Water Agencies Tackle Pipe Replacement and Financial Decisions

Julie Spacht, water executive managing engineer in LADWP’s water department, says the oldest and largest lines are riveted steel and cast iron. In about 1935, welded steel lines were installed and in the 1950s asbestos cement pipes and concrete were added. In the 1960s, ductile iron pipes became popular and most recently the department has installed high density polyethylene and polyvinyl chloride pipes.

Most lines are replaced using open-cut technology, but the department has also used a variety of trenchless technologies, says Spacht.

LADWP currently has a proposal before the Los Angeles City Council to increase rates which are currently among the lowest in the state. But the issue is politically controversial and the department may have to rely more heavily on tax-exempt water revenue bonds which historically have varied between 60% and 65% of a project’s cost, says Spacht. The remaining funds are drawn from cash reserves, she says.

To read the details of LADWP’s Water Infrastructure Plan, visit http://bit.ly/1UJh08L.

Flagstaff
In September 2009, at 4:00 p.m., a 16-inch water main on a street in Flagstaff, AZ, began gushing water. A dermatology center located on the street had to go without water for at least two days, so staffers used bathrooms at the Flagstaff Medical Center and rescheduled medical procedures.

In 2008, a leaking pipe that went undetected created an underground sinkhole, and a subsequent road collapse swallowed an Arizona Public Service truck.

Maintaining, repairing, and replacing water lines are funded by city water rates and fees, but the funding is not keeping up with the costs of running the system. A proposal before the Flagstaff City Council to increase rates would provide 40% of the $78.4 million in capital improvement projects the city has determined it needs to complete over the next five years.

That rate increase will increase pipeline replacement funding by 68% or $9.8 million over the next five years and allow it to replace all of its oldest and most vulnerable water and wastewater pipes within the next decade.

Ryan Roberts, Flagstaff’s engineering manager, was quoted in the Arizona Daily on November 8 saying, “We have infrastructure that was installed by our forefathers, but now, when replacement costs come up, in a lot of cases we’ve been taking things to failure, like pipelines.”

Pasco
The City of Pasco, WA, has been relining their water pipes for at least 10 years to improve water flows at a cost of $500,000 per year, according to Ahmad Quyoumi, the city’s public works director. He says relining using cured-in-place pipe (CIPP) technology has been very successful. CIPP is now their primary pipe replacement technology. The older concrete/clay pipes in the city’s system all displayed deterioration and have now been relined. Ductile iron piping has had corrosion problems as well, he says.

Two deteriorated sections of ductile iron pipe running under six sets of Burlington-Northern railroad tracks illustrate these problems. For five years, beginning in 2006, the city chose to temporarily reroute the water supply that had been running through these sections because open-cut construction to repair them was out of the question. (Burlington-Northern had no tolerance for disrupting its operations since this particular rail yard is a major intersection of railways on the West Coast.)

The city hired Michels Pipe Service in 2011 to rehabilitate the 66-year old pipe using CIPP technology. Michels chose NORDIPIPE, manufactured by Sekisui. NORDIPIPE uses an epoxy resin that is impregnated into the lining material and then inverted with a specially designed reversion drum into the host pipe. The NORDIPIPE is then cured with air/steam. The result is a self-supporting pipe within a pipe, meeting AWWA Class IV standards.

Each section of pipe is 275 feet and each installation took 12 hours. End seals were used to join the NORDIPIPE liner to the existing ductile iron pipe. After a 150-psi pressure test, the pipe was returned to service.

Michels was able to reduce the cost to the city by preparing the liner in its Salem, OR, facility and then transporting it in a refrigerated truck to the site overnight. Michels repaired the pipes in two days. The only excavation required was to provide access to the pipe on each side of the rail crossings.

Quyoumi says the project cost about $200,000. All capital infrastructure projects are funded through water rates, including the $500,000 allocated each year to reline water pipes. That amount is being reduced to $300,000 as the relining projects are completed by 2018, he says.

Kent McCue, the city’s construction manager, says the city has been replacing its old concrete and asbestos cement pipes with ductile iron pipes for the past 15 years. In addition to CIPP relining, they have also used pipe bursting on occasion. He says they are replacing a lead joint pipe next year, again with ductile iron pipe.

