ENVIRONMENTAL FINANCIAL ADVISORY BOARD
Joanne Tfarowe, Chair
Brent Anderson
L.ori Beary
Janice Beecher
Theodore Chapman
Rudolph Chow
Edwin Crooks
Lisa Daniel
Marie Roberts De LaParra
Yvette Downs
Heather Himmelberger
Ted Henifin
Craig Holland
Daniel Kaplan
Suzanne Kim
Pamela Lemoine
James McGoff
Chris Meister
James "Tony" Parrott
Eric Rothstein
Bill Stannard
Linda Sullivan
Carl Thompson
Angie Sanchez
Jennifer Wasinger
Richard Weiss
David Zimmer
Designated
Federal Officer
Edward Chu
June 25, 2019
Mr. David P. Ross
Assistant Administrator for Water
United States Environmental Protection Agency
1200 Pennsylvania Avenue, N.W.
Washington, DC 20460
Dear Assistant Administrator Ross:
The Environmental Financial Advisory Board (EFAB) is pleased to present you
our report on Funding for Pre-Disaster Resiliency. The EFAB was issued this
charge from the EPA's Office of Water in January 2018 with the purpose to
"investigate effective investment and funding strategies that reduce risks to
essential water infrastructure and post-disaster costs attributable to extreme
natural events and chronic flooding and which achieve net savings on a
probabilistic adjusted Net Present Value given historic and expected incidence."
The Board organized a workgroup and analyzed this matter utilizing the
knowledge of our diverse group of members as well as multiple technical
resources that were available on this topic.
This report focuses mainly, but not exclusively, on investments in flood control
and stormwater infrastructure - which are generally the function of the local or
regional unit of government - and analyzes how such investments can help
protect key assets. Furthermore, the report highlights opportunities and barriers at
the local and Federal level associated with pre-disaster resiliency.
We believe the bulk of actionable opportunities related to pre-disaster resiliency
remain with local and regional governments which continue to build most of the
drinking water, sanitary sewer and stormwater infrastructure in the United States.
Local communities often partner with Federal and respective state governments
and rely on the tax-exempt municipal bond market as well as Federal funding and
state financing programs for project funding. There continue to be opportunities
to encourage and incentivize community-based pre-disaster resiliency through
collaboration and prioritization between and among these programs.
Our recommendations regarding pre-disaster resiliency center around several
core principles which we believe are important to mitigating the risks associated
with extreme events. These principles are: (i) understand the problem and
Creative Approaches to Funding Environmental Programs, Projects, and Activities
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potential solution; (ii) focus on long-term planning; (iii) utilize an asset management approach
to track and monitor operational performance; (iv) money is limited; and (v) collaboration
among Federal agencies. From these principles, we developed the following recommendations:
1. Encourage long-term planning and the use of asset management planning tools forboth
municipal and investor-owned utilities;
2. Develop a Coordination Team (including U.S. EPA, U.S. Army Corps of Engineers, U.S.
Department of Agriculture's Natural Resources Conservation Service, and Federal
Emergency Management Agency) to foster communication among Federal agencies, set
priorities, and reduce gaps in funding pre-disaster resiliency for public infrastructure;
3. Consider the creation and authorization of a new Stormwater State Revolving Fund
and/or expansion of the SRF or WIFIA programs to include additional storm water/flood
control eligibilities; and
4. Suggest EPA's Water Infrastructure and Resiliency Finance Center (WIRFC) develop a
compendium of information to measure resiliency costs, benefits, and best practices.
We believe that these recommendations are actionable and will provide momentum and enhance
investment in pre-disaster resilience.
As this report was being developed, the America's Water Infrastructure Act of 2018 (the Act)
was signed into law. Section 4106 Section of the Act authorizes grants to the states and direct
grants to municipalities for stormwater overflow and stormwater reuse purposes under the same
requirements as projects funded from a State water pollution control agency under Title VI.
While the Act is briefly referenced in the report; we did not fully evaluate this new program due
to the timing of our report, the need for program implementation details, and appropriations
uncertainties. The Board believes that the Act has a strong connection with the charge for this
report. We believe EFAB should take on a future work effort to evaluate and discuss with EPA
the Act, implementation details, and the enhancements it can provide for pre-disaster resiliency.
We hope this report is helpful to you and the EPA staff and we would be pleased to discuss our
analysis and summary in further detail.
Joanne M. Throwe, Chair
Environmental Financial Advisory Board
Enclosure
cc: Edward Chu, Designated Federal Officer, Environmental Financial AdvisoryBoard
Benita Best-Wong, Principal Deputy Assistant Administrator, Office ofWater
Andrew Sawyers, Director, Office of Wastewater Management Raffael Stein,
Director, Water Infrastructure Division
Sonia Brubaker, Director Water Infrastructure and Resiliency Finance Center
Sincerely,
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Environmental Financial Advisory Board
EFAB
Members
Joanne Throwe, Chair
Brent Anderson
Lori Beary
Janice Beecher
Theodore Chapman
Rudolph Chow
Edwin Crooks
Lisa Daniel
Marie Roberts De La Parra
Yvette Downs
Heather Himmelberger
Ted Henifin
Craig Holland
Jeffrey Hughes
Daniel Kaplan
Suzanne Kim
Pamela Lemoine
James McGoff
Chris Meister
James "Tony" Parrott
Eric Rothstein
Bill Stannard
Linda Sullivan
Carl Thompson
Angie Sanchez
Jennifer Wasinger
Richard Weiss
David Zimmer
Designated
Federal Officer
Funding for Pre-Disaster Resiliency
June 2019
This report has not been reviewed for approval by the U.S. Environmental
Protection Agency; and hence, the views and opinions expressed in the
report do not necessarily represent those of the Agency or any other
agencies in the Federal Government.
Printed on Recycled Paper
Edward Chu
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Environmental Financial Advisory Board
Funding for Pre-Disaster Resiliency
June 2019
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Table of Contents
EPA's Charge 3
Introduction, Background, and Need for the Charge 5
Defining Resilience and Framing the Report 6
Discussion and Analysis 8
Recommendations 11
Summary/Conclusion 14
Appendix: Case Studies in Resilience 15
NEW YORK 15
Superstorm Sandy - New York City Department of Environmental Protection Wastewater
Resilience Plan 15
NEW JERSEY 17
Post-Superstorm Sandy Damage Assessment of South Monmouth Regional Sewerage
Authority Pump Stations 17
TEXAS 20
Texas Windstorm Insurance Association 20
IOWA 22
Dubuque Bee Branch 22
Middle Cedar Partnership Project 25
OKLAHOMA 27
City of Tulsa: Resilience after the Storm 27
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large
In January 2018, EFAB received the following charge discussion and questions from EPA's
Office of Water.
Infrastructure design that mitigates risks associated with extreme events is critical to achieving
resilience capacity. Such designs are critical to mitigating post-event costs and service
interruptions to water, wastewater and stormwater treatment works. It is also critical to develop a
good understanding of what is an optimal resilience investment for a community given risks and
future expectations for high impact events and their frequency. In addition, natural infrastructure,
coastal ecosystems preservation and restoration can be a critical component to mitigation and
water quality impairment that can bend the resilience investment cost curve for communities
with high flood risk. For example, stormwater drainage can be designed to adapt to risks
associated with changing sea levels. It is now increasingly possible to measure the risks and
compare the costs and benefits of natural/green infrastructure solutions with that of conventional
gray infrastructure/defenses.1 Cost/benefit measurement can be applied equally to flood and
drought resilience investment.
There are many federal programs that invest in risk mitigation, including natural infrastructure,
but they are often a by-product of other intended goals borne by other federal agencies such as
Federal Emergency Management Agency (FEMA), Army Corps of Engineers (ACE) and US
Department of Agriculture (USDA). In addressing the following questions, we ask EFAB to
consider how EPA funding programs mesh with the programs of the other federal agencies (or
not) and identify opportunities for improvement. Given that EPA oversees the Clean Water and
Drinking Water SRF Funds, 319 grant programs for states and federal territories, WIFIA and that
program administrators (either EPA or the states) establish project funding priorities/criteria, we
request EFAB to respond to the following:
To provide a fresh assessment of how these programs serve as incentives/barriers to
resilient investment, including natural and green infrastructure, designed to mitigate risk
and reduce the costs of extreme events?
