GOPC Testifies on Transportation Budget in House Subcommittee

February 16th, 2017

Recently, Greater Ohio’s Manager of Government Affairs, Jason Warner, had the opportunity to testify before the House Finance Subcommittee on Transportation regarding House Bill 26, the state transportation budget for FY2018-2019. The subcommittee held hearings throughout the week on the proposed budget, which provides appropriations for programs funded with motor vehicle fuel taxes and registration fees (primarily in the Departments of Transportation and Public Safety.

GOPC full testimony is below and can also be found in PDF format here. You may also review all the testimony which the subcommittee heard on the committee’s website.

 

House Finance – Transportation Subcommittee
House Bill 26: State Transportation Budget | Interested Party Testimony
Jason Warner, Greater Ohio Policy Center
February 9, 2017

Chairman McColley, Ranking Member Reece and members of the Transportation Subcommittee, I want to thank you for providing me this opportunity to speak to you today about transportation in Ohio and the state’s transportation budget for FY2018-19.

My name is Jason Warner and I am the Manager of Government Affairs at the Greater Ohio Policy Center. Greater Ohio is a nonprofit nonpartisan organization that is valued for its data-driven research. Our mission is to champion revitalization in Ohio to create economically competitive communities.

As I am sure you are aware, Ohio is a cornerstone of our nation’s transportation infrastructure. I would like to focus my testimony today on what Greater Ohio sees as a policy platform to support a robust, competitive transportation system that will continue to keep Ohio at the forefront of meeting the increasing demands for a 21st Century transportation system for a 21st Century economy. We do not consider these to be aspirational goals, but rather a blueprint and effective strategic plan.

I would like to begin my remarks today with an overview of public transportation in Ohio. Ohio boasts a strong and productive public transportation network, which includes 28 urban and 33 rural systems. ODOT data shows that over 115.1 million passenger trips were provided by the state’s transit systems in 2013, the most recent year statistics are available.

Yet, 27 counties in Ohio feature no form of public transportation (either fixed route or on-demand service) and the state spends only 63 cents per capita for public transit. That is why Ohio ranked 38th in the nation in terms of state investment in public transportation, below North Dakota. It’s worth noting, that among Ohio’s neighboring states, the state ranks ahead of only Kentucky:

  • Pennsylvania – 9th ($85.55 per capita) 
  • Michigan – 15th ($24.33 per capita) 
  • Indiana – 19th ($8.57 per capita) 
  • West Virginia – 32nd ($1.50 per capita) 
  • Ohio – 38th ($0.63 per capita) 
  • Kentucky – 42nd ($0.34 per capita) 

Only 2% of ODOT’s budget is dedicated to public transportation, which is why the department’s own 2014 Transit Needs Study found that current service does not meet demand. Ohio’s peer states dedicate between 10-20% of their state transportation budgets to transit and the state needs to do much to make up for this deficiency. Public transportation is critical to a number of sectors in Ohio, including the elderly, disabled, and is a key component in successfully supporting the state’s priority of job creation, job growth, and workforce development.

We thank Director Wray for his leadership on this issue. Through his efforts and those of the team at the Ohio Department of Transportation, the governor’s budget proposed a substantial increase in funding for public transportation over the next two years. However, as the ODOT Transit Needs Study acknowledged, the backlog of capital needs is great and will require substantial support. There are several ways to address that gap.

Increase Federal Highway Administration Funding for Public Transportation

One option, which involves a simple reprioritization of goals and projects at the Department of Transportation is the idea of flexing Federal Highway Administration (FHWA) dollars.

Flexing FHWA dollars reallocated federal funding Ohio already receives. At present, the state flexes around $23 million per year for public transportation purposes. House Bill 26 proposes to increase this amount by $10 million per year, to $33 million annually. This is a significant increase in funding and we applaud the move by the administration to increase this support, which will help support the purchase of new rural transit vans and full sized buses.

Greater Ohio Policy Center believes that this support would be greatly enhanced with a commitment by the legislature and Department of Transportation to flex an additional $17 million annually, boosting the total amount of flexed FHWA dollars to $50 million per year of the biennium. Doing so will not adversely impact ODOT and its primary mission, as outlined recently by Director Wray in his testimony to the House Finance Committee, which is to “to take care of what we have.”

Setting aside a total of $50 million in FHWA funding to public transit will result in 7.5 fewer miles of highway expansion, or 24 miles of highway repaired per year. For perspective, ODOT paved 5,564 lane miles in 2015.

