Opportunity Knocks

During the closing weeks of 2008, several incidents re-enforced the pressing need to address the country’s water and wastewater infrastructure system.

Within the North Texas Municipal Water District, an estimated 9 million gallons of untreated sewage leaked from a pipe into a creek that feeds Lewisville Lake. The lake, just minutes north of Dallas is a primary source of drinking water in North Texas. The spill had originated from a broken sewer line located under the Dallas North Tollway.

In Eastern Tennessee, a vast quantity of toxic coal sludge broke through an earthen retention wall at a Tennessee Valley Authority power plant and flowed into the Emory River, a tributary of the Tennessee River, which provides drinking water to millions. Federal data now showed that arsenic levels in the water are more than 100 times the acceptable level.

And in Montgomery County, Md., part of suburban Washington, D.C., a 66-inch water main burst just days before Christmas and sent a four-foot wall of water swirling down a busy roadway during the morning rush hour. It trapped people in their cars and prompted a number of helicopter rescues. Water service in the area was interrupted or water pressure significantly reduced. While Washington Suburban Sanitary Commission (WSSC) officials initially provided no direct cause, it was noted that the water system had more than 2,100 pipe breaks in 2007, with decades-old pipes worn down by acidic soils and groundwater. With 150,000 gallons of water a minute cascading down the road, elected officials in the area hope this will serve as a wake-up call for the incoming administration.

As part of their most recent national assessment of public water and wastewater systems, the Environmental Protection Agency noted that a combined investment of $479.3 billion is necessary over the next 20 years to address infrastructure needs.

The challenge now is getting design-build on the public’s radar for upcoming projects. While it can be difficult for those projects already moving forward, the potential for design-build — amid all the country’s need for high-quality, low-cost projects completed on or ahead of schedule — is perhaps better now than ever before.

During the first week of December 2008, President-elect Barack Obama met with members of the National Governors Association (NGA) in Philadelphia. Chaired by Pennsylvania Gov. Ed Rendell, the NGA asked for $136 billion for infrastructure projects deemed “ready to go.” The NGA project list includes water/wastewater and sewer systems as well as roads, bridges and school refurbishments.

Just one week after the NGA presentation, a group of U.S. mayors then appeared before Congress and requested $73 billion for numerous infrastructure projects, including water/wastewater and sewer systems.

Miami Mayor Manny Diaz, president of the U.S. Conference of Mayors, said an investment level of this proportion will “create 848,000 jobs” across 11,000 projects identified by mayors around the country as “shovel ready.”

For design-build, it’s getting some recognition — albeit guarded — by the conference.

One conference source who wished to remain anonymous said the design-build delivery method is supported by the conference “in addition to the traditional infrastructure development models,” as a very viable option for delivering these much needed infrastructure projects that cities are actively seeking.

Regardless, infrastructure needs are top priorities nationwide.

Trenton Mayor Doug Palmer, former head of the U.S. Conference of Mayors’ Water Council, said, “We don’t need a bailout; we are talking about a buildout,” to create jobs and better address the daily infrastructure services that in turn improve the quality and sustainability of everyday life. New York Mayor Michael Bloomberg re-enforced Palmer’s support for immediate infrastructure investment as well.

Many see large and small infrastructure projects across the country as a way to re-energize the economy and plan for a sustainable future.

In an early December interview, Obama promised to create the largest public works construction program since the inception of the interstate highway system a half a century ago. Along with remarks from senior Obama advisers, it appears public works infrastructure improvement is an Obama administration priority.

 But it is still not clear what the actual size of the new administration’s economic stimulus package will be, or how much will actually be allocated to infrastructure investment – particularly water/wastewater related funds.

The package, however, is slated for review just days after Obama’s inauguration. Already, word has leaked out from the House and the Senate that the package will most likely not be ready for review until late February or perhaps as late as early March. Meanwhile, many states cannot wait for the new administration and Congress to sort out its demanding list of priorities that are vying for attention from the anticipated stimulus package. Recognizing the dire straits associated with the various existing infrastructure challenges located around the country, billions of dollars worth of infrastructure initiatives appeared on state ballots on Nov. 4. In fact, according to the chief economist for the Associated General Contractors of America, the country probably reviewed more than $12 billion of proposed statewide and local infrastructure-related bond issues on Election Day.

Within many of these initiatives, however, notable water-related infrastructure projects could provide opportunities for the design-build community within many states.

In Pennsylvania, voters overwhelmingly approved a $400 million water bond to repair and upgrade water and sewer systems. The funds, in the form of grants, will assist sewage and water treatment plants through the state. Specifically, the funds will be used for the acquisition, construction, improvement, expansion and/or rehabilitation of drinking water systems and wastewater treatment systems. This funding will serve as a companion to funding that is available through the H2O PA program — an $800 million fund set up through legislation approved in July 2008 by Rendell to protect the state’s flood-prone communities, ensure safe clean drinking water and improve critical wastewater systems. Projects to be funded through H20 PA can include the construction, improvement, expansion or rehabilitation of all or part of a water supply, sewage disposal or storm water system owned and maintained by municipalities or municipal authorities. Effectively, the government and voters of Pennsylvania have given themselves $1.2 billion for the sole purpose of investing in the state’s water and sewer infrastructure system.

Minnesota residents approved the Clean Water, Land, and Legacy Amendment — recognized as the largest conservation ballot measure in U.S. history. It will essentially allocate $5.5 billion for land and water conservation, increasing the investment in clean water, natural areas and parks by about $220 million a year for the next 25 years. The core purpose of the amendment revolves around the protection of water quality.

This could be a particular benefit for design-build companies that specialize in water quality-related project initiatives.

Arkansas approved a measure that would allow up to $300 million in bonds to be issued for water projects around the state. The bond package would offer low interest loans and grants through the Arkansas Resources Commission for local governments who want to build water and sewer projects.

The City of Tempe, Ariz., approved $13.3 million for water and sewer improvements as well. The funds will cover the costs associated with the renovations of a water treatment plant, a wastewater treatment plant, and sewer line replacements. And in Columbia, Mo., voters approved a $38.9 million bond to upgrade water infrastructure. Specifically, the funds from the sale of Proposition 1 will be used to finance renovations and expansions to the city’s water system over the next six years.

Back at the national level, it’s a question of when the much talked about economic stimulus plan will see the light of day and how much of the package will be allocated to investment in “shovel ready” infrastructure projects versus other funding requests.

Disputes are already brewing in Congress over what constitutes spending earmarks for special projects the incoming president says he opposes. Speaker of the House Nancy Pelosi says, “Every dollar will have to be justified as to whether it is targeted to our economy.”

While it’s still too early to accurately predict how the country’s water/wastewater infrastructure will benefit from the stimulus package and how many “shovel ready” projects will be design-build, it’s one of the best chances for design-build to come along in decades.

Marlay Price, vice president of marketing at Gannett Fleming, says the effect of the design-build model “will be realized farther down the road beyond the 120-day time period” that is currently serving as a benchmark [for identifying shovel-ready projects] by the incoming administration.

He says the implementation of an economic stimulus package should “inspire a level of confidence that projects can be financed” and in turn “encourage utilities to review future potential design-build projects.” He also says that if structured correctly, including the “early involvement of equipment suppliers,” and if all “components are working together” a design-build model can successfully and effectively get future Obama-inspired water infrastructure projects rapidly underway, delivering end project results “under budget and on schedule.”