Using Funds Wisely
Many water agencies count on raising rates to fund capital improvement projects to repair or replace aging infrastructure, says Wayne Pratt, director of marketing for Wachs Water Services, a company specializing in condition assessment and rehabilitation services for valves, hydrants, and water mains. For example, he points to Rockford, IL’s 12% increase approved by the Rockford City Council on November 16. They will often supplement those funds with buying tax-exempt municipal bonds, which are paid back through rates.

Cities also use state revolving funds in partnership with cash on hand, and Pratt points to St. Louis, MO, which received a $9.5 million loan in November 2013 from Missouri’s Drinking Water State Revolving Funds. According to the press statement released by the city, the funds were used to improve the “Chain of Rocks Water Treatment Plant and the citywide water transmission and distribution system” including water mains under and around Halls Ferry Circle.

But Pratt observes that water agencies are not always using their funds wisely. They are choosing to replace water lines, wholesale, based on age. He says this criteria is not adequate since he estimates 70% of the older water pipes still have useful life left. “We shouldprioritize and target where we spend our dollars. This is so important,” says Pratt.

Moreover, there are consequential costs resulting from replacement projects, says Pratt—lost water costs, road restoration, and crew time if the project is done in-house. These costs are often not included in the project budget and are borne by the city’s general fund.

Pratt recommends water pipes first be inspected internally using robots or smart balls, a much more cost-effective way to determine which pipes should be replaced, he says. Plus, there are other inspection technologies that water agencies should check out.

Wachs Water Services has concentrated on evaluating valve systems to identify their failures, says Pratt. “Their failure may indicate other problems, like lack of maintenance or improper operation of valves.”

Funding Opportunities
The federal Safe Drinking Water Act, amended in 1996, established the Drinking Water State Revolving Fund (DWSRF) and made funds available to drinking water systems in all states to pay for infrastructure improvements. The program is funded through federal and state money and subject to both federal and state laws.

EPA designed and administers the state DWSRF programs, which offer low-interest preconstruction and construction loans and grants to publicly owned—or municipal—and privately owned drinking water systems.

The loans and grants cover capital improvements that increase public health and compliance with drinking water regulations. Loan repayments can range from six to 20 years. In some cases, partial loan forgiveness is offered.

Programs in four state agencies are discussed here by managers who also talk about their other state-designed funding programs. DWSRF programs are almost identical across all states since EPA wrote the regulations. What varies are the state-funded projects that supplement DWSRF funding.

Washington
The Office of Drinking Water, located in the State of Washington’s Department of Health, has preconstruction and construction grants and loans and consolidation loans and grants. DWSRF low-interest loans are offered to public water systems to build, repair, and redesign infrastructure.

Joe Crossland, finance section manager in the Department of Health’s Office of Drinking Water, says the program has been aggressively managed with cash flow accounting for the past four years because demand was outclassing resources, and because state-level funding has been reduced. It now has $380 million available, built with EPA funding and interest repayments from loan recipients.

Funding was reduced because Crossland’s department lost the robust funding provided by the Public Works Assistance Account which it had managed for 30 years. It provided additional funding for local government drinking water and infrastructure loans through dedicated taxes and a revolving fund. However, the state legislature recently appropriated the funding for educational projects to meet children’s needs, he says, requiring the department to find other revenue sources. “We anticipate repayments coming in for four years to make loans available. The cash flow accounting increases our ability to loan by four to five times,” he says.

Crossland says another piece moving the department to cash flow management happened when EPA pointed out the department’s unliquidated obligations. A lot of capital was tied up while projects completed preconstruction work, with no significant spending for two years. Preconstruction grants and loans were thus created so that small water agencies could complete feasibility studies, design and engineering, historical and cultural consultations, and environmental reviews. “Large water systems know what they want to do,” says Crossland, so they don’t usually have needs for preconstruction loans.

The $25,000 preconstruction grants, which are not paid back, help small nonprofit public water systems evaluate the feasibility of seeking a DWSRF construction loan. They are usually vulnerable to a diminished level of service or unsafe water because of a lack of technical managerial or financial capacity. Preconstruction loans for up to $300,000 are for small- to medium-sized water systems that do not have up-front capital funds to pay for preconstruction activities before receiving a DWSRF loan. Once the water system is close to starting project construction it can get the construction loan. Crossland says the limit is $6 million.

