80th Annual Meeting

WHEREAS, the nationís water infrastructure must be updated to continue providing clean and safe drinking water and waterways; and

WHEREAS, the Environmental Protection Agency reports that $530 billion is needed to invest in water and wastewater infrastructure improvements over the next twenty years to ensure the provision of safe water; and (2) $202.5 billion is needed for publicly owned wastewater systems-related infrastructure needs over 20 years; and

WHEREAS, the municipal bond market and State Revolving Fund programs are the primary sources of financing for drinking water, wastewater projects, storm water and flood control projects, but current financing levels are insufficient; and

WHEREAS, customer rates and local charges are the primary means of paying for water service and infrastructure, but upfront investment needs are simply too high to be met with traditional means alone; and

WHEREAS, State Revolving Fund (SRF) loans are helpful for small and moderate-sized projects, but generally are not available for larger projects; and

WHEREAS, an innovative financing mechanism modeled after the Transportation Infrastructure Financing and Innovation Act (TIFIA) program offers a mechanism to provide direct loans and loan guarantees for water infrastructure projects at minimum cost to the federal government; and

WHEREAS, enacting such legislation will substantially benefit the nationís drinking water and wastewater systems by reducing borrowing costs and thereby accelerating infrastructure investment; and

WHEREAS, the budgetary costs to the federal government of this model are minimal and based on the risk of default; and

WHEREAS, in the case of TIFIA, $122 million in annual budget authority translates into over $1 billion in credit assistance Ė approximately a nine-to-one leverage ratio; and

WHEREAS, the historical default rate on water and sewer bonds is .04 percent, the risk of default on federal credit assistance is minimal, and the leverage ratio may be even greater than for TIFIA; and

WHEREAS, the TIFIA program has been very successful and enjoys broad bi-partisan support; and

WHEREAS, unlike transportation projects, water systems and utilities have a built-in mechanism to repay federal credit assistance as they have existing revenue streams, but need upfront capital to finance improvements or expansions; and

WHEREAS, making credit available based on Treasury borrowing rates can reduce borrowing costs by up to 20 percent to accelerate water infrastructure investment; and

WHEREAS, federal credit in a project can also make the project more attractive for private capital and lower interest rates on private lending; and

WHEREAS, a Water Infrastructure Financing and Innovation Act (WIFIA) modeled on the TIFIA program would target the current gap in funding for large, regionally significant projects; and

WHEREAS, such a program would benefit all water infrastructure projects by also making available direct loans to State Revolving Funds for a program of smaller projects; and

WHEREAS, enacting WIFIA legislation would therefore provide a critical additional financing tool designed to complement existing financing mechanisms; and

WHEREAS, such legislation also works within the existing structure for water infrastructure finance by (1) maintaining the primary responsibility of local governments for the nationís water infrastructure; and (2) leveraging federal credit assistance to make it easier and less expensive for American communities to access public and private capital; and

WHEREAS, such legislation will help meet the nationís water infrastructure needs while creating tens of thousands of jobs at minimal cost to the federal government,

NOW, THEREFORE, BE IT RESOLVED that the United States Conference ofMayors supports the enactment of a Water Infrastructure Finance and Innovation Act (WIFIA) and urges Congress to enact such legislation to create a new and innovative financing mechanism to help meet the nationís critical water infrastructure needs.