Are there specific changes that could be made to the list of qualified projects that could
enhance the opportunity to fund pre-disaster risk/cost mitigation projects? Could we add
a classification of project qualifications as outcome-based? For example, should program
criteria prioritize infrastructure intended to reduce FEMA payout for flooding or to
reduce expected mortality rates should the incidence for high impact events rise? Should
program criteria address the potential value of risk and probability?
When it comes to post event response, what have federal and state partners done to assure
a robust and cost-effective response that can further mitigate event impacts on
communities? What incentives are given to rebuild to a greater degree of resilience than
1 "Financing Natural Infrastructure for Coastal Flood Damage Reduction", Lloyd's Tercentenary Research
Foundation, London, June 2017
http://conservationgatewaY.org/ConservationPractices/Marine/crr/librarv/Documents/FinancingNaturalInfrastructure
Report, pdf
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before? Given recent events, what are the best management practices that have been
developed that can be documented?
What can be done to encourage efforts to address resilience as viewed from a regional
and/or a watershed perspective? For example, can states/SRFs do more to facilitate
regional and/or watershed-based cooperation?
What changes, if any, are needed to EPA programs to assure that natural and green
infrastructure solutions are given proper weight in criteria setting given cost/benefit
impacts on resilience investment? Are there opportunities for connectivity across EPA
offices/federal agencies regarding the promotion of natural infrastructure acquisition,
green infrastructure (GI) and related Best Management Practices?
What metrics are there to measure/quantify Return on Investment (ROI) made to protect
critical infrastructure that mitigate extreme event risk or impacts?
Are there any good, quantified examples of proactive resilience investment expenditures
that resulted in net savings as analyzed after a relevant disaster event?
How do we encourage communities to make investment in pre-mitigation infrastructure a
priority in their capital improvement plans/budgeting process? How are rating agency
criteria affecting resilience investment?"
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Introduction, Background, and Need for the Charge
"Disasters, both natural and man-made, will always pose a threat, and every community in
America will face a disaster at some point. A sobering fact is that the costs of disaster,
measured in lives lost and property destroyed, have been steadily increasing in the United
States over the past 50 years...
Not only does mitigation save lives, it is a more cost-effective, wiser use of taxpayer dollars.
Studies demonstrate that for every $1 spent on mitigation, between $4 and $8 is saved in
avoided disaster-recovery costs.
It costs less to prevent and minimize damage and to strengthen our communities than it
does to simply spend resources on recovery afterward: a common-sense approach but not
one that our federal programs currently emphasize. Facilitating and incentivizing
mitigation is the most effective means of bending the cost curve for disasters."
Representative Bill Shuster (PA), Transportation and Committee Chair for the 115th
Congress, in an op-ed for Investor's Business Daily, speaking to the damage from
Hurricane Florence and in support of resilience measures (September 25, 2018).
"It's frustrating to us because we repeat this same cycle over and over again. If you want to
live in these areas, you've got to do it in a more resilient fashion."
Federal Emergency Management Agency Administrator Brock Long, in a press briefing
discussing Hurricane Michael, on citizens ignoring evacuation warnings and the need for more
consistent infrastructure and building codes to harden communities against flooding (October
12, 2018).
According to the National Oceanic and Atmospheric Administration (NOAA), in 2017 alone
there were 16 natural disasters that each caused at least $1 billion in losses and damage.
Altogether, the combined losses from all weather and climate disaster events, regardless of
severity, killed 362 people and totaled $306.2 billion in losses and damage2. In addition to the
sheer magnitude of the initial damage, the prolonged nature of rebuilding and economic recovery
- from the household level to the community - can be significant.
For example, approximately 3% of northern California's estimated 1,200 wineries were
destroyed by the 2017 wildfires. Regional chambers of commerce estimate that Napa Valley
employs over 30,000 in tourism-related jobs that generate more than $3.8 billion in economic
activity to the region, all of which is estimated to take at least some measurable hit in the near
term. As this report is being finalized, California is assessing the loss of life, property and
economic activity as a result of the 2018 wildfires. Apart from the direct impacts to the economy
and the eventual increased risk of landslides, wildfires can impact the quality of the water
supply3. The lingering effects of natural disasters can be seen in New Orleans, Louisiana where
the estimated 2017 population of about 400,000 is still only about 85% of its 2000 census figure,
2National Oceanic and Atmospheric Administration https://www.noaa.gov/news/2017-was-3rd-warmest-year-on-
record-for-us
3 Science Daily (https://www.sciencedailY.com/releases/2018/03/1803200844Q3.htm')
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more than a decade after Hurricanes Katrina and Rita and even as the city struggled again with
two extreme rainfall events in July and August 2017.
Resiliency has developed into a key theme for local and regional governments in the United
States which is due in part to the rising acceptance that climate change-related risks represent
exposures for public entities and their infrastructure (highlighted during the 2017 hurricanes in
North America). Additionally, the interlinked trends of growing and urbanizing populations,
which bring concentrations of social and economic assets in areas already susceptible to extreme
weather-related events (such as hurricanes and flooding). Furthermore, nearly 40% of the
population in the country lives in urban, coastal areas that could be threatened by not only storms
but also by sea level rise.4
Drinking water, sanitary sewer and stormwater infrastructure are crucial for public health
and safety in both urbanized and rural America. Improved resilience against the two most
common perils - floods and droughts - could help communities not only reduce the damage
and loss suffered during these perils but also speed up the return to normalcy.
Defining Resilience and Framing the Report
The Board started with a definition of Resilience that included key concepts from an existing
Memorandum of Agreement between FEMA and EPA that states "Smart growth approaches and
mitigation measures applied to pre-and post-disaster development and redevelopment are a major
part of ensuring that investments and future growth improve environmental, economic, and
public health outcomes. Smart growth will also help communities become more resilient to
future hazards that may occur, including becoming more resilient to the impacts from climate
change."5 For utilities in specific, it means "the ability of water infrastructure systems to
withstand and recover from natural and man-made disturbances to their functioning."6 One
EFAB member defined it more succinctly during internal workgroup deliberations: "...resilience
is an insurance policy. It is an investment in the future to help the community bounce back more
quickly when - not if - some kind of peril occurs. "
This report will focus mainly, but not exclusively, on investments in flood control and
stormwater infrastructure - which are generally functions of local or regional units of
government - and analyze how such investments can help with infrastructure resiliency. Equally,
if not more important, is investing in natural solutions such as wetlands preservation and
restoration. Aside from the pure economic argument as a potential lower cost alternative to
utilizing nature rather than investing in new grey infrastructure, wetlands offer measurable
benefits not only to the immediate riparian zone but also to population centers downstream and
even upstream.
We view as out of scope electric utility infrastructure assets, as most of the U.S. population is
served by investor-owned, rate-regulated utilities, typically subject to prudent investment
4 "Ocean Facts," National Oceanic and Atmospheric Administration's National Ocean Service website,
https://oceanservice.noaa.gov/facts/population.html.
5 Memorandum of Agreement between Department of Homeland Security/Federal Emergency Management Agency
(DHS/FEMA) and the U.S. Environmental Protection Agency (EPA); Section III, para. 1. (August 2016).
6 Drinking Water State Revolving Fund Eligibility Handbook. EPA publication 816-B-17-001, Section 4.1, p. 19.
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guidelines by state regulatory authorities, and each having local and regional discretion to put
into the rate base investments such as undergrounding of distribution lines to protect against ice
and trees, poles made from concrete or composite instead of wood as part of added system
reinforcement against high wind, and vegetation management practices as part of the operating
budget.
The Board acknowledges that flooding and drought are not the only natural disasters. Still, much
of the loss of life and property as well as most of the related resilience efforts focus on flood and
drought risks over investing in resilience against wildfires (currently mainly a function of the
Department of Interior) and tornados and earthquakes. Local building codes have the potential to
promote resiliency in the cases of tornados and earthquakes, but those events are generally so
catastrophic that the focus is most often on post-event responses. We also do not view
cybersecurity, terrorism or other malfeasance or deliberate acts to be in scope for this report but
agree that risk management at all levels needs to be comprehensive and acknowledge that natural
events are not the only causes of loss of life and property.
It is the Board's opinion that what should be included in the discussion are the "pain points" that
create headwinds towards long-term operational and financial planning. Without effective long-
term plans, both the services that communities provide on a daily basis as well as the longer-term
contingency and disaster planning that all local and regional governments should be doing could
suffer. This includes:
Messaging by elected and administrative officials, both on recommendations on what to
do as well as what not to do;
Asset management;
Public sector accounting and financial reporting; and,
Better collaboration between and within the Federal government
Lastly, it is the view of the Board that there is both a Funding and a Financing problem in the
United States. The traditional sources of money that have historically been responsible for most
of the infrastructure spending in the U.S. are the various levels of government; mainly the
Federal, states and local/regional units of government. The real level of spending by all units of
government on infrastructure has by all measures decreased for many decades. Nearly every
professional organization and academic institution has identified an infrastructure funding gap.
