ANNE WATKINS Special Assistant to the State Engineer

1. WATER PROJECT PLANNING and FINANCING for SUSTAINABILITY ANNE WATKINS Special Assistant to the State Engineer STATE-EPA SYMPOSIUM ON ENVIRONMENTAL INNOVATION AND RESULTS 1/24/06

2. WATER RESOURCE MANAGEMENT IN NEW MEXICO • STATE ENGINEER: water rights and adjudication Chairs Water Trust Board and Drought Task Force • INTERSTATE STREAM COMMISSION: compacts, ESA on compacted streams, regional and state water planning • ENVIRONMENT DEPT: drinking water, waste water, surface water, construction programs • ENERGY, MINERALS AND NATURAL RESOURCES DEPT: produced water, game and fish • FINANCE AND ADMINISTRATION DEPT: capital outlay, some grants • NEW MEXICO FINANCE AUTHORITY: grant and loan programs (incl DWRLF) • MULTIPLE FORMS OF DRINKING WATER AND WASTE WATER DELIVERY ENTITIES: local planning and funding • SEVERAL FORMS OF AGRICULTURAL WATER PURVEYORS: irrigation water, acequias • OTHER (flood control, watersheds, etc. etc. ETC!)

3. THE VISION GOVERNOR BILL RICHARDSON “INVEST NEW MEXICO” • Think locally but act regionally: tie infrastructure investments to STATEWIDE vision and priorities • Build for the future: 2015-2025 timeframe and innovations not “dinosaurs” • Seek legislative, regulatory and administrative solutions to market disincentives and under-pricing • DEVELOP A COORDINATED, STRATEGIC, LONG RANGE APPROACH TO INFRASTRUCTURE • STRUCTURE FUNDING TO ENSURE TIMELY PROJECT COMPLETION

4. THE CHALLENGE • Drought Strike Team: 70+ emergency calls in 2003 but only 1 due to drought • Drought Task Force Drinking Water Work Group seeks solutions to avoid emergencies • Water Trust Board gets few applications for large regional water projects • Substantial amount of state funding goes to “fix” O&M failures • No state mechanism for integrated regional planning or conditioning project funding

5. THE DIRECTION • Governor Richardson establishes WATER INFRASTRUCTURE INVESTMENT TEAM (WIIT) through Executive Order to “provide recommendations and advice regarding a long range for secure and sustainable water and waste water infrastructure in New Mexico” • E.O. directs WIIT to establish Technical Team to “provide professional and technical advice and support”

6. WIIT • John D’Antonio, State Engineer, Chair • Dave Contarino, Governor’s Chief of Staff • James Jimenez, Secretary, DFA • Ron Curry, Secretary, NMED • Joanna Prukop, Secretary, EMNRD • Steve Flance, Chair, NMFA Board • Kim Rael, N.M. Board of Finance

7. WATER INFRASTRUCTURE TECHNICAL TEAM (TT) • OSE: Anne Watkins, Jim Sizemore • NMED Construction Programs Bureau: Richard Rose, Andy Edmundson • NMED Drinking Water Bureau: Fernando Martinez, Retta Prophet, Rob Pine • NMED Surface Water Bureau: Marcy Leavitt • DFA Capital Projects Unit: Robert Apodaca • DFA Local Govt. Division: Ken Hughes • NMFA: Tom McHugh, Angela Rodarte • RCAC: Blanca Surgeon, Ellen Drew • EMNRD: Craig O’Hare • ENVIRONMENTAL FINANCE CENTER: Heather Himmelberger • NM RURAL WATER ASSOCIATION: Matt Holmes • USDA RUS: Martha Torres

8. PUBLIC WATER SYSTEMS In NEW MEXICO

9. DRINKING WATER PURVEYORS • 650 Public Water Systems in N.M. (of 1350 total) • 27 w/ 3000+ connections • 15 w/ 2000-3000 connections • 25 w/ 1000-2000 connections • 40 w/ 500-1000 connections • 500+ w/ <500 connections

10. POPULATION SERVED • 1.1M (61%) served by systems with >3000 connections • 315K (18%) served by systems with 500-3000 connections • 364K (21%) served by systems with <500 connections 95% of N.M. DRINKING WATER SYSTEMS SERVE <500 PEOPLE!

