Ohio General Assembly: 2016 Election Review, Lame Duck, and Upcoming Budget

November 16th, 2016

 By Jason Warner, GOPC Manager of Government Affairs

While much of the focus of the 2016 elections has been at the national level, voters across Ohio cast ballots last Tuesday on down ticket races to elect members of the 132nd Ohio General Assembly. Now that the dust has settled, we can look ahead to the new General Assembly, which will take office on January 3, 2017. The new legislative session will include Governor John Kasich’s final state budget and will prelude the 2018 statewide election when Ohioans will elect Mr. Kasich’s successor and other statewide executive officers.

Prior to the election, Republicans in the state legislature enjoyed a majority of 65/34 in the Ohio House and 23/10 in the Ohio Senate. Defying expectations, Republicans in the state legislature gained one seat each in the Ohio House and Ohio Senate, increasing their majorities to 66/33 in the House and 24/9 in the Senate. Both majorities are now large enough to override any vetoes which may be issued by Governor Kasich and to pass legislation as emergency measures (allowing them to take effect immediately as opposed to 90 days after executive approval), without the necessary support of legislative Democrats.

  StatehouseBirdseye

  Ohio Statehouse

The short term impact of the election at this stage is hard to determine. GOPC will be attentive to leadership changes and will continue working with members on both sides of the aisle to advance policies on urban and neighborhood revitalization, development of a diverse transportation system and modernization of the state’s water and sewer infrastructure. GOPC has already been reaching out to members of the General Assembly to highlight policy initiatives and will be working with members to ensure these issues are emphasized in budget meetings and other legislative conversations.

Before the new General Assembly is seated in January, the current session will wrap up with lame duck session, when any remaining bills that are poised for legislative passage will be completed and sent to Governor Kasich for his approval. Since political upheaval in the state legislature did not occur, most observers expect that any lingering issues that are not in need of immediate action will be held off until the start of the new session. However, Senate President Keith Faber said recently, “If you have any bills out there…pay attention. Anything can happen.”

Several bills GOPC has been tracking could see action during lame duck. HB482 (Dever) makes changes to the calculation of the exempt value of improved property subject to a community reinvestment area exemption. The bill clarifies the calculation of the exempt value of property subject to a brownfield remediation exemption while authorizing the filing of a complaint with the county auditor challenging the assessed value of fully or partially exempt property. GOPC has worked with Representative Dever on this bill and the measure is highly likely to see action during the next month.

SB333 (Hite) makes changes to laws relating to environmental protection and could also move during lame duck. While SB333 has yet to receive a hearing, the bill was a priority for Governor Kasich earlier this year. The bill complements HB512 (Ginter), which passed earlier in 2016 and established requirements governing lead and copper testing for community water systems and revised the law governing lead contamination from plumbing fixtures. Both bills emerged in response to recent water crises in Flint, Michigan and Sebring, Ohio.

SB235 (Coley/Beagle) offers an incentive to property owners to enhance land sites for future business and development, and ultimately encourage job growth throughout the state. GOPC testified on SB235 while the bill was pending in the Senate Ways & Means Committee in April, expressing support for the bill’s intent to spur economic development. However, GOPC believes a statewide “automation” of offering tax incentives could result in negative side effects. GOPC will seek to modify the bill, which passed the Senate and should see action in the House during lame duck.

 

*Names listed in parentheses are the legislators who are chief bill sponsors

 

Field Day Provides Learning Opportunity about Drinking Water, Wastewater Management Process

November 9th, 2016

By Jason Warner, GOPC Manager of Government Affairs

GOPC, with colleagues from County Commissioners Association of Ohio, Ohio Municipal League and The Ohio State University Extension, recently met with Karen Mancl, a professor at The Ohio State University College of Food, Agriculture, and Environmental Sciences to learn about drinking water and wastewater management processes in Ohio and to build on GOPC’s knowledge and expertise in this important issue area. As part of the meeting, GOPC embarked on a tour of the Westerville Water Treatment Plant to observe all of the necessary treatment steps in order to deliver clean, high-quality drinking water to homes and businesses in Ohio.

In Ohio, drinking water regulations are governed by two separate statues, the federal Safe Drinking Water Act of 1974, and Ohio Revised Code (ORC) Chapter 6109, the Safe Drinking Water statute. While the federal Safe Drinking Water Act develops national drinking water standards and establishes requirements for treatment, monitoring, and reporting by public water systems, ORC 6109 enables the state to assume and retain primary enforcement responsibilities of the state’s public water systems (by definition, any water connection that contains at least 15 connections and regularly serves an average of at least 25 people at least 60 days per year).

