done by Gillette. This com-
pany employed new technology that reduced the amount of water
needed in its manufacturing process by 90 percent and will save the
company millions of dollars. It is often difficult to convince people
that an initial up-front investment will yield long-term economic
benefits.
Directing State Investments in an Environmentally Responsible
Way. The agencies that administer environmental programs need to
encourage input from the regulated community in order to ensure that
their programs are implemented in a way that is responsive to needs
of industry as well as the environment. The agencies need to stress
innovation and flexibility and recognize that although standards
should be applied across the board, unique case-by-case evaluations
may be necessary, especially for small businesses or communities.
If these steps are not taken by environmental agencies, these organiza-
tions run the risk of public backlash. If the agencies do not educate
and establish communication with the public, they are likely to have
to fight unnecessary funding battles. The time used in fighting such
battles could be better spent administering environmental programs.
Speaker Armando Carbonell
Executive Director
Cape Cod Planning
Given the current budget constraints that agencies are facing nation-
wide, there is a need to utilize new thinking and examine non-tradi-
tional ideas that might seem 'a bit crazy' at first.
Thinking Creatively can A traditional problem with funding environmental programs is that
Provide Solutions to the accounting systems that are used to record program costs do not
. p ,, reflect the true and long-term costs of programs. They underestimate
financing romems thg long.term implications of underfunding environmental programs.
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Another policy that I find particularly distressing is that in times of
budget cuts, trie first people who are fired are from management. It is
precisely in tough times that we need the skills of management to
redirect limited resources to accomplish program objectives.
Recovering Even when people are paying some fee, fine, penalty or tax, they are
Administrative Costs often not paying both the full costs of the environmental damage and
the program administration costs. I would argue that it is critical to
recover these administrative costs and that they should be assessed on
a proportional basis. Remember that clerical costs are not the only
component of administrative costs; the costs of lab tests, engineer's
salaries and insurance for personnel should also be recovered.
Impact fees can be used to collect the costs of providing an environ-
mental service. Other sources of funding can be derived from 'invol-
untary' sources. Involuntary sources could also be labeled as negotia-
tion. For example, if a real estate developer is applying for a permit to
build along the coast, the issuing agency could require that the devel-
oper build a road or provide for independent refuse collection for the
area.
Government A last source of funds to meet our environmental challenges can result
Entrepreneurship fr°m what I call 'government entrepreneurship/ Governments need
to think more like private industry and develop programs that gener-
ate revenues that are self-sustaining. This idea of government en-
trepreneurship can and does work in the provision of environmental
services. Cape Cod Planning's acquisition of Geographic Information
Systems (GIS) technology, and its subsequent marketing of GIS serv-
ices to state and local governments, has introduced valuable expertise
to our problem solving efforts that were not otherwise open through
normal government funding channels. Other opportunities await us,
if we initiate them.
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Region 1 Closing
Speaker Paul Keough
Deputy Administrator
U.S. Environmental Protection Agency
Region 1
The Action Agenda that
Follows Identifies
Roles for EPA, States,
Municipalities, and the
Private Sector
After two days of extensive discussions about public-private partner-
ships and alternative financing mechanims, I am sure we all have a
greater appreciation of the magnitude of the funding problem for
environmental protection. This conference is an important step in the
continuing effort to fund our environmental future. The Action
Agenda included in the proceedings to this conference summarizes
the many roles you have identified for EPA, states, localities, and the
private sector to take on or continue as we carry out our environ-
mental mandate. Let me offer a few observations by way of closing.
To continue our momentum:
EPA should identify legal impediments to partnerships and
alternative financing and eliminate them;
EPA should give states more flexibility to manage its pro-
grams. Region 1's "friction fighting program" seeks to do this;
EPA should reduce the reporting burden on states and locali-
ties;
EPA and states should develop better clearinghouses to collect,
analyze/ and share data;
The Environmental Financial Advisory Board should identify
barriers and incentives to investment and financing for envi-
ronmental projects, and propose changes to overcome barriers;
and
EPA, states, localities, and the private sector should be creative
in all of its efforts to finance and manage environmental pro-
grams.
