Assessing the Affordability of Water and Wastewater ...Need to consider drinking water mandates, and...
Transcript of Assessing the Affordability of Water and Wastewater ...Need to consider drinking water mandates, and...
![Page 1: Assessing the Affordability of Water and Wastewater ...Need to consider drinking water mandates, and other water supply spending needs –Jointly with wastewater and stormwater costs](https://reader035.fdocuments.in/reader035/viewer/2022081407/605219dad6d97c5c0b79a727/html5/thumbnails/1.jpg)
STRATUS CONSULTING STRATUS CONSULTING
Prepared for:
RMSAWWA JITAC Lunch
Prepared by:
Bob Raucher and Janet Clements
Stratus Consulting
Boulder, CO
February 20, 2014
Assessing the Affordability of
Water and Wastewater-Related
Services
![Page 2: Assessing the Affordability of Water and Wastewater ...Need to consider drinking water mandates, and other water supply spending needs –Jointly with wastewater and stormwater costs](https://reader035.fdocuments.in/reader035/viewer/2022081407/605219dad6d97c5c0b79a727/html5/thumbnails/2.jpg)
STRATUS CONSULTING
Overview
What does “Affordability” mean?
Why is affordability important to you
and the water sector?
How is affordability measured?
What can you and your utility do to
help?
![Page 3: Assessing the Affordability of Water and Wastewater ...Need to consider drinking water mandates, and other water supply spending needs –Jointly with wastewater and stormwater costs](https://reader035.fdocuments.in/reader035/viewer/2022081407/605219dad6d97c5c0b79a727/html5/thumbnails/3.jpg)
What does Affordability Mean?
• Affordability
– Ability of individual customers to pay
without undue hardship
• Financial capability
– Ability of utility to finance capital
infrastructure investments
.
![Page 4: Assessing the Affordability of Water and Wastewater ...Need to consider drinking water mandates, and other water supply spending needs –Jointly with wastewater and stormwater costs](https://reader035.fdocuments.in/reader035/viewer/2022081407/605219dad6d97c5c0b79a727/html5/thumbnails/4.jpg)
STRATUS CONSULTING
Why is affordability important?
Social responsibility
– Desire to provide an essential service to
all members of the community
Political acceptability
– Elected officials’ desire to “not raise taxes”
Fiscal prudence
– Minimize arrearages, generate predicable
revenue stream
![Page 5: Assessing the Affordability of Water and Wastewater ...Need to consider drinking water mandates, and other water supply spending needs –Jointly with wastewater and stormwater costs](https://reader035.fdocuments.in/reader035/viewer/2022081407/605219dad6d97c5c0b79a727/html5/thumbnails/5.jpg)
STRATUS CONSULTING
How is Affordability applied in
the water sector?
Relief from regulatory obligations
– Delay or adjust compliance mandates
– Enable spending on other priorities, obligations
Open the gateway to rate increases
– Facilitate valuable utility investments (e.g.,
infrastructure renewal, water resources)
Guide payment assistance programs
![Page 6: Assessing the Affordability of Water and Wastewater ...Need to consider drinking water mandates, and other water supply spending needs –Jointly with wastewater and stormwater costs](https://reader035.fdocuments.in/reader035/viewer/2022081407/605219dad6d97c5c0b79a727/html5/thumbnails/6.jpg)
STRATUS CONSULTING
EPA Affordability Criteria
To relieve undue economic stress
from federal wastewater-related
mandates
Indicates when EPA might provide flexibility
– Compliance standards (1995)
– Schedule (1997)
No official utility-oriented affordability metrics
for drinking water-related mandates
![Page 7: Assessing the Affordability of Water and Wastewater ...Need to consider drinking water mandates, and other water supply spending needs –Jointly with wastewater and stormwater costs](https://reader035.fdocuments.in/reader035/viewer/2022081407/605219dad6d97c5c0b79a727/html5/thumbnails/7.jpg)
STRATUS CONSULTING
EPA Affordability Guidance
Two-tiered economic “test”
1. Preliminary screening analysis
– “Residential indicator” based on city-
wide median household income (MHI)
2. Secondary screening analysis
– “Financial capability indicator” based on
a suite of fiscal metrics
![Page 8: Assessing the Affordability of Water and Wastewater ...Need to consider drinking water mandates, and other water supply spending needs –Jointly with wastewater and stormwater costs](https://reader035.fdocuments.in/reader035/viewer/2022081407/605219dad6d97c5c0b79a727/html5/thumbnails/8.jpg)
STRATUS CONSULTING
1. Municipal Preliminary Screener
(Residential Indicator – RI)
The 2% Rule
%
income householdMedian
householdpercostpollutionwatertotalAverageX
Communities with a mid-range to large impact must
conduct a secondary screening analysis . . .