Water Treatment Plant - wikicommons

Water Treatment Plant. Source: Wikicommons

 Since first enactment, the number of drinking water standards public systems must meet has increased significantly, with more than 160 standards now required. These standards include primary regulations designed to protect the public health (which are enforceable and, if not met can result in criminal prosecution for officials involved) and secondary recommended standards, which regulate everything from taste, odor, and appearance and are designed to help protect the public welfare. To meet these standards, drinking water must go through several “treatment barriers” that are designed to ensure all requirements are met.

While touring the Westerville Water Treatment Facility, we observed these treatment barriers in action. Westerville’s water, which is sourced via Alum Creek, is pumped into the facility and goes through the first barrier known as “clarification.” Through clarification, the water is pre-chlorinated for algae control to remove any biological growth in the water, and coagulation via slow-sand filtration, again to remove any remaining biological growth. These phases are designed to separate any solid materials which could be in the water, and are critical to the primary regulation process designed to protect the public health.

Next, the water goes through a filtration process to remove any particles from the water. This is done by pumping the water into large storage tanks that contain carbon. The filter, which is 2 to 3 stories tall, acts in the same manner as an in-home water filter attached to a faucet. Finally, the water goes through a third and final disinfection process where it is treated with chlorine to kill any remaining bacteria or pathogens. From start to finish, the process takes roughly 14 hours and Westerville treats up to 4 million gallons of water each day for a system that serves up to 60,000 residents and daily workers in the city.

Learn more about the water treatment process and visit GOPC’s Water and Sewer Infrastructure page to access the latest news as well as GOPC research and analysis of solutions to modernizing Ohio’s water and sewer infrastructure systems.

Finally, special thanks to GOPC Board Member, Cheryl Subler with the County Commissioners Association of Ohio, for arranging this great “all access” educational session and tour.

 

Mid-Sized Cities with Declining Populations Face Water Infrastructure Dilemma

October 31st, 2016

By John Collier, GOPC Research & Conference Support Intern, and Jon Honeck, GOPC Senior Policy Fellow

The United States Government Accountability Office recently released a report on the water infrastructure dilemma occurring in the United States’ mid-sized and large cities with declining population.  GAO’s analysis was requested by Congressman Paul Tonko (D-NY), to understand the unique challenges these cities face in repairing and replacing water and sewer infrastructure.   The GAO noted that U.S. Environmental Protection Agency (EPA) surveys of water utilities estimate that over 20 years, $655 billion will have to be spent to maintain, replace, or upgrade the country’s water infrastructure.

GAO interviewed water and wastewater utility officials in 10 cities in the Midwest and Northeast, including Youngstown, Ohio, that experienced large population declines between 1980 and 2010.  Youngstown lost 42% of its population over this time frame.  GAO acknowledged that mid-sized to larger cities with declining populations are generally more economically distressed, and suffer from higher unemployment, higher poverty rates, and lower median incomes. These cities, whose peak population typically was in the 1950s and 1960s, suffer from decreased revenue and increased costs. The characteristics of these legacy cities put them in a unique financial bind.

Nearly all the cities in the report expressed concerns over their ability to control combined sewer overflows. Outdated infrastructure in these legacy cities needs updated, but their financial situation makes this difficult.  All the selected cities in the report have raised utility rates in an effort to raise more revenue, but this results in affordability problems for low-income households.  Low-income households in Youngstown now pay over 8% of their median income for their water and sewer bills on a combined basis, well above EPA guidelines for affordability of 3%.  Although Youngstown and other cities have established payment plans to make utility access affordable for lower-income households, it does not discount bills for low-income households, and the prospect of future rate increases will continue to make affordability difficult. 

One of the interesting findings from the report was that the utilities in the study are adopting asset management plans, but it is very difficult to downsize or “rightsize” their infrastructure despite large areas of vacant housing or vacant land.  Asset management refers to creating a comprehensive inventory of the utility assets and their condition, and integrating this data with maintenance and capital planning.  The utilities noted that downsizing was difficult because they still had to service a few houses in each block, or maintain lines through vacant areas in order to reach neighborhoods farther away.  This response illustrates how difficult it is to separate infrastructure planning from overall land use planning. 