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Region 1 looks forward to participating with the states and localities
of New England, with EPA Headquarters, and with the private sector
as we explore and implement creative forms of financing to support
our environmental services.
Thank you for participating in our conference.
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Region 1 Action Agenda
Key Roles
This section highlights important points brought out in this and other
EPA-sponsored Public-Private Partnership and Alternative Financing
conferences. It identifies key roles for EPA, state government, local
government, and the private sector to assist in the successful develop-
ment of public-private partnerships and alternative financing mecha-
nisms that will help to fund the costs of our environmental future.
Federal-EPA
Use public relations to increase public cooperation concerning the
potential role of the private sector in solving environmental problems.
Provide start-up capital in the form of grants that will be used to fund
model projects.
Offer financial, legal, and technical assistance to parties considering
alternative financing mechanisms or public-private partnerships.
Develop more and better information clearinghouses that will collect,
analyze, and share data among all levels of government and between
the public and private sectors.
Increase the involvement of the regulated community during the
drafting of legislation. This will result in laws that are conducive to
the formation of alternative financing mechanisms and public-private
partnerships.
Create a workgroup to examine the legislative and regulatory barriers
that impede the formation of alternative financing mechanisms and
public-private partnerships.
Sponsor conferences and workshops that can be used to disseminate
information on the details of implementing alternative financing
mechanisms and public-private partnerships.
Encourage the U.S. Treasury Department to develop and issue favor-
able regulations to support greater private involvement in local gov-
ernment's provision of services.
103
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Establish relationships with members of the House Ways and Means
Committee, the Senate Finance Committee, and their staffs and re-
quest them to consider legislation providing more favorable tax condi-
tions.
Elicit the assistance of advisory groups such as the Financial Advisory
Board that will work to provide feedback concerning federal pro-
grams and policies.
Reduce the rigidness of federal programs by allowing the states more
flexibility hi the management of their environmental programs and
reducing the reporting burden on states and localities.
State
Use public relations and educational campaigns to build public sup-
port for environmental programs.
Explore the viability of alternative financing mechanisms to supple-
ment state general revenues for environmental services.
Investigate within state legislatures approaches to alternative financ-
ing that might be included within legislation for state environmental
programs.
Provide financial grants that will assist in the formation of public-
private partnerships.
Provide information to the public in the form of handbooks, tours of
existing public-private facilities, and conferences.
Develop legislation that will make public-private partnerships attrac-
tive. Flexibility in the legislation will be necessary to respond to the
unique needs of small communities.
Local
Provide public education as a key ingredient for ensuring the success
of a community based partnership.
Review all financial options and their implications and feasibility such
as new taxes, user fees, bonds, and public-private partnerships.
104
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Follow the status of federal regulations that may have profound con-
sequences on the municipal level. Work with state representatives to
ensure that legislation remains flexible and responsive to individual
community needs and circumstances.
Retain competent legal counsel during service contract negotiations to
dearly define the responsibilities of the private and public partners.
Private Sector
Explore potential undertakings where partnerships would serve in the
best interest of the community.
Market available expertise to communities to help solve environ-
mental management problems.
Work to negotiate contracts with governments that equitably distrib-
ute the risk and provide a financial return that is commensurate with
the level of risk.
Follow the status of federal and state regulations and work with Con-
gressional members and their staffs to ensure that legislation that is
conducive to the private sector's participation is passed.
Become involved and contribute expertise and time to task forces and
other groups that are interested in promoting public-private partner-
ships.
Use public relations to inform the public of other successful public-
private partnerships the firm has been involved with.