Low economic impact: < 1% of MHI
Mid-range economic impact:
between 1% and 2% of MHI
Large economic impact: > 2% of MHI
![Page 9: Assessing the Affordability of Water and Wastewater ...Need to consider drinking water mandates, and other water supply spending needs –Jointly with wastewater and stormwater costs](https://reader035.fdocuments.in/reader035/viewer/2022081407/605219dad6d97c5c0b79a727/html5/thumbnails/9.jpg)
STRATUS CONSULTING
2. Secondary Screening Analysis:
Utility Financial Capability Indicator (FCI)
![Page 10: Assessing the Affordability of Water and Wastewater ...Need to consider drinking water mandates, and other water supply spending needs –Jointly with wastewater and stormwater costs](https://reader035.fdocuments.in/reader035/viewer/2022081407/605219dad6d97c5c0b79a727/html5/thumbnails/10.jpg)
EPA 1997 Affordability Guidance
NACWA. 2013. The Evolving Landscape for Financial Capability Assessment: Clean Water Act Negotiations and the
Opportunities of Integrated Planning.
![Page 11: Assessing the Affordability of Water and Wastewater ...Need to consider drinking water mandates, and other water supply spending needs –Jointly with wastewater and stormwater costs](https://reader035.fdocuments.in/reader035/viewer/2022081407/605219dad6d97c5c0b79a727/html5/thumbnails/11.jpg)
STRATUS CONSULTING
Limitations of EPA Guidance for
Residential Affordability
MHI is a poor indicator of economic
distress or community well-being
Does not capture impacts across
highly diverse communities
Snapshot approach
Does not capture impacts to
landlords and/or public housing
authority
![Page 12: Assessing the Affordability of Water and Wastewater ...Need to consider drinking water mandates, and other water supply spending needs –Jointly with wastewater and stormwater costs](https://reader035.fdocuments.in/reader035/viewer/2022081407/605219dad6d97c5c0b79a727/html5/thumbnails/12.jpg)
10%
12%
14%
16%
18%
20%
22%
24%
26%
$45,000 $46,000 $47,000 $48,000 $49,000 $50,000 $51,000 $52,000
% o
f P
eo
ple
in
Po
ve
rty
Median household income
Nationwide
NYC
MHI is a Poor Indicator
of Poverty and Affordability
![Page 13: Assessing the Affordability of Water and Wastewater ...Need to consider drinking water mandates, and other water supply spending needs –Jointly with wastewater and stormwater costs](https://reader035.fdocuments.in/reader035/viewer/2022081407/605219dad6d97c5c0b79a727/html5/thumbnails/13.jpg)
13
US and NYC Income Distributions
![Page 14: Assessing the Affordability of Water and Wastewater ...Need to consider drinking water mandates, and other water supply spending needs –Jointly with wastewater and stormwater costs](https://reader035.fdocuments.in/reader035/viewer/2022081407/605219dad6d97c5c0b79a727/html5/thumbnails/14.jpg)
STRATUS CONSULTING
Limitations of EPA Guidance
for “Utility Financial Capability”
Fiscal realities for municipalities much more
challenging today than in mid 1990s
– Access to and cost of borrowing
– Unfunded liabilities (e.g., pensions)
Property tax levels overlooks burden
of other local taxes and fees
Comparing local unemployment rate to national
level does not reflect local economic hardship
![Page 15: Assessing the Affordability of Water and Wastewater ...Need to consider drinking water mandates, and other water supply spending needs –Jointly with wastewater and stormwater costs](https://reader035.fdocuments.in/reader035/viewer/2022081407/605219dad6d97c5c0b79a727/html5/thumbnails/15.jpg)
STRATUS CONSULTING
What’s a Utility To Do?