Greater Ohio Policy Center considers the modernization of Ohio’s water infrastructure a critical issue. GOPC has conducted an assessment of the issues Ohio’s legacy cities face, and the need for additional mechanisms, such as green infrastructure as an alternative stormwater management tool.  We believe that asset management and regional consolidation are key outcomes that could be accelerated with additional state incentives.     

More information about water infrastructure and links to GOPC’s reports can be found Here.

 

GOPC Staff Speaks at MORPC Summit on Sustainability and the Environment

October 25th, 2016

By Jon Honeck, Ph.D., GOPC Senior Policy Fellow

Overview

On Friday, October 21, I had the privilege of being a panelist at the MORPC Summit on Sustainability and the Environment, held at the Columbus Hilton Downtown.  The panel’s title was “Looking Ahead, What Are the Important Sustainability Policy Issues?”  The other panelists included Kent Scarrett of the Ohio Municipal League, Jack Shaner of the Ohio Environmental Council, and Holly Nagle of the Columbus Chamber.  Panelists were asked to speak about upcoming issues in the lame duck state legislative session and the 2017 state budget process.  In the short run, panelists agreed that Ohio’s renewable portfolio energy standards are likely to be a top priority of the General Assembly when it returns after the 2016 election.  For the 2017 budget process, I focused my presentation on transportation, water and sewer infrastructure, brownfield remediation, and application of public nuisance statutes to commercial and industrial property. 

Transportation

GOPC is trying to improve state funding for public transit and advocate that the state make progress in an “active transportation” strategy that makes roadways safe for all users, including bicyclists and pedestrians.   The Ohio Department of Transportation budget is considered separately from the state main operating budget bill.  The budget scenario for public transit funding is difficult.   Currently the state only provides about 3 percent of overall public transit funding, with local and federal funds providing the largest shares.  On a per capita basis, Ohio ranks 38th highest in the nation in its support for public transit.  GOPC has proposed some ways to provide dedicated funding from the state, but progress is complicated by the need to replace Ohio’s Medicaid managed care sales tax.  Seven local transit authorities rely on a local sales tax and collectively they received $33.6 million from the sales tax on Medicaid premiums. If this funding goes away without a replacement, significant service cuts will result.

Water and Sewer

Many cities across the state are facing a dual challenge of upgrading aging infrastructure and complying with EPA regulations to fix combined sewer overflows that lead to raw sewage being discharged into waterways during major storms.   Over the next 20 years, the EPA estimates that Ohio utilities will need $14.1 billion for wastewater treatment upgrades and $12.1 billion for drinking water infrastructure.  GOPC’s analysis of the problems facing Ohio legacy cities and the need for additional funding can be found here.  These estimates do not include any potential costs of lead service line replacement that may be needed in the wake of public reaction to the situation in Flint, MI.  Under Ohio House Bill 512, Ohio utilities must complete a map of all lead service water supply lines by March, 2017, a date that is in the midst of the state budget process.  The availability of this information may influence public opinion.   

With the Kasich Administration proposing its final budget, sustainability issues will have to hold their own against education, taxation, criminal justice, and other high profile issues.  GOPC will ensure that advocates are informed and can make the case for sustainability during the budget process.  For more information, please sign up for our email updates. 

 

Glenn College Forum Highlights Improvements Necessary to Sustain Water, Transportation Infrastructure

September 26th, 2016

By Jason Warner, GOPC Manager of Government Affairs

This month, GOPC was pleased to join with our colleagues at the Mid-Ohio Regional Planning Commission (MORPC) as a part of a panel discussion at the Glenn College Leadership Forum at The Ohio State University. The panel, Keeping Things Flowing: Water and Transportation Needs in the 21st Century, focused on the growing concern about infrastructure deterioration in the state and addressed ways in which local and state governments can identity and implement innovative strategies to take on these twin crises head-on.

Jon Honeck, Ph.D., Senior Policy Fellow with GOPC, presented on Ohio’s Water and Sewer infrastructure needs, with special focus on a growing issue that often is overlooked when considering this critical utility service, stormwater infrastructure. Most of Ohio’s water and sewer infrastructure was installed in the late 19th and early 20th Century, and especially in major metropolitan downtown areas, the systems have not been updated to meet the needs of growing populations and demands of the 21st Century. This is especially true of stormwater systems. With some studies suggesting that rain events are now producing more precipitation than they did even 20 to 30 years earlier, aging sewer systems that combine wastewater and stormwater are often overwhelmed, resulting in releases of raw sewage from aging systems into rivers and streams.