U.S. EPA Headquarters Library
Mail code 3201
1200 Pennsylvania Avenue NW
Washington DC 20460
105
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106
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Region 1 Conference Attendees
A-B
Philip Ahrens
Deputy Attorney General
Maine Department of Environmental Protection
State House, Station #17
Augusta, ME 04333
Stephen Allbee
Director
Planning and Analysis Division
Office of Municipal Pollution Control
U.S. Environmental Protection Agency
401M Street, SW
Washington, DC 20460
George Ames
Executive Director
Council of Infrastructure Financing Authorities
300 Metropolitan Square
65515th Street, NW
Washington, DC 20005
Carol Ansheles
Solid Waste Project Manager
New England Waste Management Officials'
Association
85 Merrimac Street
Boston, MA 02114
Elizabeth Armstrong
Deputy Commissioner
Maine Department of Environmental Protection
State House, Station #17
Augusta, ME 04333
Bryan Barrette
Principal Systems Analyst
Rhode Island Department of Health
3 Capitol Hill, Room 209
Providence, RI 02908
Len Bechtel
Program Analyst
Resource Management Division
U.S. Environmental Protection Agency
401 M Street, SW
Washington, DC 20460
Julie Belaga
U.S. Environmental Protection Agency
Region 1
JFK Federal Building
Boston, MA 02203
Harless R. Benthul
Deputy Director
Management Division
U.S. Environmental Protection Agency
Region 6
1445 Ross Avenue
Dallas, TX 75202
Richard Bernier
Chief
Construction & Grants
Narragansett Bay Commission
2 Ernest Street
Providence, RI 02905
107
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Jonathan Bilmes
Manager
Bristol Resource Recovery Facility
225 North Main Street, Suite 311
Bristol CT 06010
Terry Blunt
Director
Connecticut River Action Program
Massachusetts Department of Environmental
Management
136 Damon Road
Northampton, MA 01060
David Boulter
Land Use Regulation Commission
Department of Conservation
State House, Station #22
Augusta, ME 04333
Tim Brennan
Executive Director
Pioneer Valley Planning Commission
26 Central Street
West Springfield, MA 01089
Gary Briere
Project Manager
Massachusetts Department of Environmental
Management
136 Damon Road
Northampton, MA 01060
Kevin Brubaker
Water Quality Coordinator
Save the Bay
434 Smith Street
Providence, RI 02903
Robert Brustlin
Vice President
Vanasse Hangen Brustlin, Inc.
101 Walnut Street
Watertown,MA 02172
William Bryson
Intergovernmental Coordinator
Kansas Corporation Commission
Docking State House, 4th Floor
Topeka, KS 06612
Nancy Bucci
Selectmen's Secretary
Town Hall
3 East Main Street, P.O. Box 188
Erving,MA 01344
Timothy Burke
Commissioner
Vermont Department of Environmental
Conservation
103 South Main Street
Building 1 South
Waterbury,VT 05676
Ted Cady
Water Resource Specialist
Rural Housing Improvement
218 Central Street
Winchendon, MA 01475
Armando Carbonell
Executive Director
Cape Cod Planning & Development
1st District Courthouse
Barnstable, MA 02630
Ann Carey
Vice President
Apogee Research, Inc.
48350 East West Highway
Suite 600
Bethesda,MD 20814
Russell Chaleauneuf
Director
Department of Public Works
925 Sandy Lane
Warwick, RI 02886
108
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Marian Cody
Program Analyst
Grants Administration Division
U.S. Environmental Protection Agency
401M Street, SW
Washington, DC 20460
Reed Coles
State Representative
Maine House of Representatives
Route 2, Box 59
South Harpswell, ME 04079
Pat Conway
Administrative Assistant
New England Interstate -
Water Pollution Control Commission
85 Merrimac Street
Boston, MA 02114
George Crombie
Director
Burlington Public Works
P.O. Box 849
Burlington, VT 05402
D-E
Savas Danos
Assistant General Manager
Littleton Light & Water Department
Whitcomb Avenue, P.O. Box 2406
Littleton, MA 01460
Robert Daylor
President
Daylor Consulting Group, Inc.