Allocating $50 million per year of FHWA fund to transit-related capital investments will have negligible impact on Ohio’s crucial highway maintenance and construction programs, while significantly improving safety, performance, and use of Ohio’s public transportation systems.

Create a Dedicated Funding Stream for Public Transportation

Flexing FHWA funding is just one option Ohio has to support Ohio’s public transportation network. Another option, which will require action on the part of the legislature, is to create a dedicated funding stream for public transportation.

Nationwide, 25 states along with the District of Columbia dedicate fees and taxes for the exclusive use of public transit. This, in turn, provides a relatively reliable source of assured funding for these systems. While local transit systems can seek support for dedicated sales tax funding from local voters, it is still not sufficient to meet all needs, and thus most systems rely on funding from the state.

There are several possible sources Ohio could dedicate to support transit-related equipment and vehicle investments; examples of potential funding sources include. At Greater Ohio, we believe Ohio should consider dedicated funding derived from the sales tax collected on rental vehicles, a revenue source that is largely paid by out-of-state visitors to Ohio. By dispersing the equivalent amount of sales tax collected on rental vehicles to fund public transportation, Ohio would take a major step forward in assisting Ohio’s existing transit systems modernize and expand to meet the growing demands for service statewide.

There are other options available beyond the rental vehicle sales tax, including a tax on motor vehicle sales or a fee on the sale of new tires, among others. Regardless of the source, dedicated funding is an important and necessary step forward if Ohio is to have a modern, competitive system.

Dedicated funding for capital improvements will increase the safety and reach of Ohio’s transit agencies. In addition, dedicated funding will help to expand Ohio’s existing transit services, including helping to reach residents in the 27 mostly rural counties that lack access to any form of public transportation.

Adopt and Implement a Statewide Active Transportation Policy

Public transportation is just one aspect of a robust transportation network which Ohioans have come to expect and rely upon. But as we near the beginning of the third decade of the 21st Century, we must look beyond four wheeled transportation as being the sole aspect of the transportation network.
Every day in Ohio, 2 pedestrians and 1 bicyclist dies or is seriously injured in roadway accidents.

Nationally, elderly people and children are at greater risk of pedestrian fatalities than other age groups. A 2015 analysis of 37 active transportation projects across the country determined the projects avoided a total of $18.1 million in collision and injury costs in one year alone. An active transportation policy that ensures state roadways and municipal streets that receive ODOT investment can be safely traveled by all users’ needs to be implemented.

Active transportation, by definition any human-powered transportation system such as walking or bicycling, is increasing in frequency across the state for a variety of reasons. Adoption of a policy that would be sensitive to context (rural vs. suburban vs. urban) and that would facilitate the safe and efficient movement of people and goods is key. At present, 33 states have an active transportation policy. Agencies such as ODOT and the Ohio Department of Health have been working on a policy for some time. I recently had the opportunity to share this plea with both the Joint Task Force on Transportation Issues and the Joint Education Oversight Committee, as part of its review of school transportation issues, and share it with you now in the hope that this committee will urge the department to pursue this policy on a statewide basis and ensure safe travel for all Ohioans.

Comprehensive Funding Reform of the ODOT Budget

As I have previously mentioned, Ohio is a key component in our national transportation network. 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. Ohio’s maritime ports saw 48,267,276 short tons of cargo traded in 2013, and features 7 ports ranked in the top 100 nationally that year.

Yet, in spite of 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 the state’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.

Adequately maintaining and upgrading all modes of transportation in Ohio is becoming a challenge, as there are not enough resources available to ensure this is done effectively. The cost of transportation materials and equipment has increased substantially in the last decade, while local, state and federal funds have flat-lined. This is not a problem that is unique to Ohio, and ODOT should be lauded for the work it has been able to accomplish in light of these challenges.

That said, Ohio needs to take a serious look at these challenges going forward, and can look close by to see an effective model that is meeting the needs of the public and private sector in a strategic manner.

In 2012, Pennsylvania had been found to have the most dire of infrastructure systems in the nation; the bridges were rated as the most structurally deficient, roadways were crumbling and there was a growing, unmet demand for public transportation. Through a comprehensive 5-year transportation budget package enacted in 2013, Pennsylvania is now producing $2.1 billion in additional funds and recalibrating resources to better support all modes of transportation. The state has now adopted a Fix-It-First Policy that focuses on funding repairs and maintenance programs on existing infrastructure, doing more to improve asset management and limiting capital expansions.