JH Glenn College3

Photo Credit: John Glenn College of Public Affairs

Estimates show that Ohio needs $14.1 billion for wastewater treatment upgrades alone between 2012 and 2032, in addition to another $12.1 billion for upgrades and replacing to the state’s drinking water systems over 20 years. That is a total of $26.2 billion in infrastructure needs in just 20 years, and that does not include costs to identify and replace lead pipes, which service an estimated 650,000 homes and businesses in the state.

Coming up with the necessary funding to upgrade this aging infrastructure is complicated by the elimination of federal grants for water and sewer systems in the 1980’s. The feds now provide revolving loans to local governments to assist in system repairs and upgrades, but local communities facing economic problems must repay the loans over time, which is an challenge many small communities in the state cannot afford.  

Among the potential solutions that could help to mitigate this future crisis that Honeck discussed during the forum include new financial tools which could provide either credit enhancements or loan guarantees for small communities that lack necessary funding resources, regionalization of water systems that encourages smaller communities to band together and pool limited resources to better afford work which needs to be done, public-private partnerships, and increased state funding in revolving loan funds and grant programs. 

Thea Walsh, the Director of Transportation Systems and Funding at MORPC, next provided an overview of Ohio’s transportation infrastructure and the needs it faces in order to maintain the state’s competitive edge.  Ohio’s interstate highway system is the 12th largest in the nation, and ranks 5th in overall traffic volume and 4th in truck traffic volume. Ohio boasts the 2nd largest inventory of bridges in the nation.  Beyond roadways, Ohio also ranks 4th nationally in freight rail mileage, hosting 35 freight railroads and 5,305 miles of rail.

Despite these impressive statistics, the American Society of Civil Engineers has graded Ohio’s 125,000 plus miles of roads a ‘D’, finding that 43% of Ohio’s roadways are in critical, poor, or fair condition. Of greater concern is a finding that 2,242 of the state’s 27,015 bridges (8% of total bridges), are structurally deficient. The overall cost to motorists in the state, the personal cost of driving on roads in need of repair, is $3.3 billion per year, which amounts to $413 per motorist.

Ohio receives a significant portion of its overall transportation funding from the Federal Highway Trust Fund, which constitutes 45.1% of the Ohio Department of Transportation Revenue (FY12-14), while 32.9% is generated from the state motor fuel tax. The Federal Highway Trust Fund is supported from the federal gas tax, currently 18.4 cents per gallon of gasoline. That rate has remained unchanged since 1993. The state motor fuel tax is 28 cents per gallon of gasoline, and has remained unchanged since 2005. Moreover, because of constitutional limitations, this fuel tax revenue may only be used for highway construction, which precludes its usage toward public transportation projects. GOPC is constantly seeking ways of funding and modernizing all modes of transportation, including transit, biking, and walking.

Because the Federal Highway Administration has estimated that $170 billion in capital investment is needed annually to improve only roadways nationwide, it will be necessary in the future to increase revenue in order to make the required improvements. This will likely include raising fuel taxes, but also involve alternative sources of revenue as automobiles are becoming more fuel efficient and more vehicles that run on alternative sources (hybrid, electric) are operating on roadways.

One alternative that was discussed is a pilot program underway in the state of Oregon where individuals have volunteered to have tracking devices installed in their vehicles to track the number of miles they are traveling, and then paying per-mile fees to help fund highway and road construction and improvement. Other alternatives include the construction of new tolled infrastructure, an alternative that has been discussed to fund improvements on the Brent Spence Bridge in Cincinnati (Ohio has approved the toll bridge, Kentucky has not) and public private partnerships.

It was clear from the discussion that difficult decisions will need to be made in the months and years ahead. Investment in the state’s critical infrastructure, including drinking water, stormwater, and transportation, is necessary for two reasons. First, it is of paramount importance to ensure public health and safety. Without improvement to the state’s water systems, Ohio runs the risk of seeing repeats of the public health crisis in Flint, Michigan caused by lead contamination in the city’s water system, or the tragic failing of critical infrastructure such as the collapse of the I-35W bridge in Minneapolis several years ago. Secondly, these systems are of critical importance to our state’s economy. Ohio is at the center of the nation’s economic livelihood, located within a day’s drive of 50 percent of the country’s population, with tens of thousands of jobs tied to transportation, manufacturing, and logistics. Investment in quality water and transportation systems will ensure Ohio’s economic stability in the years ahead.