11. Drinking Water Systems at Risk • Aging infrastructure • Limited Expansion Capacity • Safe Drinking Water Act compliance • Water rights • Water supply availability • Managerial and technical demands • Volunteer boards • Planning capacity • Infrastructure funding

12. THE NEW APPROACH • Set standards for sound business practices, conservation and efficiency • Provide “free and easy” technical support to help water and waste water systems meet those standards • Enforce statutory and regulatory compliance • Provide incentives by prioritizing grants and zero-interest loans to systems that meet the standards

13. THE RECOMMENDATION TEN CRITERIA for SOUND MANAGEMENT and SUSTAINABILITY TEN ADDITIONAL RECOMMENDATIONS

14. CRITERIA #1 • FINANCIAL PLAN • 5 YEAR • COMPLETE REVENUE PICTURE • COMPLETE O&M BUDGET • PAYMENT INTO CASH RESERVE ACCOUNTS • AUDITABLE FORMAT NOTE: PILOT PROJECT WILL ESTABLISH STANDARD AND DEVELOP IMPLEMENTATION MANUAL!

15. CRITERIA #2 • FULLY ALLOCATED RATE STRUCTURE • COMPONENT OF FINANCIAL PLAN • FUNDS FIXED AND VARIABLE O&M COSTS • FUNDS REGULATORY COMPLIANCE • FUNDS CAPITAL IMPROVEMENT FUND • IS TIERED TO ENCOURAGE CONSERVATION

16. CRITERIA #3 • ASSET MANAGEMENT PLAN • COMPLETE ASSET REGISTER • DEFINED LEVEL OF SERVICE TO MEET REGULATORY AND CUSTOMER DEMANDS • RISK ANALYSIS FOR ASSETS • O&M AND CIP PLANS • METERING AND MEASURING PLAN NOTE: PILOT PROJECT WILL ESTABLISH STANDARD AND DEVELOP IMPLEMENTATION MANUAL!

17. CRITERIA #4 • WATER USE ACCOUNTING SYSTEM • TOOL TO QUANTIFY: • AUTHORIZED BILLED AND UNBILLED USAGE • UNAUTHORIZED USE FOR ELIMINATION • WATER LOSS TO LEAKAGE FOR REPAIRS • WATER USAGE BY CUSTOMER CATEGORIES • QUANTIFIES SUPPLY AND DEMAND PROJECTIONS FOR PLANNING • BASIS FOR CONSERVATION TARGETS AND GOALS • REQUIRES METERING OF ALL USES • TO OPTIMIZE WATER SYSTEM EFFICIENCY NOTE: PILOT PROJECT WILL ESTABLISH STANDARD AND DEVELOP IMPLEMENTATION MANUAL!

18. CRITERIA #5 • COMPLIANCE WITH OSE REGULATIONS • SUFFICIENT WATER RIGHTS • PERMITS IN ORDER • REPORTING REQUIREMENTS MET

19. CRITERIA #6 • COMPLIANCE WITH SDWA, CWA, NMED REGULATIONS • QUALITY MONITORIING AND REPORTING • CERTIFIED OPERATOR(S) • PERMITS IN ORDER NOTE: 20% of water systems have quality violations NOTE: 40% of water systems do not have certified operators NOTE: 5% of water systems have chronic violations ESTIMATES FROM NMED

20. CRITERIA #7 • ADEQUATE GOVERNANCE STRUCTURE • ARTICLES, BY-LAWS ON FILE • BOARD ELECTIONS REGULAR AND MEMBERS TRAINED • COMPLIANCE WITH OPEN MEETINGS, PUBLIC RECORDS, AND AUDIT ACTS • INTERNAL CONTROL POLICIES AND PROCEDURES • BILLING, NEW SERVICE, FAILURE TO PAY, AND OTHER POLICIES IN PLACE • BUSINESS MANAGEMENT TOOLS PART OF DOING BUSINESS