Like Ohio, Pennsylvania restricts its motor fuels tax to highways and bridges, so in order to provide for the needs of additional transportation modes like transit, rail, aviation, and maritime ports, the state instituted new fees and aggregates small increases on existing taxes and fees to provide additional funding to expand transit services, modernize ports and airports and generate additional revenue for traditional maintenance programs. Among these revenue generators were:

  • A new $1 fee on all new tires sold 
  • A higher fine for lapsed vehicle insurance in lieu of license suspension 
  • A flat $150 fine for disobeying traffic control devices 
  • A $2 per day vehicle rental fee 
  • A 3% vehicle lease tax 
  • A clear formula for assessing the gas tax on alternative fuel vehicles 
  • A switch from taxing at the pump to taxing “at the rack”

One of these elements is already included in House Bill 26. A provision in the bill moves the point at which the motor fuel tax is applied from the point when the fuel is received to, generally, the terminal or refinery rack, affecting who is required to report and pay the tax.

GOPC believes that other elements of the Pennsylvania reform package can and should be considered in Ohio, in order to ensure the state’s economic stability in the years ahead.

Conclusion

In conclusion, it is crucial that Ohio support and maintain a system supporting all modes of transportation. Such a robust, competitive system as outlined here today can serve as a blueprint for addressing our state’s critical infrastructure needs while simultaneously enhancing Ohio as a place where businesses can thrive and where people want to live.

Chairman McColley and members of the Transportation Subcommittee, thank you for your time and thoughtful consideration. I am happy to answer any questions you may have.

Southwest Ohio’s Pipeline H2O Launches Program for Upgrading Sewer and Water Infrastructure

January 31st, 2017

By Nick Livingston, GOPC High School Intern

Pipeline H2O, a water-based startup technology program located in Hamilton, Ohio, has just announced its first class of companies that are working on water infrastructure challenges. Pipeline H2O’s main objective is to acknowledge and advance the work of water technology companies improve water services and seek innovative strategies for reusing water, upgrading infrastructure, treating wastewater, and monitoring water quality. This timely news coincides with GOPC recently beginning the Implementation Phase of its Water Financing Project, providing recommendations on strengthening the long-term sustainability of water infrastructure in Ohio. 

At the end of the selection process, Pipeline H2O chose eight startup companies to begin the program, including two companies from Ohio: kW river Hydroelctric from Hamilton, and Searen from Cincinnati. Companies that have been selected to participate in the Pipeline H2O program exhibit through their work many of the strategies that GOPC recommends in its recent report, Strengthening Ohio’s Water Infrastructure: Financing and Policy. For instance, WEL Enterprise’s system that treats and reclaims wastewater on one platform is a strong example of developing new technologies in order to save energy costs, which is a strategy GOPC recommends in its report.  

GOPC‘s report also emphasizes the importance of asset management, which is the process of cost-effectively upgrading and maintaining assets. The companies selected for the Pipeline H20 program are efficient in maintaining resources and saving money while upgrading water quality, demonstrating sound asset management techniques.  For instance, the Aquatech startup Searen has created a Vacuum Airlift, which replaces legacy hardware and consolidates pieces of equipment. In addition, GOPC’s call for public-private partnership to make projects more flexible and timely can be seen through Pipeline H2O’s partnership with government agencies such as the United States Environmental Protection Agency, the City of Hamilton, and the City of Cincinnati.

Go Here to access GOPC’s latest report Strengthening Ohio’s Water Infrastructure: Financing and Policy and Here for more on Pipeline H20’s inaugural class of water technology companies

Pipeline H20’s assessment was handled by a committee composed of water experts, including Greater Cincinnati Water Works, the Metropolitan Sewer District of Greater Cincinnati, City of Hamilton Water, Confluence, Butler County Groundwater Consortium, U.S. EPA, Hamilton Mill, Cintrifuse, Village Capital, and Queen City Angels.  New and innovative ideas concerning water development will be introduced throughout the region from the selected companies, and the Pipeline H2O program will be set in action from February 2017 through May 2017.

 

Cincinnati Enquirer Publishes GOPC Op-Ed on Recommendations for 21st Century Infrastructure Policies

January 26th, 2017

The Cincinnati Enquirer recently published GOPC Senior Policy Fellow Jon Honeck’s guest column “Here’s how to, and how not to, rebuild America.” In the op-ed, GOPC makes practical recommendations to guide policymakers as they tackle the challenges of keeping the country moving in the 21st Century. 