Use WEF-AWWA-USCM Guidance!!
![Page 16: Assessing the Affordability of Water and Wastewater ...Need to consider drinking water mandates, and other water supply spending needs –Jointly with wastewater and stormwater costs](https://reader035.fdocuments.in/reader035/viewer/2022081407/605219dad6d97c5c0b79a727/html5/thumbnails/16.jpg)
STRATUS CONSULTING
EPA May Consider Additional
Analyses
EPA’s 2001 Guidance states:
“ . . .States may also use alternative
analyses and criteria to support this
determination, provided they explain the
basis for these alternative analyses and/or
criteria”
![Page 17: Assessing the Affordability of Water and Wastewater ...Need to consider drinking water mandates, and other water supply spending needs –Jointly with wastewater and stormwater costs](https://reader035.fdocuments.in/reader035/viewer/2022081407/605219dad6d97c5c0b79a727/html5/thumbnails/17.jpg)
Jointly sponsored by AWWA, WEF,
and U.S. Conference of Mayors
Assessing the Affordability of Federal
Water Mandates: Issue Brief
Affordability Assessment Tool
for Federal Water Mandates
New Affordability Assessment
Resources
http://www.awwa.org/resources-tools/water-
utility-management/affordability-assessment.aspx
![Page 18: Assessing the Affordability of Water and Wastewater ...Need to consider drinking water mandates, and other water supply spending needs –Jointly with wastewater and stormwater costs](https://reader035.fdocuments.in/reader035/viewer/2022081407/605219dad6d97c5c0b79a727/html5/thumbnails/18.jpg)
STRATUS CONSULTING
What’s Included in the Tool?
Background on affordability issues
Limitations of EPA’s approaches
for assessing affordability
Presentation of alternative metrics
Relevant data sources
Spreadsheets and templates
![Page 19: Assessing the Affordability of Water and Wastewater ...Need to consider drinking water mandates, and other water supply spending needs –Jointly with wastewater and stormwater costs](https://reader035.fdocuments.in/reader035/viewer/2022081407/605219dad6d97c5c0b79a727/html5/thumbnails/19.jpg)
STRATUS CONSULTING
Better Measures of Economic Need
Impact on low- and fixed-income households
Identify at-risk households by
– Income distribution
– Poverty rates
– Unemployment
– Neighborhood
– Household type
Housing burden and other nondiscretionary
spending
![Page 20: Assessing the Affordability of Water and Wastewater ...Need to consider drinking water mandates, and other water supply spending needs –Jointly with wastewater and stormwater costs](https://reader035.fdocuments.in/reader035/viewer/2022081407/605219dad6d97c5c0b79a727/html5/thumbnails/20.jpg)
Residential Affordability of
Wastewater Services: NYC Example
![Page 21: Assessing the Affordability of Water and Wastewater ...Need to consider drinking water mandates, and other water supply spending needs –Jointly with wastewater and stormwater costs](https://reader035.fdocuments.in/reader035/viewer/2022081407/605219dad6d97c5c0b79a727/html5/thumbnails/21.jpg)
If bills were to increase by
50%, 36% of households are
estimated to have sewer bills
2% of MHI.
Rate increases that elevate bill to
2% of median Census tract MHI
![Page 22: Assessing the Affordability of Water and Wastewater ...Need to consider drinking water mandates, and other water supply spending needs –Jointly with wastewater and stormwater costs](https://reader035.fdocuments.in/reader035/viewer/2022081407/605219dad6d97c5c0b79a727/html5/thumbnails/22.jpg)