World Trade Center, Suite 216
Boston, MA 02210
Steve DeToy
Assistant Director
Cranston Planning Department
City Hall, 869 Park Avenue
Cranston, RI 02910
Jim DeWitt
President
Connecticut Resources Group
Connecticut Association of Metal Finishers
60 Washington Street, Suite 805
Hartford, CT 06106
Edward Dlott
Vice President
Public Finance Department
Bank of Boston
100 Federal Street
Boston, MA 02110
James Dobbs
Vice President and General Counsel
Metcalf & Eddy
P.O. Box 4043
Woburn, MA 01888
Dan Doyle
Town Administrator
Town of Blackstone
15 St. Paul Street
Blackstone, MA 01504
Ellen Duke
Manager
Ernst & Young
One Boston Place
Boston, MA 02108
Stephen Erickson
Director of Legislative Affairs
Governor DiPrete's Office
State House
Providence, RI 02903
F-G
David Fierra
Director
Water Management Division
U.S. Environmental Protection Agency
Region 1
JFK Federal Building
Boston, MA 02203
209
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Kevin Flynn
Planning Director
Cranston Planning Department
City Hall, 869 Park Avenue
Cranston, RI 02910
Caroline Gangmark
Public-Private Partnership Coordinator
U.S. Environmental Protection Agency
Region 10
1200 6th Avenue
Seattle, WA 98101
Linda Glass
Program Analyst
U.S. Environmental Protection Agency
Region 5
230 South Dearborn Street
Chicago, IL 60604
William Graham
Senior Financial Analyst
Government Finance Research Center
K Street, NW, Suite 200
Washington, DC 20006
Daniel Greenbaum
Commissioner
Massachusetts Department of Environmental
Protection
One Winter Street
Boston, MA 02108
Charles L. Grizzle
Assistant Administrator
Office of Administration and Resources
Management
U.S. Environmental Protection Agency
401 M Street, SW
Washington, DC 20460
Laura Guadagno
Municipal Representative
Bank of New England
28 State Street
Boston, MA 02109
H-I
Kenneth Hagg
Deputy Commissioner
Massachusetts Department of Environmental
Protection
One Winter Street
Boston, MA 02108
Rebecca Hanmer
Assistant to the Deputy Administrator
Office of the Administrator
U.S. Environmental Protection Agency
401 M Street, SW
Washington, DC 20460
Deborah Harstedt
Grants Specialist
Planning and Management Division
U.S. Environmental Protection Agency
Region 1
JFK Federal Building
Boston, MA 02203
Christine Hart
Project Manager
Envirologic, Inc.
P.O. Box 1222
Brattieboro, VT 05302
Frank Heald
President
Alpine Pipeline, Inc.
c/o Pico Ski Resort
Rutland, VT 05701
David Hickox
Assistant Superintendent Public Works
Town of North Dartmouth
751 Allen Street
North Dartmouth, MA 02747
F. Charles Hindmarsh
Vice President
State Street Boston Capital Corporation
225 Franklin Street
Boston, MA 02101
no
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Merrill Hohman
Director
Waste Management Division
U.S. Environmental Protection Agency
Region 1
JFK Federal Building
Boston, MA 02203
Timlcke
Program Analyst
Analysis and Evaluation Division
Office of Water Regulations and Standards
U.S. Environmental Protection Agency
401M Street, SW
Washington, DC 20460
Dan Ingold
Business Manager
Envirologic, Inc.
P.O. Box 1222
Brattleboro, VT 05302
J-K
Kathleen Jensen
Maine Department of Environmental Protection
Office of Commissioner
State House, Station #17
Augusta, ME 04333
Peter Johnson
Administrative Assistant
Ashfield Water District
P.O. Box 213
Ashfield, MA 01330
Peter Karalekas
Chief, Water Supply Section
Water Management Division
U.S. Environmental Protection Agency
Region 1
JFK Federal Building
Boston, MA 02203
Caroline Karp
Project Manager
Rhode Island Department of Environmental
Management - Narragansett Bay Project
291 Promenade Street
Providence, RI 02908
George Kent
Marketing Manager
ChemCycle Corporation
129 South Street
Boston, MA 02111
Paul Keough
Deputy Regional Administrator
U.S. Environmental Protection Agency
Region 1
JFK Federal Building
Boston, MA 02203
Tom Kern
Project Manager
American Management Systems, Inc.
1777 North Kent Street, Room 755
Arlington, VA 22209
Dennis Keschl
Director, Bureau of Air Quality
Maine Department of Environmental Protection
State House, Station #17
Augusta, ME 04333
Ted Kinney
Director
New England Water Works Association
42ADilla Street
Milford,MA 01757
David Kittredge
Director
Manchester Water Works
281 Lincoln Street
Manchester, NH 03103
111
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BobKlehm
Senior Manager
Ernst & Young
200 Clarendon Street
Boston, MA 02116
Carol Knutsen
Regional Manager
TECLAW,Inc.
