Going with the flow
Water – where it comes from and what we do with it after we’re finished with it – is one of the most important issues with which cities and counties deal. In fact, increasingly strict environmental regulations and the nation’s aging water infrastructure have vaulted water supply and pollution control to the top of the worry list for many local government officials.
Recent events like Hurricane Floyd and the Midwest floods of 1997 have brought home the delicate relationship that exists between increasingly urban areas and their water supplies. Floods triggered by Floyd overwhelmed the wastewater treatment plants in a number of North Carolina towns, spilling sewage into ecologically sensitive Pamlico Sound. And the 1997 Midwest floods washed tons of fertilizer and other pollutants down the Mississippi River and into the Gulf of Mexico. Those pollutants are being blamed, at least partly, for a growing “dead zone” in the Gulf.
Maintaining a pure water supply and controlling anything that might threaten that supply has challenged local governments since the founding of the nation. Early efforts fell woefully short, and typhoid, cholera, diphtheria and a host of other ailments were rampant.
The Massachusetts Board of Health attempted to solve the problem of unhealthy water through creation of the Lawrence Experiment Station. The station experimented with different filtering techniques and ultimately determined that the filtration provided by slow sand filters could reduce the incidences of typhoid.
Shortly thereafter, the city of Lawrence built a sand filtration plant, which proved effective in treating water during a typhoid epidemic at the turn of the century. Albany, N.Y.; Washington, D.C.; and Philadelphia followed suit.
Eventually, more effective rapid sand and mechanical filters would be developed. But the major breakthrough of the early 1900swas the discovery of the purifying effects of chlorine.
Ironically, when the private water company that ran Jersey City, N.J.’s water plant decided to chlorinate the city’s water supply, the town council filed suit to stop it. Despite the fact that the company had scientific evidence of the benefits of chlorine, a local court enjoined it from installing chlorination devices.
But the company persisted and, after more litigation and several years, its chlorination plant was approved in 1910. Chlorination, more than anything, was responsible for the dramatic drop in typhoid deaths. In 1900, 36 people out of a population of 100,000 died from the disease. By 1950, that rate had dropped to 0.1 per 100,000.
Continued experimentation resulted in the widespread use of powdered activated carbon, which controlled odors and tastes caused by algae. By the 1970s, most on-site reactivation systems were using granular activated charcoal.
Despite the advances, however, many cities still did not have their own water works – notwithstanding the fact that the National Board of Fire Underwriters rated having a water works as being more important than having a fire department in terms of fire protection. In the long-winded fashion of the era, one article in The American City (February 1922) noted: “The loss and damage by fire, the diseases arising from unsanitary drinking water, the inconveniences of a home which has no bathtub, the embarrassments and enormous danger connected with the disposal of human excreta, the unsightliness of barren yards, the trouble and labor of securing water from springs or wells, the handicap to factories on account of lack of water supply – these are some of the conditions which demand that communities give consideration to the building of water works.”
At the same time, a cry went up for the establishment of sanitary sewer districts – municipal “corporations” with taxing and bonding powers that would allow them to build treatment and disposal facilities. Sanitary sewer districts became more important as populations grew and the old method of sewage disposal – dumping it in the nearest body of water – was no longer tenable. Furthermore, the cost of building treatment plants was a serious impediment for most local governments, and sanitary sewer districts, which usually involved several municipalities, could better spread the financing burden.
Most early treatment involved activated sludge plants. The first began operating in San Marcos, Texas, in 1916, and the world’s largest activated sludge installation – Chicago’s Southwest Plant – went on line in 1939.
By the 1930s, most cities had heeded the pleas for construction of municipally owned water works and establishment of sanitary sewer districts. However, with typhoid and cholera under some measure of control because of chlorination, experimentation on new filtering and purification methods stagnated.
“Science and technology in the water field went for decades without any major significant change or improvement – and, throughout the middle of the century, the technologies used were those that were put in place in the earlier part of the century,” Jack Mannion, former executive director of the American Water Works Association, said in a speech during a corporate meeting. “Disinfecting against water-borne diseases, filtration, and that was it. Engineers grew up, they were trained and went through their whole careers without a significant change in the technologies they were applying.”
Desalination was about the only major breakthrough during those years. The first plant, a municipal de-salting plant in San Diego, was built in the 1960s. (The old de-salting method, distillation, has mostly given way to reverse osmosis, a one-step method that requires less energy.)
Mannion credited the environmental movement with pushing clean water back onto the national agenda. The 1970s saw the passage of the Safe Drinking Water Act, the Clean Water Act and the Water Pollution Control Act, and, within two decades, the U.S. Environmental Protection Agency was estimating that as much as 75 percent of the country’s water pollution problems had been solved.
The remaining 25 percent is proving more elusive. It is largely the result of non-point source pollution, for which source identification is more difficult. In the reauthorization of the Clean Water Act, non-point source pollution is targeted, and the resulting regulations require local governments to pinpoint potential problem areas. Local governments, by and large, have indicated a willingness to live with the tighter regulations. However, they insist that the federal government pony up the money to help them do so.