21. CRITERIA #8 • PLANNING FOR INFRASTRUCTURE AND OPERATIONS • FULL INFRASTRUCTURE SCOPING • PROJECT ELEMENT P.E.R. FOR BEST TECHNICAL AND ENGINEERING APPROACH • INTEGRATED APPROACH TO WATER AND WASTE WATER SERVICE • O&M PLAN TO INSURE INFRASTRUCTURE LOGEVITY REQUIRED

22. CRITERIA #9 • REGIONAL COLLABORATION • FOR EFFICIENT MANAGEMENT OF SHARED RESOURCE • FOR SHARED PROTECTION OF SOURCE WATER QUALITY • FOR ECONOMIES OF SCALE • FOR “FULL WATER CYCLE PLANNING” FOR AREA

23. CRITERIA #10 • ENERGY EFFICIENCY STRATEGY • TO DECREASE OPERATIONAL COSTS • TO DESIGN EFFICIENT INFRASTRUCTURE • INCLUDES CONSERVATION

24. REGIONALIZATION DEFINED COLLABORATION AMONG GEOGRAPHICALLY PROXIMATE WATER SYSTEMS WHICH SHARE THE SAME WATER RESOURCE FOR THE PURPOSE OF: ● IMPROVING EFFICIENCY OF MANAGEMENT, ADMINISTRATION AND OPERATIONS ●REALIZING ECONOMIES OF SCALE FOR TREATMENT, ADMINISTRATION, AND MANGEMENT ●SIZING SYSTEMS TO SUPPORT NEW TECHNOLOGIES (DESAL, ASR, REUSE) ● “TOTAL WATER CYCLE” APPROACH THAT INTEGRATES DRINKING WATER and WASTE WATER ●OPTIMIZING INFRASTRUCTURE DEVELOPMENT THROUGH COMPREHENSIVE INTEGRATED PLANNING AND FUNDING ● IMPROVE FINANCING EFFICIENCIES and ATTRACT PRIVATE SECTOR INVESTMENT

25. REGIONAL COLLABORATION OPTIONS: * plan together * emergency-only working relationship * share inventory/equipment * share operator * share administrative tasks (ex: billing) * share management * interconnect physical system for backup * share water rights/resources w/out system connection * interconnect systems but operate individually * dissolve current systems, form new entity

26. REGIONALIZATION VISION • Convene ALL water purveyors and users: public and private, drinking and agricultural, acequias, conservancy and irrigation, industrial and commercial • Involve local governments: municipality, county, special districts • Include nations, tribes, pueblos • Include agency partners (state, federal) • Include water-related entities (ex: SWCDs) WATER IS EVERYONE’S ISSUE— AND EVERYONE HAS A ROLE!

27. RECOMMENDATIONS • SET STANDARDS! • REVISE STATUTES! • FREE TECHNICAL ASSISTANCE! • PACKAGE FUNDING AS GRANT/LOAN COMBO! • IMPROVE PROJECT PLANNING—EMPHASIZE REGIONALIZATION! • ESTABLISH STATE PLANNING ENTITY! • METER ALL USES! • MANDATE SEPTIC MANAGEMENT AND/OR WASTE WATER TREATMENT! • REQUIRE CONSTRUCTION OVERSIGHT! • CREATE COMMUNITY COLLEGE TRAINING PROGRAMS!

28. TEN CRITERIA andTEN RECOMMENDATIONS DEMANDING VISIONARY AGGRESSIVE BOLD CHALLENGING

29. GOALS • PROTECT PUBLIC HEALTH • SUPPORT ECONOMIC DEVELOPMENT & VITALITY • PROTECT WATER QUALITY • STRATEGIC DEVELOPMENT OF 21ST CENTURY WATER/WASTE WATER INFRASTRUCTURE • MANAGE ASSETS • PROMOTE CONSERVATION AND EFFICIENCY • FISCAL AND HYDROLOGIC SUSTAINABILITY INVEST WISELY AND STRATEGICALLY!!!

30. “We cannot solve our problems with the same thinking we used when we created them.”