 

View the PowerPoint presentation here

 

Social Impact Bonds for Urban Redevelopment and Green Infrastructure Break New Ground

September 6th, 2016

By John Honeck, GOPC Senior Policy Fellow

Social impact bonds (SIBs) or “pay for success” models are debt arrangements established by a public agency or nonprofit organization in order to finance an innovative service or program with an uncertain rate of return.  Investors are paid back in full only if the project succeeds in meeting its goals.  In this way, public agencies are incentivized to take a more flexible approach to problem-solving.  Until recently, social impact bonds were mainly tried in social service and criminal justice fields to test approaches with significant risk.  For example, Cuyahoga County is using a SIB to test a new approach to reduce foster care placements of children with homeless parents.

Two recent deals show that the social impact bond approach can be used in infrastructure and urban redevelopment.  In Hamilton County, the Port Authority of Greater Cincinnati has been looking for ways to redevelop sites for manufacturing firms seeking to locate or expand within the county.  Although the county has many abandoned industrial sites, they are often contaminated and have outdated buildings and infrastructure.  The lack of suitable locations for manufacturing expansion puts the county at a significant disadvantage with respect to greenfield development. 

To help remedy the situation, in June, 2016, the Port Authority issued bonds with a principal amount of $7 million for the acquisition and remediation of contaminated sites in the county.[1]  The bonds were purchased by local businesses and high net worth individuals that have an interest in economic development but are willing to provide a source of long-term patient capital.  Investors hope to make a profit when the land is sold, but if the deal does not work out as planned they are only guaranteed a miniscule annual rate of return of 0.15 percent.  If the approach is successful, the Port Authority may seek an additional $13 million from other investors.  This financing strategy may provide an example for other older post-industrial cities in Ohio and the rest of the nation. 

In Washington, D.C., a ground-breaking deal showed the potential for social impact bonds for infrastructure.[2]  The DC Water and Sewer Authority announced in early September that it will seek between $20 – $30 million in financing from investors to support the installation of “green” infrastructure such as porous pavement or rain gardens to manage stormwater flowing into the Potomac River and Rock Creek watersheds.  DC Water hopes to avoid using expensive deep tunnels or other major infrastructure work that would otherwise be necessary to address a federal mandate to stop combined sewer overflows.  Like many other cities in the Eastern U.S., the older parts of Washington’s sewer system combine wastewater and storm water runoff into the same pipes, which overflow when it rains, discharging raw sewage into rivers and streams.  Investors will be repaid according the degree of stormwater control that the project achieves. 

Greater Ohio Policy Center is currently in the midst of a year-long study of innovative financing techniques for water and sewer infrastructure and brownfield redevelopment.  These two issues are critical needs for cities in Ohio and across the nation, as discussed in our earlier report.  Although social impact bonds cannot be expected to provide most of the financing needed to tackle these issues, it can promote innovative approaches to test the application of new programs.  In the long run, these arrangements can also help to build a network of stakeholder organizations that see themselves as partners in addressing a significant environmental or economic problem.  SIBs are not just about financing, they also help to focus public attention on an issue. 

 

 

[1] Press release, Port of Greater Cincinnati Development Authority, “Port Authority Issues Impact Investment Debt To Fund Industrial Site Revitalization; Closes $7.0 Million In First Round,” June 16, 2016.  http://www.cincinnatiport.org/wp-content/uploads/Port-Authority-builds-patient-capital-portfolio-6.9.16.pdf

[2] Kyle Glazier, “D.C.’s Social Impact Bond Deal Will Fund Infrastructure,” The Bond Buyer, 9-2-16, http://www.bondbuyer.com/news/regionalnews/dcs-social-impact-bond-deal-will-fund-infrastructure-1112664-1.html.

In Time for the RNC, Cleveland’s Public Square Renovation Showcases Fine Center-City Redevelopment

July 25th, 2016

By Alex Highley, GOPC Project Associate

The redesign of Cleveland, Ohio’s Public Square, which was completed in June 2016 and just in time for the Republican National Convention (RNC), demonstrates impressive investment in a legacy city’s downtown core, to the long-term benefit of the public. The remodeling of the area has transformed the area from a mere intersection of traffic to an exemplary planning case study of intelligently recreated urban space for refined functionality and imagery. By creating more green spaces with park benches, walkable paths, the artistically-modeled area now exudes an atmosphere that is welcoming for visitors and passers-by.