Average bill as % of MHI by income bracket
Income bracket % of NYC
households*
Median
income
within
income
bracket**
Average sewer bill as
% of bracket MHI
2012 50% real
rate
increase***
All incomes $ 48,743 0.94% 1.4%
Less than $20,000 23% $ 9,100 5.03% 7.54%
$20,000 to $39,999 20% $ 29,200 1.57% 2.35%
$40,000 to $74,999 24% $ 55,000 0.83% 1.25%
$75,000 to $99,999 10% $ 85,000 0.54% 0.81%
$100,000 to $199,999 17% $ 128,970 0.35% 0.53%
$200,000 or more 6% $ 290,000 0.16% 0.24%
*2010 ACS Data
**2009 iPUMS data used for median incomes within brackets
**Since 2009, rates have increased more than 50%. Since 2008, rates have increased more than 74%.
Residential Affordability of
Wastewater Services: NYC Example
![Page 23: Assessing the Affordability of Water and Wastewater ...Need to consider drinking water mandates, and other water supply spending needs –Jointly with wastewater and stormwater costs](https://reader035.fdocuments.in/reader035/viewer/2022081407/605219dad6d97c5c0b79a727/html5/thumbnails/23.jpg)
STRATUS CONSULTING
Socioeconomic Indicators:
Income Distribution (Atlanta)
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
Pe
rce
nta
ge o
f h
ou
seh
old
s
Household income
US Atlanta
![Page 24: Assessing the Affordability of Water and Wastewater ...Need to consider drinking water mandates, and other water supply spending needs –Jointly with wastewater and stormwater costs](https://reader035.fdocuments.in/reader035/viewer/2022081407/605219dad6d97c5c0b79a727/html5/thumbnails/24.jpg)
STRATUS CONSULTING
Income Distribution for
Elderly Households (Atlanta)
0%
5%
10%
15%
20%
25%
Perc
enta
ge o
f h
ou
seh
old
s
Household income
Elderly households All households
![Page 25: Assessing the Affordability of Water and Wastewater ...Need to consider drinking water mandates, and other water supply spending needs –Jointly with wastewater and stormwater costs](https://reader035.fdocuments.in/reader035/viewer/2022081407/605219dad6d97c5c0b79a727/html5/thumbnails/25.jpg)
STRATUS CONSULTING
Summary: WEF-AWWA-USCM
Guidance
Helps utilities consider which metrics apply to
their community
Provides specific data sources and instructions
for accessing those data
Provides spreadsheets/templates for data entry
and outputs
Highlights where environmental justice issues
can be raised
![Page 26: Assessing the Affordability of Water and Wastewater ...Need to consider drinking water mandates, and other water supply spending needs –Jointly with wastewater and stormwater costs](https://reader035.fdocuments.in/reader035/viewer/2022081407/605219dad6d97c5c0b79a727/html5/thumbnails/26.jpg)
STRATUS CONSULTING
Federal Policy Issues Raised in
the Guidance
Need to consider drinking water mandates, and
other water supply spending needs
– Jointly with wastewater and stormwater costs
Need to enable localities to prioritize across all
their water-related investments
– In concert with EPA’s new Integrated Planning
and Permitting Program (IPPP)
![Page 27: Assessing the Affordability of Water and Wastewater ...Need to consider drinking water mandates, and other water supply spending needs –Jointly with wastewater and stormwater costs](https://reader035.fdocuments.in/reader035/viewer/2022081407/605219dad6d97c5c0b79a727/html5/thumbnails/27.jpg)
STRATUS CONSULTING
What Can You Do to Assist
Customers in Need?
Shrink bills for low- income households
– Lifeline and other rate design options
– Conservation and leak detection programs
– Discounts
Facilitate bill payment (and avoid arrearages)
– Billing practices (e.g., monthly vs. quarterly)
– Income assistance
– Link/referrals to other social services
![Page 28: Assessing the Affordability of Water and Wastewater ...Need to consider drinking water mandates, and other water supply spending needs –Jointly with wastewater and stormwater costs](https://reader035.fdocuments.in/reader035/viewer/2022081407/605219dad6d97c5c0b79a727/html5/thumbnails/28.jpg)
STRATUS CONSULTING
Thank you!
Bob Raucher [email protected]
Janet Clements [email protected]
AWWA-WEF-USCM Brief and Toolkit:
http://www.awwa.org/resources-tools/water-utility-
management/affordability-assessment.aspx