205 Portland Street
Boston, MA 02114
Richard Kotelly
Deputy Director
Water Management Division
U.S. Environmental Protection Agency
Region 1
JFK Federal Building
Boston, MA 02203
KirkLaflin
Director
New England Regional Wastewater
2 Fort Road
South Portland, ME 04106
Reginald LaRosa
Chief of Operations
Vermont Department of Environmental
Conservation
105 South Main Street
Waterbury, VT 05676
Cheryl LeClair
State House
Office of Lieutenant Governor
317 State House
Providence, RI 02903
David Lenart
Project Manager
Tighe-Bond
55 Southampton Road
Westfield,MA 01085
Robert Lenna
Director
Maine Municipal Bond Bank
P.O. Box 2268
Augusta, ME 04338
David Luberoff
Research Analyst
Kennedy School of Government
Harvard University
Cambridge, MA 02138
M-N
Craig MacLaughlin
Engineering Technician
Rhode Island Department of Environmental
Management
291 Promenade Street
Providence, RI 02908
Dolores Malloy
Director, Legislative Services
Connecticut Association of Metal Finishers
60 Washington Street, Suite 805
Hartford, CT 06106
Mark Malone
Outreach Coordinator
U.S. Environmental Protection Agency
Region 1
JFK Federal Building
Boston, MA 02203
Dean Marriott
Commissioner
Maine Department of Environmental Protection
State House, Station #17
Augusta, ME 04333
Janet Mason
Chief
Planning & Budgeting Branch
U.S. Environmental Protection Agency
Regions
230 South Dearborn Street
Chicago, IL 60604
112
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Tina Mazzocchetti
Analyst
American Management Systems, Inc.
1777 North Kent Street, Room 767
Arlington, VA 22209
Barbara McAllister
Chief
Planning, Analysis & Grants Branch
U.S. Environmental Protection Agency
Region 1
JFK Federal Building
Boston, MA 02203
Patricia Meaney
Director
Planning and Management Division
U.S. Environmental Protection Agency
Region 1
JFK Federal Building
Boston, MA 02203
Michael Meotti
Senator, Senate Appropriation Committee
Connecticut State Senate ,
Legislative Office Building, Room 23
Hartford, CT 06106
Michael Michaud
Representative
Maine State Legislature
State House, Station #115
Augusta, ME 04333
Elizabeth Miner
Chief
Regulatory & Program Analysis Branch
U.S. Environmental Protection Agency
401 M Street, SW
Washington, DC 20460
Jane Moore
Chief
Program Planning & Integration Branch
U.S. Environmental Protection Agency
Region 6
1445 Ross Avenue
Dallas, TX 75202
Rachel Moore
Public Information Officer
Massachusetts Department of Environmental
Management
136 Damon Road
Northampton, MA 01060
Robert Moore
Assistant Deputy Commissioner
Connecticut Department of Environmental
Protection
165 Capitol Street
Hartford, CT 06106
John Moulton III
Division Director
Maine Department of Environmental Protection
State House, Station #17
Augusta, ME 04333
Joseph Murphy
Town Manager
Town of Hull
253 Atlantic Avenue
Hull, MA 02045
Linda Murphy
Deputy Director
Waste Management Division
U.S. Environmental Protection Agency
Region 1
JFK Federal Building
Boston, MA 02203
113
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Robert Murray
Operations Manager
Rhode Island Solid Waste Management
Corporation
West Exchange Center
260 West Exchange Street
Providence, RI 02903
John Musante
Budget Director
City of New Bedford
133 Williams Street
NewBedford^MA 02745
Patricia Nisco
Assistant to Treasurer
Krofta Engineering
P.O. Box 972
Lenox, MA 01240
William Nuzzo
Program Coordinator
Waste-Management Division
U.S. Environmental Protection Agency
Region 1
JFK Federal Building
Boston, MA 02203
O-P
Arleen O'Donnell
Assistant Commissioner for Resource Protection
Massachusetts Department of Environmental
Protection
One Winter Street
Boston, MA 02108
Neil O'Leary
Division Director
Massachusetts Department of Environmental
Protection
One Winter Street
Boston, MA 02108
Pat O'Leary
Program Analyst
Water Management Division
U.S. Environmental Protection Agency
Region 1
JFK Federal Building
Boston, MA 02203
Joseph Ochab
GOALS Planner
Massachusetts Department of Environmental
Management
136 Damon Road
Northampton, MA 01060
Michael Ochs
Assistant for Government Relations
U.S. Environmental Protection Agency
Region 1
JFK Federal Building
Boston, MA 02203
David Osterman
Branch Chief
Resource Planning & Analysis Branch
Resource Management Division
U.S. Environmental Protection Agency
401 M Street, SW
Washington, DC 20460
Mark Perry
Financial Manager
City of New Bedford
133 Williams Street
New Bedford, MA 02745
Harvey Pippen, Jr.