Along with newly paved walkways, fresh green spaces, newly planted trees, and a fountain for kids to play in, the refurbished square features a brand new outdoor café for visitors to enjoy. Statues of the city’s founder and a former mayor have been preserved and repositioned in the square. For special events, as the RNC demonstrated, Public Square acts as the central hub where citizens can congregate to absorb ranging opinions at the “speakers’ platform” on the south end of the park.

Cle Public Square

Cleveland Public Square revitalized. Photo credit: The Group Plan

The renovation of Public Square, overseen by the nonprofit city-county Group Plan Commission, in total cost $50 million. According to the Cleveland Plain Dealer, $37 million was spent on landscaping and $13 million was spent on reconstruction underground. A combination of government and private sources contributed to this project. As Greater Ohio Policy Center’s reports have argued, urban core investment will substantially improve the downtown area in many ways. Firstly, by attracting people who otherwise wouldn’t visit the area, commercial activity in the surrounding businesses will improve. Property values in the area will likely rise due to the public good of improved amenities such as green spaces. Lastly, as we saw with the RNC, the new area should act as a venue of bringing people together for events, such as the upcoming Cleveland Orchestra concert, where Clevelanders and visitors can interact and enjoy themselves.

 

Congress considers changes to EPA revolving loan formulas: Ohio may lose ground

July 6th, 2016

By Jon Honeck, GOPC Senior Policy Fellow

Background

Each year Congress appropriates funds for the U.S. EPA to provide capitalization grants for state revolving loan funds for wastewater treatment.  In Ohio, this fund is known as the Water Pollution Control Loan Fund (WPCLF).   The Ohio EPA sets priorities for the fund according to state needs and federal guidelines.  Local communities submit applications for loans to help finance wastewater treatment plant, sewer system upgrades, or conversions of septic systems to centralized sewage collection.  Ohio’s allotment of the total appropriation is set at 5.7% of the total appropriation amount; the state received $78.5 million in 2016. The annual subsidy allows the WPCLF to offer interest rates below standard market rates.  When combined with loan repayments, the fund can offer substantial amounts of financing.  In 2015, it made a record $759.6 million in loans. 

Congress orders a review

In 2014, Congress passed a major overhaul to the Clean Water Act.  This legislation, known as the Water Resources Development and Reform Act, mandated that the EPA review the allocation formula for the Clean Water Act revolving loan program.  The formula had changed little since the program was created in 1987.  At that time, the formula roughly reflected states’ share of the national population and share of the Clean Watersheds Needs Survey. 

Congress asked the US EPA to determine whether the formula addresses the water quality needs of states based on: (1) the most recent Clean Watersheds Needs Survey (CWNS); and (2) other information that the agency determined appropriate.  The CWNS takes place every four years.  In the 2012 survey, Ohio wastewater utilities identified $14.6 billion in capital projects that needed to be addressed over a 20-year period.  (Click here to access the 2012 CWNS).

Potential Revisions to the Formula

The US EPA presented its report to Congress in May, 2016.  It can be accessed here.  The agency’s main conclusion is that “the current allotment does not adequately reflect the reported water quality needs or the most recent census population for the majority of States” (emphasis in original, p. 5).    The report considers four basic factors that could be used in a revised formula:

  • Clean Watershed Needs Survey (CWNS, which the agency admits underestimates water quality needs)
  • Resident Population from the 2010 U.S. Census
  • Water Quality Impairment Component Ratio (WQICR), an existing database documenting pollution in rivers, lakes, and streams, derived from data submitted by the states; and,
  • Ratio of revolving loan fund assistance to the federal capitalization grant over the past ten years (to reward states that have increased project funding by leveraging their federal grants as much as possible);

Using these factors, the report considers three possible options for a new formula.  Each option would limit a state’s potential loss to 25% and its potential gain to 200%. 

OPTION FACTORS and FORMULA WEIGHTS
1 2012 Clean Watersheds Needs Survey (70%), 2010 population (30%)
2 2012 CWNS (50%), 2010 population (30%), WQICR (20%)
3 2012 CWNS (50%), 2010 population (30%), WQICR (10%), Ratio of assistance to federal grant (10%)

Ohio’s allocation would decline

Ohio fares poorly in all three scenarios, mostly because its share of the national population has fallen by over a full percentage point in the last 30 years, to about 3.7% of the national total.  Interestingly, Ohio’s share of the Clean Watersheds Needs Survey has fallen only slightly, reflecting the large amount of EPA-mandated combined sewer overflow work that must be done.   All three scenarios would yield double-digit declines in Ohio’s allotment, with option 1 creating an 18.2% decline, and options 2 and 3 at the maximum reduction of 25%.   In Program Year 2016, a 25% reduction would have meant a loss of nearly $20 million in federal funding. 