The challenge of addressing this funding reality has become more difficult as assets age and
associated maintenance and replacement costs increase. In addition, growing non-discretionary
spending for health care and public pensions makes competing for budget funding tougher and
tougher. So, infrastructure funding - the ongoing dedication of financial and other resources that
do not have to be repaid - becomes more difficult.
The financing problem is different. Traditional options for raising capital like the capital markets
work well. They are transparent, liquid, generally accessible and high functioning. However,
because the money comes from investors who are willing to put their capital at risk, a rate of
return is expected which increases costs. Non-traditional financing options also exist that could
provide additional capital for investments in resilience. Examples of these include insurance
linked securities, catastrophic bonds, resilience bonds, green bonds and, for some areas,
enterprise funds. While these non-traditional financing options may be available, the financial
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and managerial capacities to utilize them varies from community to community as does the
willingness to use them. Moreover, as the ability of units of government to finance aging water
and sewer infrastructure becomes more constrained, so does their respective ability to finance
resilience focused infrastructure projects. Thus, financing becomes an affordability problem.7
Discussion and Analysis
We believe that the primary barriers to communities addressing key infrastructure pre-disaster
resilience is characterized by one or more of the following principles:
1. Understanding the problem and potential solution. Not every local, regional or state
government/entity views stormwater and flood control as something that should be
funded, managed and operated by a dedicated non-tax revenue stream. This problem is
the one of education and we believe this is the easiest to solve, assuming that flooding -
whether from extreme weather events or sea level rise - is the most common peril.
Stormwater infrastructure is one aspect of flood control. However, not all flood control
projects are eligible for state revolving fund borrowing, which typically is among the
lowest cost of funds for water-related projects. For example, climate resilience for
centralized wastewater treatment is already an eligible project category for clean water
state revolving fund participation. But flood control projects can generally only qualify
for SRF borrowing if they can demonstrate a water quality benefit. Good reasons for
accessing the state revolving fund programs for both drinking and clean water whenever
possible include their decades long record of good management and successful projects.
EFAB supports the consideration of expanding the SRF program, either by definition
tweaks of what constitutes an eligible project, or by the creation of a new or expanded
Federal program, as further discussed below.
2. Mindset and focus on long-term planning. Even for those communities that may have
relatively greater financial resources and more discretion in how to strategically deploy
those resources, there is not always consensus regarding how to prioritize projects. Often,
leadership devotes attention and resources to the provision of drinking water and sanitary
sewer because they are essential services that must be provided around-the clock in the
name of public health. Because 'water is life' and demand is constant, conveying the
message for contingency planning and risk management as what is essentially a prudent
insurance policy that can help limit the loss of life and property - and perhaps population
and economic opportunity - can be difficult. Creating awareness for the need to engage
in long-term planning and robust risk management to protect against natural disasters
which occur infrequently, is not necessarily difficult. Creating political support to commit
what is most likely substantial financial resources to hedge against those perils, however,
can be very difficult because of the innate subjectivity.
7 Bipartisan Policy Center https://bipartisanpolicy.org/blog/infrastructure-finance-faqs/
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EFAB supports the use of objective tools to determine a measurable return on
investment (ROT) to help communities and if applicable rate regulators make
more informed decisions.
3. Asset management approach to track and monitor operational performance. Rather
than assuming a particular asset will "run to fail" and then be replaced, asset management
allows utilities to track and monitor operational performance with a litany of data. By
itself, this is not meaningful to resilience and mitigation. But data gleaned from asset
management systems can assist in aligning the entire organization and the messaging of
addressing a utility's weaknesses by, for example:
providing the finance and back-office team life-cycle cost, inventory and
procurement-related information;
providing compliance reporting to satisfy environmental regulators;
providing decision-makers greater certainty that the appropriate levels of financial
resources will exist when the asset needs to be renewed or replaced; and,
providing financial regulators enough information to support any rate case.
Asset management data can also help establish the justification for longer-lived assets
carrying a financing and depreciation treatment more in line with the asset's useful life.
In recent years, EPA has incorporated programmatic elements and policies within the
SRF programs that can promote resiliency investments.8 Incorporating/developing a
robust program, system wide and regardless of whether it is water, wastewater or
stormwater, can pave the way for effective system governance.
EFAB supports better and more consistent use of asset management programs which
can help provide utility governing bodies more and better information. It is a tool that
utilities use to improve reliability.
4. Money is limited. Local Regional Governments (LRGs) - the entities that historically
have provided most of the waterworks, sanitary sewer and stormwater infrastructure -
have competing priorities but generally do not have the financial and other resources to
address them all in addition to resiliency within any given fiscal year. In general, utilities
derive virtually all of their operating revenues from rates and charges. For municipally-
owned utilities, this insulates the utility against flat property tax revenues or
economically-volatile local option sales taxes, as well as any cuts in state shared
revenues. For investor-owned utilities, the singularity of operating revenues makes rate
regulation more straightforward. But regardless of ownership and governance, the
reliance on rates and charges to grow operating revenues means affordability is a "third
rail issue" in an increasing number of communities. EFAB and others that follow
drinking and clean water service provision have observed that in addition to sensitivity
towards rate increases, more utilities are reconsidering the composition of their rate
8 Environmental Protection Agency, State Revolving Funds: Financing Drought Resilient Water Infrastructure
Projects, available at https://www.epa.gov/sites/production/files/2018-01/documents/srf_drought_paper_-
_final_2_8-31-17.pdf
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structures. For example, as per capita per day consumption has been flat or declining,
some utility managers such as DC Water have made revisions such as increasing the
minimum charge in the base rate and softening the impact from the volumetric rates. But
even these moves are intended to be largely revenue neutral. Operating expenses,
including fixed costs such as bond debt payments or pension payments, have tended to
increase in a sector that is generally very highly leveraged. The result for some utilities is
a choice between pressure on the bottom line and available cash reserves or raising rates.
It should be noted, however, that this issue is not unique to the resilience sector but also
applies to any sector under the governance of LRGs. There are many Federal programs
that invest in municipal risk mitigation, including natural infrastructure, but they are often
a by-product of other goals of federal agencies such as FEMA, Army Corps of Engineers
and USD A. EPA funding programs can complement the efforts of other federal agencies
and identify opportunities for improvement. Additionally, there are a variety of private
sector financing strategies and funding options that could be explored further, but
financial capacity among local and regional governments is inconsistent and willingness
to borrow to invest in infrastructure varies from community to community. The private
sector, including some very large investment banks and hedge funds, have announced
new commitments to infrastructure9. In addition, the United States has considered, but
not yet created, a national infrastructure bank.
EFAB endorses the concept of aligning private sector interest with public sector
necessity, potentially complementing not only the state revolving funds and WIFIA but
also efforts by the Army Corps of Engineers, Federal Emergency Management Agency,
and USDA Natural Resources Conservation Service (NRCS) all of which have similar
and often overlapping infrastructure goals.
5. Collaboration among Federal agencies. While it is uncertain if the Congress and the
President will agree upon and pass an infrastructure bill, there does seem to be broad
consensus on the need for more leadership on messaging the problem between and
among Federal agencies, especially in an environment of resource scarcity. Historically,
state and local governments have built the majority (by dollar amount) of the
infrastructure in the United States. This workgroup does not expect that to change, thus
making the messaging even more important. There is no single solution. You get what
you pay for, and if not attended to with ongoing upkeep, infrastructure failures could
increase. De-prioritizing risk management, including resilience planning and
preparedness, exposes the community to the potential increase in day-to-day risks, let
alone tail risk from extreme events.
Several federal agencies - chief among them the Federal Emergency Management
Agency and U.S. Army Corps of Engineers - have active roles in cost sharing and
financial incentives, but also in establishing best practices and guidelines. It is EFAB's
view that the EPA is an equally important partner in pre-disaster resilience and
9 "KKR Closes $7.4 Billion Global Infrastructure Fund" (September 6, 2018); https://media.kkr.com/news-
releases/news-release-details/kkr-closes-74-billion-global-infrastructure-fund
"Blackstone Nears First Close of $5 Billion for Infrastructure Fund" (June 25, 2018);
https://www.bloomberg.com/news/articles/2018-06-25/blackstone-is-said-to-raise-5-billion-for-infrastructure-fund
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mitigation. Given its successful financing programs, EPA can be a champion for pre-
disaster resiliency in a way that is still respectful of federal budget constraints
EFAB encourages the ongoing collaboration among all Federal agencies FEMA,
USD A, US ACE, EPA, and others - with funding andfinancing programs that assist
with developing green infrastructure or other innovative solutions that readily promote
resilient communities.
