Long-term Planning at North Carolina Water and Wastewater Utilities

1. Long-term Planning at North Carolina Water and Wastewater Utilities NCAWWA-WEA Spring Symposium March 26, 2018 Shadi Eskaf, Carol Rosenfeld, James Farrell Environmental Finance Center at The University of North Carolina, Chapel Hill

2. Dedicated to enhancing the ability of governments and other organizations to provide environmental programs and services in fair, effective, and financially sustainable ways through: • Applied Research • Teaching and Outreach • Program Design and Evaluation How you pay for it matters

3. The 2017-18 Water and Wastewater Utility Management Survey

4. 2017-18 Utility Management Survey Funder The North Carolina Policy Collaboratory Survey Responders All local government and large non-governmental water and wastewater utilities in North Carolina Partner

6. Topics • Planning • Financial planning • Asset management planning • Capital planning • Emergency / resiliency planning • Long-range water resources planning • Process of reviewing rates • Current revenues and financial practices • Current billing practices • Other info

7. Survey Distribution • Distributed to 511 drinking water and wastewater utilities in North Carolina (serving nearly all of North Carolinians on centralized systems) • Input from State and local officials • Pre-tested the survey • Offered incentives • 3+ months collection period

8. Response Rate by Type Data Source: 2017 NC Water and Wastewater Utility Management Survey (funded by the North Carolina Policy Collaboratory)

9. Response Rate by Size Data Source: 2017 NC Water and Wastewater Utility Management Survey (funded by the North Carolina Policy Collaboratory)

10. Participating Utilities Data Source: 2017 NC Water and Wastewater Utility Management Survey (funded by the North Carolina Policy Collaboratory)

11. Who Responded?

12. Preliminary results: FOCUS ON PLANNING EFFORTS Results as of March 2018

13. Which Colour to Look At? Blue • Strengths • Glass half-full • Opportunities to learn from/mentorship • Best management practices Orange • Challenges • Glass half-empty • Opportunities to improve • Focused assistance

14. Financial Planning

15. Financial Self-Assessment

16. Asset Management Planning

17. Components of Asset Management Plans

18. Capital Planning

19. Components of Capital Planning

20. Capital Planning Horizon

21. Disaster / Emergency / Resiliency Planning

22. Vulnerability Assessment

23. Mitigation Strategies

24. Long Range Water and Wastewater Resources Planning

25. Public Participation

26. Integration with Other Local Planners

27. Partnering with Other Utilities

28. Utility Non-Structural Partnerships

29. Capital Funding

30. Capital Funding in North Carolina

31. Extent of Rate Proposals Data Source: 2017 NC Water and Wastewater Utility Management Survey (funded by the North Carolina Policy Collaboratory)

32. Preliminary Results: How Planning and Resiliency Correlate

33. Hypothesis Utilities that undertake more or earlier long-term planning efforts benefit from more resilient finances and improved system performance relative to other utilities.

34. Current Expenditures Cost Recovery

35. Trends in Water Utilities’ Violations

36. What Hinders Performance • Small utilities face greater challenges. • Absence of a full-time Utilities Director greatly increases challenges. ~75% of utilities in the survey have a full-time utilities director. FY2017 data. About 80 local governments’ data not yet available.

37. What Hinders Performance • Utilities that do not monitor recent financial performance against specific benchmarks or targets, and utilities that do not have a documented, published Capital Improvement Plan perform worse on financial resiliency than others. • Utilities without an Asset Management Plan have higher likelihood of having health-based violations than others. • And more…

38. Thank you.Shadi EskafEskaf@sog.unc.edu919-962-2785 Environmental Finance Center at the University of North Carolina School of Government, Knapp-Sanders Building CB #3330 Chapel Hill, NC 27599-3330 USA

39. Financial Training

40. Full-Time Leadership

41. Revenue Vulnerability

42. NC DWI Asset Management Guidance • Determining if utility applicant to subsidized funding is eligible for points under line item 3B of priority rating system: • Inventory of assets (including maps) • Condition assessment • A C.I.P. with projected cost estimates • An O&M plan for the assets

43. Surveyed Utilities Meeting DWI Criteria

44. Funding Programs

45. How to Pay for Capital • Utility revenues and reserves • Special fees • Commercial bonds/loans • Subsidized loan and grant programs • Division of Water Infrastructure (NC DEQ) • USDA • NC Dept. of Commerce (EDA, ARC) • Golden Leaf Foundation • WIFIA (EPA) • NRWA, more See matrix with contacts and information at http://efcnetwork.org/resources/funding-sources-by-state/

46. Division of Water Infrastructure http://portal.ncdenr.org/web/wi/

47. Water Infrastructure Funding Programs • Clean Water State Revolving Funds (SRF) • $130 million/year • $30 million project funding limit* • Drinking Water SRF • $55 million/year • $20 million project funding limit* • Public utilities also eligible • CDBG-Infrastructure • Non-entitlement areas only • Towns and counties only • Water and sewer – $26 million 2016; $21 million 2017 • $2 million grant maximum Department of Environmental Quality Slide from Kim Colson, Director of the Division of Water Infrastructure, NC DEQ

48. Water Infrastructure Funding Programs • State Reserve Programs • $10 million/year recurring appropriations for grants • Projects – loans and grants • Both drinking water and wastewater • Connect NC Bonds (finished in Fall 2017), but a permanent source for state loans • Maximums: loans – $3 million / year; targeted rate loans – $3 million / 3 years; and grants – $3 million / 3 years • Asset Inventory and Assessment grants • Drinking water or wastewater • $150,000 maximum / 3 years • Merger Regionalization Feasibility grants • Drinking water or wastewater • $50,000 maximum / 3 years Department of Environmental Quality Slide from Kim Colson, Director of the Division of Water Infrastructure, NC DEQ

49. Summary of Fall 2017 Funding Applications Department of Environmental Quality Slide from Kim Colson, Director of the Division of Water Infrastructure, NC DEQ