Director
Grants Administration Division
U.S. Environmental Protection Agency
401 M Street, SW
Washington, DC 20460
114
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Ronald Poltak
Executive Director
New England Interstate
Water Pollution Control Commission
85 Merrimac Street
Boston, MA 02114
Gerald Potamis
Chief
Wastewater Financial Management Section
U.S. Environmental Protection Agency
Region 1
JFK Federal Building
Boston, MA 02203
Anna F. Prager
Governor's Office
State House
317 State House
Providence, RI 02903
R
Andrew Robinson
Administrative Manager
Envirologic, Inc.
P.O. Box 1222
Brattieboro, VT 05302
Donald Rodgers
Mayor's Office
Town of Leominster
City Hall, 25 West Street
Leominster, MA 01453
Norman Rodgers
Chief Facility Manager
Hull Sewer Commission
1111 Nantasket Avenue
Hull, MA 02045
Brian Rourke
Program Analyst
Office of Water
U.S. Environmental Protection Agency
401M Street, SW
Washington, DC 20460
Clark Rowell
Vice President
Shawmut Bank
1 Federal Street
Boston, MA 02211
Donald Rugh
Financial Specialist
Office of Municipal Pollution Control
Office of Water
U.S. Environmental Protection Agency
401 M Street, SW (WH-546)
Washington, DC 20460
S-T
John J. Sandy
Director
Resource Management Division
U.S. Environmental Protection Agency
401 M Street, SW
Washington, DC 20460
Brian Sarault
Mayor
CityofPawtucket
City Hall
Pawtucket,RI 02860
Arnold Schiffman
Assistant Director
New Jersey Department of Environmental
Protection - Groundwater Quality
401 East State Street, CN-029
Trenton, NJ 08625
Larry J. Scully
President
Scully Capital
113315th Street, NW
Washington, DC 20005
115
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Robert Sexton
Assistant to Dean
Graduate School of Oceanography
University of Rhode Island
South Ferry Road
Narragansett, RI 02882
Claudia Shambaugh
Compliance Specialist
Massachusetts Coastal Zone Management
P.O. Box 1012
Marion, MA 02738
Philip Shapiro
Senior Financial Officer
Massachusetts Water Resources Authority
Charlestown Navy Yard, First Avenue
Boston, MA 02129
Evelyn Shields
Policy Analyst on Public Finance
National Governors' Association
444 North Capitol Street, NW, Suite 250
Washington, DC 20001
S.R. Shrivastava
President/Chief Executive Officer
Larsen Engineers/Architects
700 West Metropark
Rochester, NY 14623
Dennis Sohocki
Public-Private Partnership Coordinator
U.S. Environmental Protection Agency
Region 8
99918th Street, Suite 500
Denver, CO 80202
Ramsay Steward
Research Assistant
Connecticut Council on Environmental Quality
165 Capitol Avenue, Room 239
Hartford, CT 06106
Ralph Sullivan
Counsellor
Environment & Public Finance
1004 Loxford Terrace
Silver Spring, MD 20901
David Sutherland
Director of Environmental Affairs
Connecticut Audobon Society
118 Oak Street
Hartford, CT 06106
Lester Sutton
Special Assistant
New England Regional Laboratory
U.S. Environmental Protection Agency
60 Westview Street
Lexington, MA 02173
David Sweet
Superintendent
Kennebunk Water District
92 Main Street
Kennebunk, ME 04043
Edward Szymanski
Chief
Division of Water Resources
Rhode Island Department of Environmental
Management
291 Promenade Street
Providence, RI 02908
Sandra Tate
Director
Office of Policy & Planning
Maine Department of Environmental Protection
State House, Station #17
Augusta, ME 04333
Gina Terry
Environmental Planner
Washington State Department of Ecology