Recommendations
The recommendations below are rank-ordered in terms of most-preferred and most likely to be
actionable items for consideration by EPA to those that are more general observations of areas of
opportunity. The recommendations may not include new technology, processes or protocols;
however, they are what we believe will create headwinds for more efficient pre-disaster
resilience and mitigation planning and execution. (See the Appendix for case studies
documenting pre-disaster resiliency implementation success.)
1. Encourage Long-Term Planning and Use of Asset Management Planning Tools for
both Municipal and Investor-Owned Utilities.
We believe that the use of long-term planning and/or asset management planning could
help align utility leadership by ensuring the requisite financial resources are in place
before the replacement or renewal needs to be scheduled or hopefully before the next
storm or drought, but also creates more objective data to provide to the decision-makers
who must engage and ultimately garner support from the community. The Board also
believes that this information should be presented to funding program managers as they
consider the repayment terms. If, in the view of managers, the applicant can demonstrate
that the resilience-related asset is long-lived and has an expected useful life beyond the
maximum amount of years over which the final loan payment can currently extend, that
the managers can choose to consider that in the repayment schedule. This approach can
be applied with both public (SRF, USD A, FEMA) and private sources of infrastructure
funding. Additionally, we believe that SRF and WIFIA applicants should demonstrate
that the utility has in place or plans for a robust asset management system and that EPA
should encourage that these projects receive higher funding priority.
2. Develop a Coordination Team to Foster Communication among Federal Agencies
including EPA, ACE, USDA '.s NRCS and FEMA. The team should set priorities and
reduce gaps in funding pre-disaster resiliency for public infrastructure.
EFAB endorses section 4101 of Senate Bill 3021, America's Water Infrastructure Act of
2018. The intended purpose of the Bill is to provide funding for ports, inland waterways,
upgrade dams and irrigation systems and increase water projects. Section 4101,
stormwater infrastructure funding taskforce, specifically directs the EPA administration
to develop the taskforce and submit a report. We believe that this report should
specifically outline the connections, redundancy and gaps between and within federal
agencies. For example, relief funds from FEMA are critical in aiding the recovery of
affected communities. However, by offering grant funds only for rebuilding after a
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declared disaster, an argument can be made that the investment disincentivizes
communities from pro-actively preparing for disasters and investing in resilience
measures. The report should develop an overarching strategy with direction on
programmatic changes to fund and encourage pre-disaster resiliency for public
infrastructure.
3. Consider the Creation and Authorization of a New Stormwater State Revolving Fund
(SWSRF), Expansion of the SRF or WIFIA to Include Additional Stormwater/Flood
Control Eligibilities, and/or National Infrastructure Bank.
Funding programs including the SRF have been well managed by the States to ensure
public health and the environment. The ability to fund stormwater/flooding pre-disaster
or mitigation projects, however, may be limited relative to the nation's clean water and
drinking water needs. The new SWSRF program or expanded SRF/WIFIA should
include, stormwater-eligible projects, without qualification, as well as flood control as
qualified projects also have a clear benefit to public health and safety as well as to the
environment.
Should a new program be created, funding for this SWSRF would need to be obtained.
One possibility would be to coordinate with FEMA and use some amount of the
appropriation for FEMA's Pre-Disaster Mitigation Program, authorized under Section
203 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act. It is
EFAB's opinion that more projects could be funded by leveraging a loan program using
existing SRF structures and management teams rather than a federal grant with state
and/or local matching. In fiscal 2018, FEMA's total budget for grants was about $2
billion, roughly the same as the combined funding for the Drinking and Clean Water
Revolving Fund appropriations. EFAB identified a number of success stories from the
use of stormwater infrastructure helping to improve flood control by the use of gray and
green retention, detention and barriers. These anecdotes tended to be irrespective of
whether the LRG creates funding through general taxes or stormwater revenue fees and
charges, although the latter most likely creates an ongoing and more certain revenue
stream and one that could potentially be matched to federal and state participation.
Depending upon the total funding needs, another possibility would be to reconsider the
creation of a national infrastructure bank. Consideration would have to acknowledge that
the investor community's interest in infrastructure investments both domestically and
abroad is very high. We do not feel that a federal infrastructure bank would compete with
existing loan programs offered by the EPA or USD A, since the latter is most often
utilized by the medium, small and very small community water systems. The largest
utilities generally utilize the tax-exempt capital markets and now, perhaps, WIFIA. The
U.S. population is increasingly coastal and urban, with most of the largest cities along the
Atlantic or Pacific Oceans or Gulf of Mexico needing to invest in resilience and
mitigation infrastructure. In cases where urban planning has already at least identified
and even designed projects, the construction phase is very costly and might have a
decades-long timeline with multiple phases. This means they may simply be too large for
existing options, or even alternative solutions like catastrophe or social impact bonds or
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that funding in phases may greatly delay readiness. However, a proposed national
infrastructure bank is structured and ultimately capitalized would be at the discretion of
the federally-elected officials, but EFAB believes that the time is right to reconsider the
idea.
4. Recommend Water Infrastructure and Resiliency Finance Center (WIRFC) Develop a
Compendium of Information to Measure Resiliency Costs, Benefits and Best Practices.
There are a number of global tools, benchmarks and studies (proprietary and academic)
that attempt to measure resilience at the sub-sovereign (typically city) level. It is the
EFAB's observation that all are valuable and useful in slightly different ways: some are
focused on social infrastructure, some on utilities and the environment, and others that
look to mitigate risks from manmade causes such as cyber or physical terror attacks.
Even the EPA has an existing "Route to Resilience" compendium of best practices
specific to water infrastructure10. Just as there is no consensus on definitions, assumptions
and methodology, there is no universally accepted holistic tool. It is the EFAB's view
that without a uniform way to measure costs and benefits as well as best practices for
resilience that community leaders could face an information overload. Each individual
study would seem to provide sound recommendations, leading to analysis paralysis with
no clear path to apolitically prioritize mitigation investments. We also urge the EPA, the
FEMA, the Army Corps of Engineers and other federal agencies tasked with the
provision of infrastructure to look to the private sector for measurements of resiliency
costs and benefits. The homeowner insurance industry for example, while generally
regulated in each state, has valuable models in place to assess risks by location. There are
also private vendors that follow "tail risk" events and use the data to build sophisticated
models that predict destruction and likely population shifts from storms and sea level rise.
These models provide more robust and transparent disclosure about communities as a
whole all the way down to an individual parcel as to the exposure of any particular risk
and any mitigation measures already in place. This disclosure to potential bond investors,
to rate regulators trying to discern what might meet the threshold of "prudence," or even
to prospective homebuyers can create a situation whereby market forces alone may help
to achieve prioritization and potential ROI based simply on collective wisdom.
Once the compendium of information is completed, we recommend that this information
is easily accessible on the EPA's website. Given the importance of pre-disaster resiliency
as discussed throughout this report, the Agency should consider having a "Pre-Disaster
Resiliency and Funding" link on its homepage under the "Key Topics" section and
reference link to not only the compendium information and related matters but also to its
Federal Funding for Water and Wastewater Utilities in National Disasters (Fed FUNDs)
page.
10 EPA https://www.epa.gov/waterresilience/route-resilience-2018-drinking-water-and-wastewater-utilities
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Summary/Conclusion
In response to the EPA Office of Water's charge, EFAB organized a workgroup and analyzed the
pre-disaster resiliency. In our analysis, we summarized the key barriers for communities in
addressing key infrastructure pre-disaster resilience to the following principles: (i) understanding
the problem and potential solution, (ii) mindset and focus on long-term planning, (iii) asset
management approach to track and monitor operational performance, (iv) money is limited, and
(v) collaboration among Federal agencies.
