Viability Path for NC Water Infrastructure: Master Plan March 26, 2018

1. The Road to Viability: Refreshing North Carolina’s Statewide Water and Wastewater Infrastructure Master Plan March 26, 2018 Department of Environmental QualityDivision of Water Infrastructure

2. Topics • State Water Infrastructure Authority • Statewide Water and Wastewater Infrastructure Master Plan – The Road to Viability • Fostering Viable Utilities • Troubled System Initiative • Next Issues Department of Environmental Quality

3. Created by the NC General Assembly in 2013 • Division of Water Infrastructure • Consolidated water and wastewater infrastructure funding programs • 9-member State Water Infrastructure Authority • Rural County Commissioner and Mayor • Rural and urban water utility managers • Professional engineer • Director of Division of Water Infrastructure • Department of Commerce • Treasurer’s Office • Division Funding Programs • State Revolving Funds (SRF) • Drinking Water SRF loans • Clean Water SRF loans • Community Development Block Grants (CDBG) – Infrastructure • State Programs • Drinking Water and Wastewater loans & grants • Asset Inventory and Assessment Grants • Merger/Regionalization Feasibility Grants

4. Water Infrastructure Needs over the Next 20 Years • Drinking water systems needs: $10-$15 billion • Wastewater systems needs: $7-$11 billion • For most funding sources, users pay to meet capital needs (e.g., loans, bonds, reserves, etc.) • Federal grants and loans made up only 4% of water infrastructure spending in 2014 Source: Environmental Finance Center (EFC) at the University of North Carolina’s School of Government evaluation of needs surveys

5. Statewide Water & Wastewater Infrastructure Master Plan The long-term viability of any critical infrastructure system, no matter how resilient and sustainable it is, will ultimately rely on the human and organizational stewardship the infrastructure system receives Guiding Principles for the Nation’s Critical Infrastructure (American Society of Civil Engineers, 2009)

6. Master Plan Vision Statement The state will best be able to meet its water infrastructure needs by ensuringindividual utilities are, or are on a path to be, viable systems A viable system is one that functions as a long-term, self-sufficient business enterprise, establishes organizational excellence, and provides appropriate levels of infrastructure maintenance, operation, and reinvestment that allow the utility to provide reliable water services now and in the future Department of Environmental Quality

7. Fostering Viable Utilities through Best Practices • Infrastructure management • Proactive approaches • Risk and life-cycle costs • Organizational management • Long-term nature of system needs • Prioritize the most critical projects • Financial management • Operation & Maintenance • Renewal/replacement • Reserves for unexpected events

8. A Joint Effort to Achieve Viability • Partnerships • Leverage existing • resources & programs • Resources & • Tools • Support proactive • management • Prioritized Funding • Prioritize projects representing best utility management practices • Linked to utility viability

9. New Tools to Begin Moving toward Permanent Solutions • Merger/Regionalization Feasibility (MRF) grants • Voluntary partnership options • Wide range of solutions • Shared management, staff, equipment • Develop realistic costs for comparison • Operate • Maintain • Set aside reserves • Asset Inventory and Assessment (AIA) grants • Inventory existing water and/ or sewer system • Document condition of infrastructure • Prepare capital improvement program / prioritize projects

10. From: Environmental Finance Center at the University of North Carolina’s School of Government From the Environmental Finance Center at the University of North Carolina’s School of Government

11. Troubled System Initiative – Drivers • Local government situations • Aging population • Decreasing population • Decreasing water usage • Financial management issues • Billing and revenue collection • Internal controls • Low cash balances • Utility rates that don’t cover true cost of services Department of Environmental Quality

12. Troubled System Initiative – Tasks • Evaluate capacity to function as a long-term, self-sufficient utility • Water and sewer infrastructure condition • Utility organizational structure • Utility financial situation • Develop potential permanent alternatives that address long-term infrastructure, organizational and financial management Goal Adequate and safe water and wastewater service is provided under a viable utility structure for the long-term

13. Troubled System Initiative – Infrastructure Issues

14. Next Potential Issue – Stormwater • Water resources • Water supply • Drought management • Quality • Quantity • Funding • Master planning • Short-term / long-term • Integrated wastewater and stormwater efficiencies • Prioritization • Infrastructure and capital improvements • Green infrastructure • Low impact development (LID) • Resiliency measures Department of Environmental Quality

15. Next Steps • Scheduling discussions with 16 Regional Councils of Government • Evaluate effects of affordability criteria • Evaluate benefits of AIA and MRF grants • Joint water infrastructure & water supply planning • Public health • Quality of life • Economic opportunities • Environmental protection Department of Environmental Quality

16. Division of Water Infrastructurehttp://portal.ncdenr.org/web/wi/homeState Water Infrastructure Authorityhttp://portal.ncdenr.org/web/wi/authority

17. Francine Durso, PEFrancine.Durso@ncdenr.govJessica LeggettJessica.Leggett@ncdenr.gov

18. The Road to Viability: Refreshing North Carolina’s Statewide Water and Wastewater Infrastructure Master Plan March 26, 2018 Department of Environmental QualityDivision of Water Infrastructure