Mail Stop PV-11
Olympia, WA 98504
116
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Robert Varney
Commissioner
New Hampshire Department of Environmental
Services
P.O. Box 95, Hazen Drive
Concord, NH 03301
George Viles
Director
Bureau of Administration
Maine Department of Environmental Protection
State House, Station #17
Augusta, ME 04333
w
Lajuana Wilcher
Assistant Administrator
Office of Water
U.S. Environmental Protection Agency
401M Street, SW
Washington, DC 20460
KarlWilkins
Office of Commissioner
Maine Department of Environmental Protection
State House, Station #17
Augusta, ME 04333
Barry Woods
Water Department Superintendent
Town of North Dartmouth
751 Allen Street
North Dartmouth, MA 02747
Karl Wagener
Executive Director
Connecticut Council on Environmental Quality
165 Capitol Avenue, Room 239
Hartford, CT 06106
John Wallace m
Managing Director
Public Finance Department
Bank of Boston
100 Federal Street
Boston, MA 02110
Joan Westiand
Engineering Aide
Connecticut Department of Environmental Pro-
tection
122 Washington Street
Hartford, CT 06106
Marcy Wetherbee
Environmental Planner
City of New Bedford
133 Williams Street
New Bedford, MA 02745
F. Adam Yanulis
Regional Business Development Manager
Woodard & Curran, Inc.
60 Walnut Street
Wellesley,MA 02181
Mark Youngstrom
Project Engineer
Wright Engineering Limited
12 Wales Street, Box 176
Rutland, VT 05702
117
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118
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Office of the Comptroller
Public-Private Partnerships Initiative Staff
John J. Sandy
Director
Resource Management Division
(202) 382-4425
David Osterman
Chief
Resource Planning and Analysis Branch
(202) 475-8227
Staff: Leonard Bechtel
Margaret Binney
Ellen Fahey
Keith Hinds
Kim Lewis
Joanne Lynch
Timothy McProuty
Eugene Pontillo
Christine Zawlocki
Public-Private Partnerships
Regional Coordinators
Region 1
Region 2
Region 3
Region 4
RegionS
Region6
Region 7
Region 8
Region 9
Region 10
Boston
New York
Philadelphia
Atlanta
Chicago
Dallas
Kansas City
Denver
San Francisco
Seattle
Barbara McAllister
Helen Beggun
Cathy Mastropieri
Tom Nessmith
Janet Mason
Jane Moore
Gene Ramsey
Evelyn Daniels
Dennis Sohocki
Sharon Childs
Marsha Harris
Caroline Gangmark
(617) 565-3395
(212) 264-9860
(215) 597-9358
(404) 347-7109
(312) 353-7894
(214) 655-6530
(913)236-2825
(303) 293-1460
(415) 974-0960
(206) 442-4044
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Office of Water
Alternative Financing Mechanisms Contact
Elizabeth Miner
Chief
Regulatory and Program Analysis Branch
(202) 382-5818
Alternative Financing Mechanisms
Regional Mobilization Coordinators
Region 1
Region 2
Regions
Region 4
Regions
Region 6
Region?
Regions
Region 9
Region 10
Boston
New York
Philadelphia
Atlanta
Chicago
Dallas
Kansas City
Denver
San Francisco
Seattle
Peter Karalekas
MikeLowy
Jeff Mass
Carla Pierce
Christine Urban
Jose Rodriquez
Glen Yager
Marc Alston
Bill Thurston
Larry Worley
(617) 565-3665
(212) 264-4448
(215) 597-9873
(404) 347-2913
(312) 353-9546
(214)655-9546
(913) 236-2815
(303) 293-1702
(415) 974-0912
(206)442-1893
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For More Information:
U.S. Environmental Protection Agency
Resource Management Division (H-3304)
401 M Street, SW
Washington, DC 20460
(202) 245-4020
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