From these principles, we established the following recommendations:
1. Encourage Long-Term Planning and the Use of an Asset Management Planning Tools
for both Municipal and Investor-Owned Utilities;
2. Develop a Coordination Team to Foster Communication among Federal Agencies
including EPA, ACE, USDA's NRCS and FEMA. (The team should set priorities
and reduce gaps in funding pre-disaster resiliency for public infrastructure);
3. Consider the Creation and Authorization of a New Stormwater State Revolving Fund
and/or Expansion of SRF or WIFIA to Include Additional Stormwater/Flood Control
Eligibilities; and
4. Recommend WIRFC Develop a Compendium of Information to Measure Resiliency
Costs, Benefits and Best Practices.
Given the long-standing, expensive and growing challenge to funding pre-disaster resiliency,
there is no easy solution. However, EFAB believes that our recommendations above are an
important first step to understanding and addressing this nationwide challenge for EPA and our
nation.
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I- I" n ¦ i . 1 ,'ise St111 ¦ i1 I esilience
NEW YORK
Superstorm Sandy - New York City Department of Environmental Protection Wastewater
Resilience Plan
In response to Superstorm Sandy, the New York City Department of Environmental Protection
(DEP) sought to identify its operational risks and vulnerabilities to flooding events due to
extreme weather and future sea level rise for the 14 wastewater treatment plants and 96 pump
stations it operates, and to quantify the capital investments that, if implemented, would help
protect these facilities against future damage. The October 2013 NYC Wastewater Resilience
Plan11 (the Plan) determined that all DEP treatment plants and 58 of its pumping stations were at
risk to flood damage. A key finding of the Plan was that with the implementation of
approximately $315 million of protective measures, the City would be able to avoid $2.46 billion
worth of potential repair and replacement costs over a 50-year period (costs in 2013 dollars).
Superstorm Sandy made landfall in New York City on October 29, 2012. Damage, estimated at
$95 million, occurred throughout DEP's system, most often due to the failure of electrical power
and equipment that drive treatment processes. While emergency generators allowed varying
levels of treatment to continue, DEP's Rockaway plant was so overwhelmed by flooding that it
did not operate for three days, only able to perform basic disinfection activities; additionally, two
other plants were not able to operate for a period of several hours. Approximately 562 million
gallons of untreated sewage was released into local waterways. While the damage was extensive,
implementation of its Storm Preparedness Plan prior to Sandy's landfall enabled DEP to recover
and be able to treat 99% of the City's wastewater within four days after the storm and then
resume secondary treatment citywide by November 11, 2012.
DEP's Wastewater Resilience Plan provides a climate risk and adaptation analysis specific to
each of its treatment plants and 58 at-risk pump stations. Many DEP facilities are located in low-
lying areas and are close to bodies of watera design feature that is common to the wastewater
industry as these locations facilitate transmitting and discharging effluent at lower costs than
higher elevations. These circumstances can make flooding an inherent risk of the wastewater
industry. DEP's climate analysis addressed this risk by mapping the location of current and
projected 100-year flood elevations at each of its facilities using recently updated FEMA maps.
A margin of 30 inches was added to the 100-year elevations to account for storm surge
associated with projected sea level rise by 2050.
The risk analysis identified specific items of infrastructure that would be affected in flood events.
Flood pathways were found and mapped at each treatment plant based on the flood elevations of
the climate analysis. Equipment was deemed at risk if it was within the flood pathway and was
critical to allowing the plant to continue to provide primary treatment. At Rockaway, the DEP
11 New York City Wastewater Resiliency Plan
http://www.nyc.gov/html/dep/html/about_dep/wastewater_resiliency_plan.shtml
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facility hardest hit by Hurricane Sandy, 689 pieces of equipment, more than one-third of all of
the equipment in the plant, were found to be mission critical. The risk analysis also showed that
58 of the system's 96 pump stations were vulnerable to the storm surge elevations indicated in
the climate analysis.
The risk analysis also identified the facilities where future improvements should be prioritized.
The selection criteria for pump stations was based on the area population and critical facilities
(hospitals, schools, public safety) that would be impacted by the pump station's failure. The six
treatment plants where failure could impact bathing beaches have the highest priority for the
implementation of protective measures.
The adaption analysis addressed the potential strategies that would best protect the system's
infrastructure. The strategies were evaluated based on their feasibility, cost and level of
resilience that they would provide at the facilities identified in the risk analysis. The strategies
include:
elevating equipment above the critical flood elevation;
flood-proofing equipment by using submersible pumps and installing watertight boxes
around electrical equipment;
installing flood barriers around flood pathways and critical areas;
sealing structures with watertight doors and windows;
temporarily deploying sandbags around doorways, vents and windows before a surge
event; and
providing backup power generation at pump stations. (Treatment plants already have
such equipment.)
The adaption analysis provided each treatment plant and the 58 pump stations with specific
recommendations on the protective measures and their costs at each critical location. (See
accompanying pdf.) Costs for these measures (in 2013 dollars) were estimated at $187 million at
the treatment plants and $128 million at the pump stations.
Benefits were also quantified and indicate that the returns to DEP for investing in disaster
resilience would be significant. The benefits to DEP are the costs that it would not have to incur
repairing and replace damaged facilities, given the probabilities of recurring storm surge over a
50-year period. These avoided costs were estimated at $1.76 billion (2013 dollars) at its
treatment plants, almost ten times the $187 million cost of recommended measures. The avoided
costs for investment in pump station resilience are $709 million (2013 dollars), almost four times
the $128 million cost of the recommended measures.
Initiatives to implement report recommendations began the following year. DEP's first action
was to incorporate the new flood elevation levels and six adaptive measures into the repairs of
existing equipment and in the design and construction of new facilities. Another important step
was to provide operators at each plant with placards that allow them to quickly see where
protective measures should be undertaken when storm surge advisories are announced.
Implementation of specific protective measures is being coordinated with other improvements at
DEP facilities. When feasible, protective measures are being scheduled toward the end of an
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asset's useful life or in conjunction with other upgrades, significantly lowering the overall cost of
the improvements. Several adaptive measures are pending at the Rockaway treatment plant, as
DEP evaluates whether to convert the plant into a pumping station, given the significant cost of
other capital improvements that are needed at the facility. Four design contracts are addressing
resilience upgrades across the system and construction contracts are scheduled for bidding this
year.12
The federal government and New York State have been important financial partners in DEP's
Resilience Plan. In the aftermath of Sandy, Congress appropriated $600 million in 2014 to the
state revolving funds of New York and New Jersey to reduce vulnerability to future natural
disasters. New York State used these and its own funds to create a $339.7 million Storm
Mitigation Loan Program (SMLP). Through 2022, DEP has budgeted $206.4 million for
resilience projects, with $161 million being provided through SLMP loans and the balance
through FEMA.13
NEW JERSEY
Post-Siiperstorin Sandy Damage Assessment of South Monmouth Regional Sewerage
Authority Pump Stations
Recognizing a unique opportunity to compare pre- and post-resilience costs of a singular incident
on similar, but independent, water/sewer components this analysis compares the impact from
Superstorm Sandy (2012) on four pump stations of the South Monmouth Regional Sewerage
Authority (SMRSA) in four adjacent towns. The intent of this analysis is to educate readers and
stakeholders, particularly managers of Federal Disaster Relief grant programs and end-user
water/sewer systems, to the cost - AND value - of investing in resilience measures for
water/sewer systems prior to a severe event. The limited scope of this analysis is not meant to
provide answers for all inquiries, rather it demonstrates a cost/benefit analysis which furthers
additional considerations, questions and discussion. For example, what other post-resilience
savings exist (e.g. lower insurance premiums) that further justify pre-event resilience
investments?
SMRSA manages a treatment plant and a conveyance system consisting of eleven pump stations
and one metering chamber for eight coastal communities in New Jersey. Prior to Hurricane Irene
ten of the eleven pump stations were traditional brick and mortar stations located at low
elevation points in communities within blocks of the Atlantic Ocean. As sea level rise has
exacerbated the impact of severe storm conditions in recent years, these pump stations have
come under increasing risk of being damaged by high winds, excessive precipitation and tidal
surge. In October 2012, when Superstorm Sandy landed along the central coast of New Jersey,
ten pump stations were flooded and sustained major damage. However, the eleventh pump
station, a mobile unit pump station in Sea Girt, located just one block from the Atlantic Ocean,
which had replaced a traditional brick and mortar station in 2011, weathered the storm with
12 Fiscal 2018 Consulting Engineer's Report, page 18 of the New York City Water Finance Authority
13 One NYC Progress Report 2018. page 84
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minimal damage. This mobile unit mimics a single unit mobile home trailer on wheels with all
electronic and computer equipment contained in the trailer and the pumps and piping submerged
underground. For the two occasions when weather and tidal surge put the pump station at risk
(i.e. Hurricane Irene and Superstorm Sandy), upon notification of mandatory evacuations, the
electronic and computer equipment components were disconnected from the pumps and the
trailer was towed to higher ground until weather conditions improved allowing for the return of
the unit. The brilliance of this approach is manifested in the net cost of the damage to the Sea
Girt mobile pump station during Superstorm Sandy as compared to that of the other similarly
located brick and motor pump stations. The total damage loss to the Sea Girt station was less
than $19,000 versus the damage and resilience costs of the other three pump stations, excluding
life-cycle replacement costs, which was between $0,683 and $2,464 million. This analysis covers
the three pump stations for which SMRSA financed the rebuild and resilience costs through the
New Jersey Water Bank (New Jersey's SRF financing program) and for which the New Jersey
Water Bank had cost figures. The Pitney Avenue and Lake Como projects received 90%
reimbursement of eligible costs from FEMA while the Belmar project received a 19% principal
forgiveness loan (a grant4ike award) from the New Jersey Water Bank through additional
federal EPA SRF funds granted to New Jersey specifically for Superstorm Sandy flood and
resilience work.