Consolidation grants and loans are designed for agencies wanting to go out of business, to consolidate their system with a larger one, or secure a regional water supply. Small systems typically with less than 500 connections that are experiencing water-quality monitoring or treatment technique violations, suffer frequent water outages, or otherwise suffer a lack of system capacity can qualify for grants. The grant will help them decide which alternative they should pursue.

Consolidation loans are available to eligible publicly and privately owned water systems for consolidation and restructuring projects that require a change of ownership before they acquire other non-compliant, failing, or struggling public water systems, before implementing the funding contract.

The 30-year-old Clean Water State Revolving fund is dedicated to wastewater projects and is managed by the Department of Ecology, says Crossland.

Crossland says, “I do see the DWSRF and CWSRF as valuable programs. They are incredibly successful and work well and will survive into the future in some form.”

Pennsylvania
The Pennsylvania Department of Environmental Protection administers Pennsylvania’s DWSRF program through the Pennsylvania Infrastructure Investment Authority. Eligible projects include the collection, treatment, or disposal of wastewater, including industrial waste; the supply, treatment, storage, or distribution of drinking water; and the control of pollution associated with stormwater runoff.

Paul Marchetti is the executive director of the DWSRF and Clean Water SRF programs. The latter program is a component of the 1987 federal Water Quality Act. Marchetti says federal and state money has been providing approximately $200 million annually for DWSRF loans and $50 million for DWSRF grants. However, in fiscal year 2015, Pennsylvania’s funding allotment was cut to $28 million. The program is concentrating on “fix it first” projects such as augmenting infrastructure capacity to meet the needs of currently served areas and to repair or replace existing drinking water systems.

The Clean Water SRF has $55.6 million available with a state match of $11.1 million for wastewater and nonpoint source projects in fiscal year 2015. Marchetti says nonpoint source projects include the control of farmland water runoff, and meeting requirements for stormwater runoff.

Green infrastructure projects are now eligible for funding under the Clean Water SRF program. Marchetti says interest is growing in permeable pavements, bioswales, and trees to suck up rainwater instead of putting in big pipes.

Marchetti also says demand for these loans has not been as strong as in previous years. “A lot of communities are self-funding projects,” he says.

Texas
The Texas Water Development Board (TWDB) administers the state’s DWSRF program as well as the State Water Implementation Fund for Texas, known as SWIFT.

Amanda Lavin, assistant deputy executive administrator of water supply and infrastructure with the TWDB, says Texas has infrastructure needs with old systems like the rest of the country. The DWSRF funds are available to take care of those needs, she says. It has the capacity to lend approximately $100 million annually.

Lavin explains the difference between the two programs. DWSRF helps projects comply with the Safe Water Drinking Act regulations. It provides financial assistance for such projects as distribution system and water treatment facilities improvements, and upgrading or replacing water infrastructure and eligible green project reserve components. Loan forgiveness is also available to very small disadvantaged communities.

Applications for financial assistance are accepted beginning March 1 of each year and throughout the year until funding is fully utilized. There are special requirements when agencies accept DWSRF funds. Go to www.twdb.texas.gov to see a description of the program and its requirements.

SWIFT, which is a new program created by the Texas Legislature and Texas voters approving a constitutional amendment, funds future water supplies. It helps communities to develop and optimize water supplies. The state legislature authorized $2 billion for the program.

The program provides low-interest rate loans, extended repayment terms, and deferral of loan repayments when necessary. Projects must be adopted by regional water plans, be included in the state water plan, and have an associated capital cost to be eligible for a SWIFTloan, says Lavin.

The first cycle of SWIFT funding just closed and it was very popular, says Lavin. Her office received applications asking for loans in excess of $1 billion. But $800 million was available. Some applications were ineligible, she says, because they were not included in the 2012 state water plan. Amendments have been made to that plan so the projects can be eligible for the next round.

“We are very happy with SWIFT,” says Lavin. The next cycle began December 1 when abridged applications became available. They were due February 5, 2016. Invitations were then extended to applicants who pass an initial screening to submit complete applications. The TWDB will approve applications in the summer and authorize the sale of bonds to fund the projects. Bond closing is scheduled for winter 2016.

Lavin says the City of Bedford, TX, was awarded $90 million for a multi-year water line improvement project that is scheduled to be completed in 2021. The City of Fort Worth was awarded $76 million for an advanced meter replacement project to be completed by 2017.