NACWA hosted a vibrant Clean Water Finance Dialogue in New York City this week of approximately 40 representatives from private investment firms, public clean water agencies, and the U.S. Environmental Protection Agency (EPA) with a focus on how private capital can be invested in public clean water projects. The issue of privatization was not on the table for purposes of this discussion, which instead focused on the benefits of the public clean water sector partnering with the private sector on mutually beneficial projects.
Given the unlikely injection in the near future of major federal funds and the fact that utilities and cities across the country face significant affordability challenges as their infrastructure continues to age and regulatory and enforcement pressures continue to mount, public agencies are increasingly considering opportunities to access private capital. In fact, one private sector representative noted that although not related directly to water/wastewater infrastructure, research has shown that 70% of the nation’s cities are experiencing sufficient financial distress that private capital will have to be a key part of the country’s infrastructure solution. In short, the finance paradigm is changing and there will be increasing pressure for the public and private investment interests to partner.
The private sector focused on several reasons why the timing is right for such partnerships: 1) the mitigation of public sector risk; 2) the increasing competitiveness between private capital and tax-exempt bond financing; 3) addressing stormwater/resiliency challenges where public funding is often limited; and 4) new ideas and innovations that private sector leaders can bring to the table in a fiscally constrained environment.
The Dialogue also underscored the importance of NACWA’s advocacy efforts on the Water Resources Utility of the Future (UOTF) front, with UOTF-type projects in the reuse, energy production, and resource recovery arenas also being the most likely candidates for public-private partnerships. The Water Resources Reform and Development Act’s State Revolving Fund and new WIFIA program also received significant attention from both the public and private sectors as opening new opportunities to discuss partnerships.
The Dialogue marked a turning-point for many of the participants, demonstrating that private and public interests can engage in a very productive dialogue. I believe we must build on this effort and develop an increasingly meaningful, long-term collaboration with private sector investors.