On May 15, 2013 the U.S. Senate passed legislation that would create a Water Infrastructure Finance and Innovation Act (WIFIA), lauded by United Water Executive Vice President Bob Iacullo as a “good show of support from Washington for public-private partnerships and water infrastructure investments.”
As a part of efforts to promote WIFIA and to work with Congress to enhance solutions for water infrastructure, Bob testified before the U.S. House Committee on Appropriations earlier this spring. In his testimony before the Subcommittee on Interior, Environment and Related Agencies, chaired by Rep. Mike Simpson (R-ID), Bob testified to the benefits of and need for a Federal policy that promotes investment in our nation’s aging water infrastructure.
Bob endorsed the development of a Water Infrastructure Finance and Innovation Act (WIFIA) program for large projects and aging infrastructure. He also encouraged Committee Members to support the legislation that would encourage municipal governments to collaborate with sources of private capital to meet public water and wastewater needs by removing these projects from the state volume cap on private activity bonds (PABs).
As an example, late last year we partnered with the City of Bayonne to meet their water infrastructure needs. United Water committed to invest over $100M in new infrastructure over the contract term as well as a $150M upfront payment to the City of Bayonne’s Municipal Utilities Authority (MUA). The upfront payment was financed with private capital – a combination of taxable debt and equity – most of which was used by the MUA to retire its outstanding debt. Since the transaction closed, Moody’s has already affirmed the City of Bayonne’s Baa1 G.O. rating and improved the credit outlook from negative to stable. This has effectively increased capacity on the City’s balance sheet to issue new debt to meet other needs.
Although benefiting from the current interest rate environment and credit quality brought by the transaction structure, the City’s situation could have been further improved if a portion of the upfront payment could have been financed with tax-exempt debt using PABs instead of taxable debt. Moreover, if there is a need to finance capital investments beyond those already built into the contract, the City could benefit from continued access to tax-exempt debt through the use of PABs in the future.
As a leading provider of public water services with a rich history that dates back to 1869, United Water understands the urgent need to invest in our water and wastewater systems and address the decades of underinvestment that has pushed our systems to the breaking point.
We are committed to leading the charge in addressing the challenges of managing, maintaining and replacing water-related infrastructure. Our 2,350 employees have been diligently working on developing innovative, effective and scalable solutions that can help us address our water infrastructure investment needs.
Bob’s testimony before Congress was part of a collaborative effort between water industry leaders to help elevate awareness and address government concerns about infrastructure affordability challenges.
To learn more, you can read the transcript of Bob Iacullo’s complete testimony on Water Infrastructure Challenges to the Subcommittee on Interior, Environment and Related Agencies.