(Est.)
(Est.) Life
(Est.)
Actual
Break-
FEMA or
Net Costs
Storm
Cycle
Resilience
Dollars
even
Sandy SRF
to cover
Costs
Replace
Investment
Spent
Storm
Disaster Aid
Storm +
Pump
Station
(Repair +
Downtime)
(A)
Costs
(B)
(C)
(Repair +
Resilience
+ Life
Cycle)
(D) =
A+B+C
Events
(Resilience
Costs /
Storm
Costs)
(C/A)
Funds
Provided
(E)
Increased
Resilience
Costs **
(D-B)-(E)
Pitney
Avenue
$902,714
$0
$368,656
$1,271,370
0.41
($1,126,998)
$144,372
Belmar1
$298,173
$2,100,000
$385,428
$2,783,601
1.29
($528,884)
$154,717
Lake Como2
$1,853,349
$0
$610,711
$2,464,060
0.33
($2,217,654)
$246,406
Sea Girt3
(Mitigation
already in
place)
$18,556
N/A
$0
$18,556
N/A
$0
$18,556
* FEMA Local Share Requirement: Due to the magnitude of the destruction caused by Sandy
throughout the State, FEMA's local match requirement was reduced from the standard 25% to
just 10% of eligible costs. More typically, local municipalities and Utilities are required to pay
25% of the total eligible costs as well as cover all non-FEMA eligible rebuild costs.
** Net Cost to SMRSA: Excludes Life-Cycle replacement cost for the Belmar Pump Station of
$2.1 million.
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1 Belmar, NJ: Pump Station was at the end of its useful life and already in need of replacement.
2 Lake Como, NJ: Pump Station was relocated outside the floodplain rather than replaced with a
Mobile Station.
3 Sea Girt, NJ: Mobile Resilient Pump Station sustained $18,556 in damage during Superstorm
Sandy (a SCADA antenna mast was bent by high winds and a backup control panel was
damaged by wind-blown rain).
Note:
SMRSA's design of the Sea Girt Mobile Resilient Pump Station (MRPS) with the ability to
transport the station's electrical and computer components out of harm's way during a storm
minimized damage to the pump station, reduced pump station down time and related costs, and
lessened the potential of sewer overflows. Superstorm Sandy cost SMRSA approximately $10
million in total damage, submerging and knocking out ten of their eleven pump stations. The Sea
Girt MRPS, which was driven to higher ground and then returned within 24 hours, was the only
pump station that endured minimal damage. SMRSA Management estimates that the Sea Girt
MRPS design saved a combined $1.5 million dollars during Hurricane Irene and
Superstorm Sandy as the pump station having been moved during both storms, sustained no
substantial damage during either storm.
This Mobile Resilient Pump Station (MSRP) design was deemed a best management practice
(BMP) by the Federal Emergency Management Agency (FEMA) and was the recipient of the
2014 New Jersey Governor's Environmental Excellence Award in the Innovative Technology.
Conclusions:
By investing and upgrading the Sea Girt pump station to a mobile design unit capable of
being removed prior to a severe weather event, SMRSA minimized the risk of substantial
damage and major expense, including down time of service for both major weather events
after installation. In the very short run (within 3 years), SMRSA's initial investment of
$1,639,901 to build and install the Sea Girt mobile station had a straight investment return of
more than 91.4% when compared to the estimated $1.5 million in damage repairs it saved
SMRSA during Hurricane Irene and Superstorm Sandy. Any future storms will likely further
increase these investment return savings.
Because the Belmar and Pitney Avenue Pump Stations were rebuilt using the same MRPS
enclosure design concept, it is assumed these stations will realize similar savings by avoiding
comparable damage as the Sea Girt pump station during future storm events.
The Lake Como pump station located at the opposite end of the lake from Pitney Avenue was
made inoperable and relocated. SMRSA minimized the cost of the Pitney Avenue and Lake
Como pump station rebuilding projects by maximizing the availability of State and federal
financing options. SMRSA applied for and received approximately $1,127 million and
$2,217 million respectively for the rebuilding of these two pump stations through FEMA's
Section 406 Public Assistance Program, which is meant to assist impacted communities
with the cost of rebuilding damaged facilities. The result was a net storm cost to SMRSA of
just $0.144 million for the Pitney Avenue pump station and $0.246 million for the Lake
Como pump station, making FEMA a crucial partner in the rebuild of both pump stations.
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TEXAS
Texas Windstorm Insurance Association
In 1971, in order to combat the insurance market's unwillingness to write policies in the wake of
Hurricane Celia, the Texas Legislature established the Texas Windstorm Insurance Association
(TWIA or the Association). The TWIA functions like an insurance company in terms of its
operations and revenue structure but differs in two distinct ways. All net insurance premiums and
other revenues made by the Association go directly into the Catastrophe Reserve Trust Fund
(CRTF) every year. Second, because it is a residual insurer of last resort, it is not a direct
competitor in the private market and therefore more closely resembles a quasi-government entity
than it does a private insurance company. TWIA's primary funding channels consist of insurance
premiums, the CRTF, bond issuances, and reinsurance. Its debt obligations do not currently carry
ratings. The State of Texas has no obligations with respect to TWIA's bond issuances.
The primary mission of the Association is to
provide windstorm and hail insurance to
residential and commercial properties in the
"designated catastrophe area" where access to
necessary coverage is not readily available.
Policy applicants must have been denied
coverage by at least one insurer in the private
market. The coverage area consists of 14
coastal counties and parts of Harris County as
shown in the map to the right. The shading
indicates the three building code standards in
this region - Seaward (red), Inland I (yellow),
and Inland II (blue).
In order to most effectively handle unfortunate
events that could result in high volumes of
claims being filed in a short period of time,
TWIA developed the Catastrophe (CAT)
Incident Response Plan. The CAT plan explicitly identifies the roles and responsibilities of all
internal departments, the size and scalability of the event, gives instructions for filing claims,
updates on TWIA's response to stakeholders and most importantly, outlines the steps necessary
to secure funding to pay all covered claims. The plan makes use of a resource scalability model
designed to assess the magnitude of the impending storm before it makes landfall and thereby the
inflow of claims that can be expected to follow. From there, TWIA can ensure that it is properly
staffed in all of the departments involved in receiving, processing and closing claims.
TWIA has worked hard to improve the CAT plan over the years. Its effectiveness was evidenced
last year in the Association's response to Hurricane Harvey. When Harvey struck the Texas coast
Texas First Tier
Coastal Counties
efferson
Chambers
Galveston
"J Brazoria
Refugio,
Calhoun
Matagorda
Source: TWIA Media Briefing Book
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in August 2017, TWIA issued their first claim payments within 72 hours and processed and
closed approximately 90% of all claims made within the first 75 days. In total, TWIA issued
more than $1.08 billion in claim payments by April 30, 2018 in response to nearly 76,000 claims.
TWIA's ability to make that many claim payments in such a short amount of time would not
have been possible without the policy changes that allowed TWIA to issue public securities. In
2005, Hurricanes Rita and Katrina made landfall and initiated a sharp increase in demand for
coverage provided by TWIA, resulting in losses of nearly $3 billion for the Association in 2008
when many policy-holders filed claims after Hurricanes Ike and Dolly. In response to increasing
liabilities, legislation was passed in 2009 and 2011 that allowed TWIA to issue Class 1, 2 and 3
bonds in order to help restore reserves and finance the writing of future policies. All classes of
bonds are backed by a net revenue pledge of the Association, which includes net premiums
collected and other revenues. Class 2 and 3 bonds, after a finding of by the Commissioner of
Insurance, may also be repaid by surcharges on coastal property policies. Class 3 bonds may be
payable from member assessments.