For the first time in years, the nation’s infrastructure crisis will be a leading issue in Congress. To build on this momentum at the state level, GOPC is advocating for improvements in public transit in the upcoming Ohio Department of Transportation budget. The op-ed recommends that policymakers in Ohio and in Washington should adopt a “fix it first” policy that focuses on maintaining and utilizing existing infrastructure. With this solid foundation in place, we can think creatively about how to finance catalytic projects that think out of the box.

Go here to read the op-ed.

For more information on strategies and policies needed to rebuild Ohio, please see GOPC’s Water Infrastructure and Transportation Modernization Resources for the latest news and tools in these fields, including a report on water infrastructure released last week: Strengthening Ohio’s Water Infrastructure: Financing and Policy.

To learn more about policies and strategies for modernizing Ohio’s water and sewer infrastructure and transportation systems, make sure to attend our 2017 Summit: Investing in Ohio’s Future March 7th and 8th! We hope you join us: Register today!

Season’s Greetings! GOPC’s 2016 Accomplishments and a 2017 Preview

December 20th, 2016

Staff holiday pic 16

Pictured from left: Jason Warner, Sheldon Johnson, Alex Highley, Meg Montgomery, Torey Hollingsworth, Jon Honeck, Alison Goebel, and John Collier

 

Dear Friends,

From everyone at the Greater Ohio Policy Center, we wish you a safe and enjoyable holiday season!

Throughout 2016, GOPC has been a leader in championing revitalization and sustainable growth in Ohio, ensuring the state is equipped with policies and practices that create robust cities and regions. With so much happening around Ohio, the past twelve months have proven to be busy and rewarding for GOPC in equal measure. We introduced Alison Goebel as our new Executive Director following the departure of Lavea Brachman, and in conjunction with this smooth transition, we achieved many important goals and started planning for even greater success next year. In 2016, we:

  • Published original research reports on many critical revitalization issues in Ohio, including:

o   Akron Urban Health and Competitiveness Report finds that Akron is at a crossroads for further growth and economic development.  This work received extensive coverage from news media, including Akron Beacon Journal, Cleveland Plain Dealer, and WCPN

o   Transportation Modernization Memos analyze strategies that improve multimodal transportation and underscore the outsized economic benefits of implementing policies that support all modes

o   Credit Gaps in Opportunity Neighborhoods assesses redevelopment needs and highlights the barriers to revitalization in many of Ohio’s opportunity neighborhoods

o   Green Infrastructure for Stormwater Control analyzes grey and green water and sewer infrastructure and highlights modern, cost-effective strategies for maintaining aging stormwater systems

o   Ohio’s Small and Mid-Sized Legacy Cities highlights the serious economic and demographic challenges facing smaller legacy cities – received extensive coverage from news media, including WKSU Chillicothe Gazette, and Youngstown Business Journal 

  • Hosted a successful Webinar, attended by over 150 people, examining how Ohio’s smaller legacy cities from Akron to Zanesville have fared over the past 15 years
  • Presented our work at over 25 conferences and meetings in Akron, Baltimore, Cincinnati, Cleveland, Columbus, Dayton, Marietta, Toledo, Washington DC, and Youngstown
  • Testified at the statehouse on state policy on issues concerning revitalization including active transportation, foreclosure reform, and brownfield redevelopment
  • Launched brand new Water and Sewer Infrastructure and Smaller Legacy Cities web resources with up-to-date news, original research, and previews of upcoming reports

Coming in 2017…

In 2017, we will build on this momentum and to continue to underscore the importance of Ohio’s cities as the economic drivers of the state. With partners from around the state and nation, we look forward to continuing to research and advocate for policies that revitalize neighborhoods, diversify transportation systems, modernize water and sewer infrastructure, and build strong cities and regions in Ohio.

We can’t wait to host our 2017 Summit, Investing in Ohio’s Future: Maximizing Growth in our Cities and Regions on March 7th & 8th in Columbus. The Summit will explore best practices in financing and accelerating comprehensive and sustainable growth in communities throughout Ohio. We are meticulously planning an exciting and informative event that we predict will be our best Summit yet. We hope you join us!

If you believe in creating vibrant, sustainable cities and regions in Ohio, we invite you to support GOPC with a year-end contribution. We are grateful for your support.

Warm wishes for 2017,

ag signature

Alison Goebel and the Greater Ohio Policy Center Team

 

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.