What happens now?

The scenarios in the report are only suggestions.  Congress would have to pass legislation to modify the current formula.  Formulas that did not have a “stop-loss” rule of 25% could have even greater effects on Ohio’s allocation.  Significant federal funding cuts would make it more difficult for the WPCLF to provide low interest rate loans to Ohio communities at a time when sewer rates are rising and affordability is becoming an issue.  It would become especially difficult to offer principal forgiveness options to Ohio’s poorest communities.  These communities already face reduced federal funding options from cuts to the Community Development Block Grant program.  Between 2000 and 2014, average Ohio sewer charges increased by 85 percent, more than twice the rate of consumer inflation.[1]  In a 2015 report on infrastructure needs, GOPC identified replacement and upgrades to water and sewer infrastructure as critical needs that span Ohio’s cities and villages of all population sizes.  Key stakeholders in the area should make every effort to inform Congress about the importance of maintaining Clean Water Act revolving loan program funding. 

[1] Author’s analysis of average user charges from Ohio EPA, 2014 Water and Sewer Rate Survey.  Consumer Price Inflation increased by 37 percent.

One Water Summit Showcases Innovative Solutions to 21st Century Water Challenges

June 20th, 2016

By Jon Honeck, GOPC Senior Policy Fellow

The U.S. Water Alliance is a coalition of water utilities, environmental engineering organizations, nonprofits, academics, and other groups interested in raising public awareness of challenges facing the U.S. water supply.  The group held its “One Water Summit 2016” in Atlanta, GA, in June, attended by GOPC Senior Policy Fellow Jon Honeck.  GOPC is engaged in a multi-year project to address water and sewer infrastructure needs in Ohio. 

Conference programming reflected the diversity of water-related challenges across the country.  Panelists at the opening plenary session discussed Atlanta’s attempt to address water supply and water quality issues brought about by decades of population growth, sprawl, and more recently, climate change.  The Atlanta metropolitan planning commission took the lead by integrating water with land use and transportation planning.  With changes in water pricing to promote conservation, the Atlanta metro region achieved a 10% water consumption decline in spite of population growth.   Water audits are now required for buildings with 25,000 ft2.  The Atlanta PACE program (Property Assessed Clean Energy) can provide commercial loans for water and clean energy efficiency that are paid back through property tax assessments.  Current efforts are aimed at improving water quality through green infrastructure.  The Turner Foundation is a major driver of this effort and a regional green infrastructure strategy is in the planning stages. 

One of the panels discussed the possibilities for implementing green infrastructure on a larger scale.  Green infrastructure has become a nationwide phenomenon with cities learning and sharing their experiences with each other.  Federal rules now require EPA-funded Clean Water state revolving funds to set aside an amount equal to 10 percent of their annual capitalization grant for green infrastructure projects.  Philadelphia has been considered a leader in this area as it implemented a plan to address combined sewer overflows under an EPA consent decree.   Atlanta has completed its CSO projects, but wants to continue to make progress in water quality to protect drinking water sources and to enhance recreational opportunities in urban areas.  Atlanta sent a large delegation to Philadelphia to learn from their experience.  The delegation included a multiple city departments and private sector groups, illustrating the breadth of the partnerships needed to carry out its goal of reducing runoff by 225 million gallons per year.   Panelists discussed the new mindset needed to implement green infrastructure, including treating natural vegetation as a capital asset and tracking long-term maintenance.  Philadelphia has no ROI information yet on its extensive green infrastructure installations because it is too soon to understand long-term maintenance costs, but green infrastructure is receiving about 3.5% of its annual capital budget.  In the Q&A session, other examples were brought up of cities moving ahead with green infrastructure, including the Northeast Ohio Regional Sewer District grants program, which provides assistance to private landowners with large surface parking lots (and large amounts of stormwater runoff), and the Milwaukee Metropolitan Sewage District, which aggressively pursuing green infrastructure for flood control and watershed management. 

