Keep Infrastructure Funds Flowing

When I am completely disgusted by the 24 hour news cycle, I reach for The Onion - America's satirical newspaper. Their hysterical take on current events, both real and fictional, are just what I need to put things in perspective.

By Peter Krainock

When I am completely disgusted by the 24 hour news cycle, I reach for The Onion– America’s satirical newspaper ( Their hysterical take on current events, both real and fictional, are just what I need to put things in perspective.

On July 28th of this year, The Onion ran a piece that struck close to home.

“In a 30 minute video released Thursday, al-Qaeda leader Ayman al-Zawahiiri criticized the mass transportation infrastructure of the United States, claiming that significant repairs and upgrades would need to be implemented before the militant group would consider destroying any roads, bridges, or railways with terrorist attacks. While al-Zawahiri mainly focused on reprimanding the U.S. for not updating its mass transportation system, the al-Qaeda leader also recommended the government repair sewage treatment plants, dams, waterlines and the power grid”.

Terrorism is nothing to laugh about, but the fact that our elected officials do not realize that investing in infrastructure is a surefire way to create jobs is a real and not so funny joke. The Onion, in its inimitable way, has hit the nail on the head: why should we be afraid of a terrorist attack on a bridge, a power plant or a water system when the current level of funding for such systems pretty much guarantees their ruin anyway?

The kind of partisan posturing that has halted our political system this year has left the water and wastewater community high and dry. In my opinion the only ray of hope for our industry is called HR 1802- “The Sustainable Water Infrastructure Act”- and its corresponding bill in the Senate, S 939. This bill eliminates the cap on private activity bonds.

For those not familiar with the term, private activity bonds (PABS) are a tax exempt funding mechanism that allows a private entity to partner with a municipality or state to meet a public need. Because the interest paid on bonds issued by states and local governments is excluded from gross income for federal income tax purposes, investors are often willing to accept a lower rate of interest than they might accept on a taxable investment. The lower interest rate reduces the borrowing cost for the government entity.

Right now Congress limits the total volume of tax exempt bonds a state can issue. The annual volume cap hinders the use of private activity bonds for water and wastewater endeavors, which are generally multi-year projects. In 2007, only 1.3% of all private activity bonds were issued to water and wastewater projects. This bill does one thing: it eliminates the cap.

As I write this piece in late September, the bill currently has 46 co-sponsors in the house and 3 in the Senate. If this sounds familiar, it is because there was a similar bill in the previous Congress that got lost in the legislative shuffle. Because there will be several legislative “jobs” proposals debated through the end of the year, organizations like the Clean Water Council will try to clip this bill to a larger package of legislation with some real traction.

For those interested, you can follow the path of this bill through websites like For those of you who are truly concerned, write your Congressmen and Senators and suggest they become co-sponsors without delay. Numerous studies indicate that if this bill becomes law, money will start to flow almost immediately from more than 30 infrastructure funds eager to invest in PAB’s.


About the Author: Peter Krainock is the CEO of American Water Works International, a Division of American International Supply Inc. Krainock has been actively involved with WASDA’s Board of Directors and served as the Chair of the Government Relations Committee for the past five years. He is actively involved in government affairs, making numerous annual trips to Washington, D.C.

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