Historical Funding Comparison
¦ Premium and CRTF a Assessments ¦ Class 1 Bonds e Class 2 Bonds ~ Class 3 Bonds ¦ Reinsurance
S4900M Total _ 54900M Total _ $4900M Total
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017*
Funding for 2008 shown as it existed for Hurricane Ike, post-Hurricane Dolly; unlimited additional funding available via reimbursable assessments
Funding for 2009-2011,2013 assumes $0 Class 1 Public Securities issuable; 2012,2014-2015 include $500 Million pre-event Class 1 Public Securities
Funding for 2015 shown as of September 1, 2015, incorporating SB 900
Funding for 2015-2015 incorporate bond repayments that differ from prior years
Funding for 2017 based on terms authorized by TWIA Board of Directors.
Source: TWIA Media Briefing Book
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TWIA has experienced a strong recovery following the severe depletion of its reserve fund in
2008. As shown above, TWIA successfully increased its funding level each year from 2009 to
2017. As a result of its 2016 operations, the balance in the CRTF available for the 2017
hurricane season was $737 million, its highest balance to date. In addition, out of a total of 36
residual market plans nationwide, TWIA is the second largest and has the second lowest
operating expense, as a percentage of premium, at 5.3%. The average operating expense for all
other plans is approximately 30% of premium. TWIA's expenses have been under-budget for the
past six years - a testament to the ability and experience of TWIA's management team, which
has over 150 years of combined insurance industry expertise.
Lastly, TWIA remains focused on constantly improving their policyholder service. It receives
complaints on only 0.2% of claims and continues to receive positive customer survey results
after processing and closing claims, averaging a rating of 4.37 out of a possible 5 in 2017.
IOWA
Dubuque Bee Branch
The City of Dubuque has experienced six Presidential Disasters between 1999 and 2011 due to
flash flooding with damages totaling nearly $70 million.
In 1998, the City commissioned an engineering study to look into the nature of the flooding and
identify solutions to mitigate or eliminate the flash flooding experienced in the Bee Branch
Watershed. The end result was the Drainage Basin Master Plan completed and adopted in 2001.
The plan revealed that there were more than 1,100 properties at risk of flood damage as a result
of the flash flooding. A subsequent study in 2009 by the Federal Emergency Management
Agency (FEMA) identified a flood-prone area with 1,373 properties. In addition to homes, there
are over 70 businesses in the at-risk area that combined employ over 1,400 people with more
than $500 million in annual sales. Eighty-five percent (85%) of the impacted properties have
buildings that are potentially eligible for listing on the National Register of Historic Places. In
fact, fifty-seven percent {51%) of the 1,373 buildings are more than 100 years old.
The Drainage Basin Master Plan outlined several improvements throughout the watershed to
mitigate future flooding and disasters. Having identified the flooding issue as a top priority, the
Dubuque City Council adopted the Drainage Basin Master Plan and established funding,
including a stormwater management utility, to construct the first phases of the Bee Branch
Watershed Flood Mitigation Project in 2003. The Bee Branch Creek project is one element of the
multi-phase Bee Branch Watershed Flood Mitigation Project. The combined phases of the
project will reduce the volume of floodwaters, slow the rate the floodwaters flow through the
upper watershed, increase the safe conveyance of floodwaters through the flood-prone area, and
provide physical barriers to prevent floodwaters from inundating the City's only potable water
source.
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The Bee Branch Watershed consists of 6.5 square miles of land located in the northeast part of
the city. It is characterized by steep slopes and bluffs that shed water quickly from the west to the
east. The watershed drains to the Bee Branch Creek and ultimately to the Mississippi River.
While it constitutes less than 25% of the City's area, over 50% of the 58,400 Dubuque residents
either live or work in the Bee Branch Watershed.
The Bee Branch Creek project involves replacing almost one-mile of storm sewer with a creek
and floodplain that resembles the one that traversed the area approximately 100 years ago. This
"day-lighting" of the buried Bee Branch Creek will allow storm water from flash floods to safely
move through the area without flooding adjacent properties. During heavy rains, storm water will
rise out of the creek and fill the adjacent green space instead of flooding streets and homes.
Prior to the project, the creek was dead and buried in an underground storm sewer. As is the case
with many rural creeks, the Bee Branch Creek does not dry up in the days following a rainstorm.
It is constantly fed with groundwater. In the case of the Bee Branch, much of the groundwater is
carried to the creek through the storm sewer system. This groundwater discharge serves to keep a
steady flow of cool, clean water into the creek.
Large diameter storm sewers discharging into the creek were equipped with Nutrient Separating
Baffle Boxes (NSBBs) to help prevent garbage and pollutants from entering the Bee Branch
Creek. The NSBBs triple compartment scour-free design and screening system captures sediment
and suspends trash and debris in a dry state. Dry state storage greatly minimizes nutrient
leaching, bacteria growth, and odors leading to improved water quality for the surrounding water
bodies. The City has strategically placed the Baffle Boxes so that they are easily accessible for
cleaning from the surface using a vacuum truck.
To further promote the infiltration and filtering of runoff prior to it reaching the creek, permeable
pavement was added to several streets, a parking lot and two alleys. Ultimately, the City plans to
convert 240 alleys within the watershed into "green," permeable alleys. So far, 80 have been
converted to date. Of the 80 alleys, 74 were converted to permeable paving using the first Iowa
Clean Water SRF Water Resource Restoration Sponsored Project.
Native plants that once dominated the Iowa landscape were strategically placed along the Bee
Branch to manage rainfall and diversify the landscape. Species used include black-eyed Susans,
purple coneflowers, brown fox sedge, prairie blazing star, cardinal flowers, and many others.
With extensive root systems, tallgrass prairie vegetation helps to form deep, rich soils with high
organic matter content and ample pore space between soil particles. These soil characteristics
absorb and infiltrate most rainfall, while shedding little runoff. The native landscaping along the
creek also attracts songbirds, dragonflies, hummingbirds, butterflies, and other desirable species.
Native landscaping is also more resistant to pests and disease. While aesthetically pleasing, it
requires little maintenance because the plants are adapted to Iowa temperatures and rainfall
patterns. This can lead to significant cost savings when compared to labor intensive turf grass.
Prairie grass was also planted in multiple biofields strategically located along the creek to
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intercept and promote the infiltration of storm water runoff from small storm sewer systems
along the creek.
In the summer of 2017, 4.9" of rain fell in less than 24 hours in Dubuque. With the completed
Bee Branch Creek Project, property damage was largely avoided. In comparison a similar
rainstorm in 2002 that dropped 4.9" of rain in a 24-hour period resulted in enough property
damage to warrant a Presidential Disaster Declaration. Based on the damage caused by the 2002
storm, it can be estimated that the 2017 storm would have caused $11.6 million in property
damage without the completed Bee Branch Creek Project.
The project was funded by weaving a variety of local, state, and federal funding sources, all with
different rules and regulations on how they can be spent. Funding was received from Iowa's
Clean Water State Revolving Loan Fund, US Department of Transportation (US DOT), Iowa
Department of Transportation (IDOT), Iowa Department of Natural Resources (IDNR), US
Department of Commerce Economic Development Administration (US EDA), the Iowa
Economic Development Agency (IEDA), and the Iowa Department of Homeland Security and
Emergency Management and Flood Mitigation Board (SFMB).
While the main purpose of the project was to mitigate flooding, the project has also improved
water quality, provided aquatic habitat and created greenspace in an area where low-to-moderate
income and minority populations call home. The City maximized the benefits of the project by
incorporating additional amenities for the community.
The Bee Branch Creek Project is:
¦ A storm water management and disaster prevention project:
o Over 1,300 homes and businesses were at risk of flood damage during heavy
rains.
o A Presidential Disaster has been declared six times in the past fifteen years as a
result of the public and private property damage following heavy rains,
o Daylighting the creek will allow storm water from flash floods to safely move
through the area without flooding adjacent properties.