One of many interesting panels discussed “Building a New Business Model for Water.”  Unlike most other countries, the U.S. water and wastewater industry is very fragmented, with 69,000 individual utilities nationwide.  David St. Pierre, CEO of the Chicago Water Reclamation District, discussed opportunities to think about larger structures through mergers, including the potential for cross-state mergers of public utilities.  This would entail putting in place a new regulatory structure that does not exist at present, but it would allow utilities to reap the benefits of economies of scale and learning that at present are only available to large international companies.  Often times, drinking water and wastewater utilities remain separate even in the same municipality.  Tony Parrot of the Louisville Metropolitan Sewer District discussed an inter-agency agreement to tie the operations of the MSD with the local drinking water utility, and how this led to the implementation of a new common billing system that will save operational costs.  The next step is to move to a full merger of the two systems.   Increasingly, some systems are turning to private companies to build or operate their facilities, and representatives of Veolia Water and MVP Capital discussed their experiences in partnering with public utilities. 

It is clear from the One Water Summit that there is tremendous energy and creativity in addressing water-related issues, and that the formerly sedate world of water utilities is changing fast.  Ohio cities have much that they can learn from their peers.  Other legacy cities, such as Louisville, are facing that challenges brought about by managing an infrastructure built for higher levels of water use.  Ohio’s capital city could also learn from growing cities like Atlanta that have combined land use and water infrastructure planning.  The issue of aging infrastructure, which is GOPC’s main concern, was brought up repeatedly by conference participants in panels and in informal conversation.  We are hopeful that GOPC’s forthcoming recommendations on financing mechanisms will not only be of use for Ohio but for other states across the nation. 

 

Ohio General Assembly Passes House Bill 512 to Reform Water Testing Procedures

June 2nd, 2016

By Jon Honeck, GOPC Senior Policy Fellow

Before leaving on its summer break, the Ohio General Assembly passed House Bill 512, a major reform to Ohio’s drinking water regulations that will tighten lead notification and testing requirements, tighten the requirements for lead-free plumbing fixtures, and provide more flexibility to the Ohio EPA and the Ohio Water Development Authority to support public drinking water and wastewater treatment infrastructure.  The bill passed with strong bipartisan support in the wake of the well-publicized crises involving lead in drinking water supplies in Flint, MI, and Sebring, OH.  The American Water Works Association estimates that there are 6.1 million lead service drinking water supply lines still in place across the nation, including many in Ohio.  With proper corrosion control methods, many of the issues with lead pipes can be avoided, although the ultimate answer is to replace these lead lines over time.  We hope that this same bipartisan spirit will carry forward into the fall and 2017 as the state grapples with important water infrastructure and water quality issues. 

Under the bill, homeowners must be notified within two business days of lead laboratory test results received by a community water system.  If the lab results show a lead level above the applicable threshold then the water system must provide information about the availability of health screening and lead blood level testing in the area to the homeowner and notify all customers that the system has exceeded acceptable lead levels within two business days, and provide information about lead testing to all customers within 5 business days.  Within 18 months of the notification of about excessive lead levels, the system must submit a revised corrosion control treatment plan to the Ohio EPA.  A revised corrosion control plan requirement is also triggered if a system changes sources of water supply, makes substantial changes to treatment, or operates outside the limits for certain metals or chemicals. Each water system is also required to map parts of its service area that are likely to contain lead lines.

Many Ohio cities are engaged in multi-year capital projects to fix combined sewer overflows and replacing aging water infrastructure.  The Water Pollution Control Loan Fund, which is controlled by the Ohio EPA, provided over $700 million in revolving loans in 2015 for these purposes.  The Fund receives an annual capitalization grant from the U.S. EPA so it can provide below-market interest rates to projects that are a high priority for the state and local partners. House Bill 512 broadened the scope of the WPCLF’s authority to match recent changes in federal law.  New funding purposes include energy conservation and efficiency at wastewater treatment plants (which use enormous amounts of electric power), watershed management, recapture or treatment of stormwater, and decentralized sewer systems to assist smaller, more isolated rural areas.  In addition, loan terms for the WPCLF are increased from 20 to 30 years, making them more affordable for borrowers.  These changes make it easier to develop creative approaches to managing the water treatment system. 

As Greater Ohio pointed out in Phase I of its ongoing infrastructure project, the state’s needs are vast and the financial capacity of many water utilities is stretched to its limit.  We will make further policy recommendations on this point in 2016.