The Association of Metropolitan Sewerage Agencies (AMSA) in Washington, D.C., notes that, early in the drive to clean the nation’s water, 90 percent of the funding came from state and federal sources. Today, AMSA says, local governments shoulder 90 percent of the burden.
In fact, a survey of AMSA members reported capital needs for 1993-1998 of $32.4 billion. Of that, just $2.3 billion (7.9 percent) is expected to be financed with federal assistance.
Even more critical, AMSA points out that operations and maintenance costs traditionally make up a higher percentage of a local agency’s budget than do capital costs. As new technologies are developed to meet increasingly stringent requirements, those costs are expected to double every eight years. Local communities shoulder 100 percent of O&M costs.
EPA itself estimates that more than $140 billion in new wastewater infrastructure construction is necessary to comply with Clean Water Act requirements through 2012. That amount includes $31 billion for secondary treatment, $15 billion for advanced treatment and $80 billion for collection system projects, such as collectors, interceptors, control of infiltration, and control of combined and sanitary sewer overflows.
Additionally, infrastructure needs for clean water systems may approach $200 billion. Drinking water infrastructure necessary to meet the requirements of the Safe Drinking Water Act is expected to cost $138 billion over the next two decades.
Those staggering costs – and an inability to hire and retain qualified water and wastewater professionals – have left cities and counties with little choice but to turn to the private sector. Indeed, privatization of water and wastewater operations, maintenance and management represents the most significant revolution in the industry since the ’70s.
In 1995, the U.S. Conference of Mayors’ Urban Water Council approved a Resolution on Municipal Water and Wastewater Infrastructure Financing, which called for Congress to remove the barriers that limited private industry participation in the long-term operation and ownership of water and wastewater facilities. (Tax regulations then limited OM&M contracts to five years. In 1997, most of the impediments to long-term contracts were removed.)
Almost immediately, cities that had entered short-term OM&M contracts began looking into the efficacy of signing 20-year deals. A number of cities, including Cranston, R.I.; Evansville, Ind.; Hawthorne, Calif.; Hoboken, N.J.; and Atlanta, have signed such deals.
The record of success is mixed, and the process of contracting functions so tightly interwoven into municipal life has been fraught with contention. Competition between the private sector players is fierce, and advantages – some ethically questionable (like hiring prominent city officials to head up negotiations) – are sought on every front. Additionally, many of the contracts call for the private partner to give up one of its greatest efficiencies – the ability to “downsize” labor populations.
Private companies are learning that cities may not necessarily be completely honest about the problems in their systems. For example, Atlanta, which recently signed a 20-year water deal, failed to inform its contractor about the extent of its repair request backlog. The company, through no fault of its own, now is fielding hundreds of complaints from residents who blame privatization for problems the city should have handled years before.
Still, a growing number of cities are realizing the benefits of long-term privatization. Roger Feldman, chairman of the Project Finance and Privatization Group with the Washington, D.C., law firm Bingham Dana, notes that “Cities are able to say, ‘We want a concession fee for the honor of serving us.’ If the company is able to keep rates at the same level, it can achieve significant savings. It can borrow upfront against those savings and make a payment to the municipality.” That, he notes, is money the city would not otherwise have.
Finally, in terms of environmental compliance, long-term contracts can provide city officials with a more abstract benefit – peace of mind. A 20-year contract eliminates the necessity for constant bidding wars to correct problems that arise over the course of a decade. And the highly paid expertise that gives private companies a serious edge over their public partners also offers a quicker route to regulatory compliance.
In Chester, N.J., for instance, a 20-year contract enabled city leaders to turn their attentions away from their problem-riddled wastewater system. The contractor, said the town’s mayor, “came in and said, ‘You’ll never hear from the state again.’ And they were right. They dragged us out of the fire.”
And OM&M contracts are not the only way cities are taking advantage of privatization. As with highway construction, some are tapping the private sector for design/build contracts, under which one company – or, more likely, a team of companies – bids to build treatment plants from the ground up. (Some contracts also involve operation once the plant is completed.)
Using the design/build process frees cities from dealing with virtually every issue associated with major construction, from permitting to financing and regulatory compliance.
Design/build/operate contracts allow cities to tap public capital and the economies of the private sector,” says George Raftelis, whose Charlotte, N.C.-based consulting firm helps local governments determine their best privatization alternatives. “They allow you to fix the responsibility with the entity that does the job, so if something goes wrong, you don’t have three or four different consultants, designers and engineers pointing fingers at each other.”
Down the road
Still, with something as critical as safe water, finger-pointing is unlikely to fade completely. Advances in technology and management techniques cannot ensure the elimination of freak occurrences like the deadly 1992 cryptosporidium incident in Milwaukee. Eternal vigilance may be the price of freedom, but it also is the only way to ensure that the country’s water systems – already the envy of the world – continue to serve a growing population sophisticated enough to insist that clean water be something it takes for granted.
The Water Environment Federation, Arlington, Va.; the American Water Works Association, Denver; and Doug Herbst of Earth Tech, Long Beach, Calif., provided research material for this article.