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Smart Investments for Water Systems & How to Pay For Them

Posted on May 23, 2022


mark funkhouser water newsletter graphic

ELGL is proud to feature the writing and thinking of longtime member Mark Funkhouser. Here’s his latest post, and you can also sign up for his newsletter here or connect with him via email.


In 2017, main breaks, lapses in service and billing errors were frustrating facts of life for customers of the Pittsburgh Water and Sewer Authority (PWSA). Not only did century-old pipes leave neighborhoods without service, but the faulty billing systems overcharged or didn’t charge customers at all. Pipes leaked alarming levels of lead into the tap, floods overwhelmed the stormwater system, and costcutting measures put savings over safety.

Those failings, combined with unqualified political appointees on staff and a revolving door of leadership, are what led a consultant’s report that year to declare the PWSA a “failed organization atop a dangerous and crumbling structure.” It was a self-inflicted crisis created by putting off needed investments for decades. “The utility got into a situation where it was unsustainable,” said City Council member and PWSA Vice Chair Erika Strassburger.

Pittsburgh is far from alone. Cities are at an inflection point as providers of basic services. No one likes raising taxes, and in many places across the country rates have been kept artificially low and don’t fully fund utilities’ long-term needs. Meanwhile, population declines in some regions  particularly in the Rust Belt and the Northeast  have further constrained revenue.

Kennedale, Texas, is an extreme example of the political blowback that can come from rate increases  or even just supporting them. Former city manager George Campbell describes a history of proposed rate increases resulting in council members losing elections and the city manager losing his job: “It’s hard to convince newly elected officials – the greatest thing they can do is pay attention and not be afraid to raise those rates.” The result was a water utility with no fund balance, threatened bond ratings and emptied executive offices.

But rate increases alone are not a solution, particularly because they often fall upon those who can least afford them. We must make smart, equitable investments if we are to create sustainable utilities with affordable rates for the long term. And by sustainable, I am talking about both our climate and our wallets. We can’t just place an undue burden on lower-income users or assume our day of reckoning is far off in the future. That day is here, and politicians must be better at communicating our collective responsibility to pay the full cost of fixing our aging water systems and ensuring that low-income residents can stay current with their bills.

There is good news. The more than $50 billion in funding for drinkingwater systems and lead-pipe replacement included in the federal Infrastructure Investment and Jobs Act provides once-in-a-generation funding to resource-starved agencies. The focus by the Biden administration to allocate 49% of those funds as grants and forgivable loans to disadvantaged communities will bring dollars to cities for investment where it’s needed most.

And there are leaders with the expertise to show us the way. George Hawkins, the former general manager of DC Water, transformed the capital city’s utility with a focus on systems change and leadership by example. He did the basics correctly and gained passage of the first green infrastructure bond to replace Civil Warera pipes with new technology. He points to cities like South Bend, Indiana, and the turnaround underway in Pittsburgh to highlight the possibilities for the future of America’s water systems.

Now an adviseto utilities nationwide as founder of the nonprofit Moonshot Missions, Hawkins advises elected officials and utility managers to change their mindset. “We must transform systems to make them permanently cheaper,” he says. “We need to rebuild with new technologies that reduce operating costs. We can’t just replace the old valve with a new one.”

South Bend had been under a consent decree to separate its sewer and stormwater systems at an estimated cost of $800 million, a percapita cost would have bankrupted the city. Instead, the city partnered with engineers at the University of Notre Dame to use the existing capacity of the system to hold water during significant rainfall. Storms don’t hit the entire city at once; by installing sensors and using gates, the sewer overflow could be directed to parts of the existing system that were not overwhelmed.

“It helped us right-size our infrastructure so that it wasn’t overbuilt but rather it met our actual need,” said Eric Horvath, the city’s director of public works. “Because at the end of the day, the capital costs get put right back on our residents.”

This smart investment and partnership is exactly what’s needed as the infrastructure funds are deployed across the U.S.

PWSA is also seeing the results of making the hard decisions. With steady leadership starting with former Mayor Bill Peduto and now CEO Will Pickering, along with renegotiation of legacy contracts, rate increases and input from community activists, improvement continues. Pittsburgh is meeting the targets set for leadline replacement and rebuilding critical facilities to reset the system for decades into the future while retaining key staff. “I don’t want to overstate it,” says Strassburger, “the large ship hasn’t made a full 180. But it’s close.

There are answers to be found in smarter administration as well. Efficiencies in consolidation of smaller utilities to share treatment plants and staff requires political will but could avoid larger rate increases. Upgrades to billing and customerservice technologies offer enhanced service.

Most important is the political will to be proactive. Utility customers have suffered through reactive policies for too many years. Let’s use the federal infrastructure funding, the expertise of smart people and new technologies to make our water systems affordable and safe well into the future.

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