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Competing for Investment Dollars

Water Infrastructure

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We love Texas and its extraordinary diversity of humans, habitat, and wildlife. Texas has fishing, golf, nature preserves, a vibrant economy, and an excellent educational system.

Most people don’t realize that water fuels many things we love about Texas, including power generation, manufacturing, and crop irrigation. Drinking water is vital and Texans need lots of it. Water demand is increasing as the population and economy grow.

Texas Strives to Secure Water Supply Amid Challenges of Population Growth, Decreased Resources and Drought

Texas has a State Water Plan. The state is a nationally recognized leader in alternative water supply development and augmentation. The state has invested in new water supplies and getting that water to where it is needed. All these measures are being complicated by rapid population growth, a decrease in existing water supplies and drought.

The Lone Star state clearly wants to avoid the water shortages that have impacted Jackson MS, Flint MI, and other U.S. cities that failed to plan and invest in reliable, resilient water systems that deliver quality water.

Planning and conservation plans need to be reviewed and adjusted. Circumstances have changed. Texas has experienced multiple drought periods throughout its history, but the most recent severe drought, which has been described as one of the worst in Texas history, has left the entire state with less water to allocate. Now is the time for state and local governments to obtain funding and advance their much-needed water infrastructure needs with an eye to the future. The keys to funding are collaboration and cooperation.

Robert Sheets on Water Planning

Advancing Water Supply Development and Funding

Robert Sheets, Executive Vice President at Anser Advisory, speaks to the House Natural Resource Committee about Housebill 2701 which seeks to give public utility agencies more flexibility and resources to undertake important projects and maintain their operations.

Where Does Your Water Come From?

With drought on the rise and water supplies shrinking, it is imperative that we act now!

Competing for Investment Dollars

In the good old days, any water utility could try to get additional funding from the next higher level of government to reduce burden on ratepayers. Of course, the money gained was tax dollars, just generally from other taxpayers. Still, there was money, if not a lot of it.

In that competition, big utilities held a distinct advantage. They served more people, had higher profile elected representatives and generally, matching dollars or other benefits.

But like the current drought that has dramatically impacted Western water politics, big utilities don’t necessarily have the advantage. Today, developing new water supplies and supporting infrastructure takes a long time and is expensive. No utility director wants to leave customers reeling from rate shock caused by the jarring increase in the cost of water.

Working together is key to funding

Cooperation, not competition, are the buzzwords of this era of federal funding. Small, rural, and indigenous water suppliers not only have set-aside funding, when working together, they can build bigger and better projects that serve regional needs.

The Lone Star state has very attractive funding options:

• The State Water Implementation Fund for Texas (SWIFT) has resulted in commitments of over $9 billion to fund implementation of recommended water management strategy projects.
• The Drinking Water State Revolving Fund provides low-cost financial assistance for planning, acquisition, design, and construction of water infrastructure.
• The Economically Distressed Areas Program (EDAP) provides drinking water and wastewater treatment to Texas residents previously without service and improves existing utility systems that do not meet minimum state standards.

Making less water work for more people

The solution is figuring out how to make less water serve more people. It’s about identifying the available sources while ensuring that our use of them doesn’t harm our quality of life. That is, we must balance water supply development with environmental protection. A single utility serving the needs of customers is one thing. A collaborative utility serving the needs of many small communities is another. Both are necessary to ensure equitable access to funding and water without overly burdening the customers.

Water Infrastructure

The American Rescue Plan Act (ARPA) and the Infrastructure and Investment and Jobs Act (IIJA) both provide funding for water infrastructure from facilities and technology upgrades to water supply development and much more. The ARPA funds were distributed directly to local and state coffers. The IIJA, on the other hand, is competitive.

These investments will give communities that have failed to invest an opportunity to reset their water systems to current standards. For utilities that have invested in maintenance and expansion, the money is an incentive to take the next steps. And, finally, the money is a boost to those (like us in Texas) trying to identify, acquire and build water supplies for the future.

It is one thing to have funding available, it is another to obtain and allocate. As always, shovel-ready projects may be at the front of the line, but wait, there is more. Small, rural, and Indigenous communities have specific funding allocations. These communities have more success when they form partnerships and work together to develop water projects and infrastructure.

The federal government prefers cooperation over litigation when it comes to water funding. The Texas Legislature also has a strong preference for cooperative regional solutions. As a practical matter, it is better, cheaper, and faster to cooperate. As a bonus, the available dollars are spent on water rather than administrative processes.

Let's Get Organized

The question for Texas is how to implement the State Water Plan. Certainly, an influx of federal dollars will help a lot of places a little bit and a few places a lot. Larger cities and counties typically have staff and resources to identify and pursue opportunities. Small and rural communities often don’t have the human or financial resources, let alone the experience to identify and pursue opportunities.

Florida law allows local government to create inter-local agreements establishing a Government Utility Authority (GUA). GUAs are nothing new. For example, across the U.S. there are government authorities for transportation, stormwater management and coastal resiliency development to name a few. An authority is nothing more than a single-purpose government entity that does one thing for a specific constituency.

Florida has GUAs that have served them well for decades. These GUAs can take different forms, depending on the cooperating member governments. Their job, though, is to plan for, identify and develop water resources that will drive economic vitality and protect the quality-of-life decades into the future.

This ensures great planning and awesome implementation. Better still, this approach puts a partnership of smaller, rural communities on a competitive footing with the big guys. A GUA is an equalizer for small utilities and communities, but it’s available to larger organizations, as well.

Our plan is to take Florida’s successful approach, enhance it and make it uniquely Texan. We hope that this legislative session will support this approach, opening new water opportunities for Texas utilities and customers.

We want our water supply to be safe, sustainable, environmentally friendly, drought-proof and affordable. It’s a big ask, but then again, we’re Texas.