An environmental improvement project:
o The restoration of 2,000 feet of a once buried creek and its associated floodplain.
o Daylighting the creek and exposing it to sunlight and creating natural creek bank
areas allows for aquatic and riparian vegetation that can improve water quality by
taking up organic and inorganic pollutants resulting in increased dissolved
oxygen, reduced suspended sediment, reduced phosphorus and nitrogen, and
reduced bacteria.
o Installation of infiltration practices such as bio-swales and permeable pavement,
o Cascading water features have been constructed at multiple locations along the
creek. In addition to providing pleasing scenery and sounds, these mini-waterfalls
serve as aeration systems, introducing fresh oxygen into the ecosystem that fish
and plants need to thrive.
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A neighborhood park serving low-income and minority populations with:
o A community orchard
o Embankment slides
o Scenic Overlooks
o Hike/Bike Trails (Maintenance Access)
o Green Amphitheater.
A regional tourist attraction:
o A 2,000-foot hike/bike trail connecting to the 26-mile Heritage Trail hike/bike
trail between Dubuque and Dyersville (IA) to the Mississippi River and Mines of
Spain trail systems.
o Overlooks that provide scenic views of the natural beauty associated with the
creek.
o A creek and linear park that connects to multiple City parks.
An outdoor classroom:
o An outdoor amphitheater next to the restored creek, adjacent to an elementary
school and along the national Mississippi River Trail through Dubuque,
o Interpretive signs with information on the history of creek, benefits of prairies, the
orchard, the fish habitat, and resurrected creek.
Middle Cedar Partnership Project
In June 2008, the City of Cedar Rapids, Iowa was engulfed by flood waters from the Cedar
River. The river crested at over 31 feet, 19 feet above flood level. The flood surpassed the
previous record, set nearly 80 years earlier, by 11 feet. Floodwaters spread across more than ten
square miles of the city. Over 1,000 blocks in the heart of the city were flooded. More than 300
public buildings and 900 businesses were damaged, 5,400 homes housing more than 18,000
citizens were affected, and 10,000 residents were displaced by the disaster. The flood caused
over $5.4 billion in damages to the community.
Since that time, Cedar Rapids has implemented a flood control plan that includes many
traditional flood mitigation practices: floodwalls, levees, real estate acquisition, stormwater
management projects, 200 acres of new greenway and eight acres of wetlands.
However, the city wanted to do more than just build more barriers. They wanted to see if they
could work with landowners upstream to capture the rain where it fell and reduce the quantity of
water flowing downstream. Cedar Rapids partnered with a variety of agricultural groups,
commodity associations and conservation districts to create the Middle Cedar Partnership Project
(MCPP).
The MCPP was awarded a USD A Regional Conservation Partnership Program (RCPP) grant of
$2 million. These funds will be matched with an addition $2.3 million in primarily technical, and
some financial assistance from the 16 MCPP partners. The partners include:
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Farmers/Producers
USD A Natural Resources Conservation Service
Benton/Tama Counties and Miller Creek Water Quality Initiative projects
Benton Soil and Water Conservation District
Tama Soil and Water Conservation District
Black Hawk Soil and Water Conservation District
Dupont Pioneer
Sand County Foundation
The Nature Conservancy
Iowa Farm Bureau
Iowa Soybean Association
Iowa Pork Producers Association
Iowa Corn Growers Association
Iowa Department of Agriculture and Land Stewardship
Iowa Department of Natural Resources
Iowa State University Extension Service
City of Cedar Rapids
The Middle Cedar watershed encompasses 2,417 square miles. The Cedar River is part of this
watershed. Not only does Cedar Rapids draw its drinking water from shallow alluvial wells
along the Cedar River, but the river runs right through the middle of the City. The goal of the
MCPP is to encourage upstream conservation entities, local farmers and landowners to install
conservation practices to improve water quality and soil health; thereby slowing runoff to help
with flood mitigation.
The project will first develop watershed plans in five targeted sub-watersheds in order to
effectively target best management practices (BMP) to high priority locations in the watershed.
The plans will incorporate conservation practice placement maps which take into account
landscape characteristics such as land use, soil type, topography, and other information to
identify the best placement of conservation practices to achieve maximum benefit in reaching
specific goals. These maps, and other information, will be used to prioritize the placement of
BMPs.
Conservation practices currently identified include nutrient management, cover crops,
bioreactors, saturated buffers, wetland creation, and wetland easements. These conservation
practices help keep runoff from cropland to a minimum. To enhance the adoption rates of
conservation practices, outreach will be provided to local farmers to share the benefits of
conservation practices that hold significant promise for nutrient reduction.
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OKLAHOMA
City of Tulsa: Resilience after the Storm
The City of Tulsa is located in northeastern Oklahoma along the banks of the Arkansas River
with multiple large tributaries running through the community. Tulsa was first established in the
1820s and began a period of growth in the early 1900s with the discovery of oil.14 The City's
population grew rapidly with primary areas of development along the river.
Even in Tulsa's early days, the community experienced devastating flooding. The flood of 1908
caused more than $6.22 million (in 2017 dollars) in damages and, as the population of the
community increased, so did the damages. The 1923 floods left thousands homeless and caused
$7.3 million (in 2017 dollars) in damages.15 Flooding continued in subsequent years, racking up
millions and millions of dollars property damage and lives lost.
The City of Tulsa chose early on to take a pro-active approach to address flooding. Community
leaders and affected residents demanded it. After the 1923 floods, City leaders developed the
first land-use plan, which set forth the foundation for development of the City. This development
featured methodically designed housing areas at higher elevations and designated the lower
elevations for parks and trails. Further, these Tulsa visionaries set aside more than 2,800 acres
for a park in the floodplain of one of the largest tributaries.
As flooding continued into the mid-1950s, the federal government also began implementing
structural controls designed to prevent flooding. The US Army Corp of Engineers completed the
Keystone dam upstream of the City in 1964, and many residents believed that the flooding of
Tulsa was coming to an end. Flooding, however, continued and increased with the urbanization
of the City. With each flood, leaders took more steps towards resilience.
In 1970, the City joined the National Flood Insurance Program and eventually enacted a
moratorium on building in the floodplain. Later, the City developed comprehensive floodplain
management policies, began drainage master planning and developed stormwater regulations for
new development. The City of Tulsa collaborated with neighboring communities and state and
federal partners. They accessed federal funding as appropriate to acquire property located in the
floodplains.
The City of Tulsa solidified their commitment to resilience in 1986 by establishing a dedicated
stormwater utility fee to provide "stable funds for maintenance and management... {with} the
entire fee exclusively for floodplain and stormwater management activities." The City believed
that they could be open to continued growth, but that growth could not, and would not, result in
14 Oklahoma Historical Society, Tulsa, Available at
http://www.okhistory.org/publications/enc/entry .php?entry=TU003
15 City of Tulsa, Flooding History, https://www.cityoftulsa.org/government/departments/engineering-services/flood-
control/flooding-history/
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new or enhanced flooding.16 This approach continues to shape Tulsa's vision of land and
infrastructure development.17
The City of Tulsa has identified flood prone areas and turned them into parks and open spaces,
which provide benefits beyond reduced flooding. Furthermore, Tulsa has developed multi-use
detention basins across the city. The basins function as soccer fields, parks, open spaces and
walking trails when dry and hold flood water during storm events.
One of the premier examples of Tulsa's vision for progressive stormwater management was
realized in the Mingo Creek Watershed. The City of Tulsa and the US Army Corp of Engineers
collaborated on a bold effort to address the ongoing flooding by creating increased amounts of
greenspace. As area residents were initially skeptical of the plan, showcasing collaboration at all
levels of government was essential in developing trust within the community. An intensive
public outreach campaign on the importance of stormwater management was critical to the
effort.
Funding for the Mingo Creek Watershed project came from a variety of sources including sales
tax, bond issue funds, stormwater utility fees, as well as federal funds. In total, more than $437
million dollars went into the project. Since its implementation, there have not been any major
property losses due to flooding. Ancillary benefits seen as part of the increased green space in
the Mingo Creek watershed include water quality improvements, reconstructed wetlands, and
community wellness.
Stormwater management continues to play an important part in the City of Tulsa. In 2018, the
City unveiled its Resilient Tulsa Strategy.18 The strategy goes well beyond flood resilience and
echoes the benefits and importance of green space for stormwater management.
16 Naturally Resilient Communities, Mingo Creek, Tulsa, Oklahoma, http://nrcsolutions.org/tulsa-oklahoma/
17 Learning from Disaster: Tulsa's Resilient Floodplain Design - 100 Resilient Cities.
18 City of Tulsa, Resilient Tulsa, available at https://www.cityoftulsa.org/media/7673/reslient-tulsa-digital-web.pdf
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