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Regional Stormwater Plan to Save Taxpayers Money in Luzerne County

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This article is an excerpt from the December 2017 issue of The Authority, a magazine produced by the Pennsylvania Municipal Authorities Association (PMAA). It is the second in a series of 3 articles about an innovative approach to stormwater management and MS4 compliance being pioneered by 31 municipalities and the Wyoming Valley Sanitary Authority.  You can read the first article here: How Municipalities in the Wyoming Valley Are Cutting Stormwater Costs by Up to 90% )

 

Lower costs and increase value

Thirty-one municipalities in Luzerne County are piloting a regional approach to MS4 compliance that may revolutionize the way Pennsylvania responds to the growing challenges posed by stormwater.

They have signed cooperative agreements with the Wyoming Valley Sanitary Authority, which will serve as MS4 permit coordinator for the entire region. In our previous post, we discussed the many ways a regional partnership can lower the cost of stormwater management for municipalities.

In this post, we’ll discuss how:

Cooperation benefits the taxpayer.

If regional cooperation lowers the cost of stormwater management, it stands to reason those cost savings will be passed on to the taxpayer. But, make no mistake, replacing aging infrastructure and constructing Best Management Practices will cost money, and that money will have to come from somewhere.

With municipal budgets already stretched to the limit, communities may have to consider new revenue sources. That could mean a tax increase or a stormwater fee.

Stormwater fees are generally a better deal for the average constituent. This is because a fee structure ensures everyone pays their fair share.

If taxes were raised to cover the cost of stormwater management, many property owners with large amounts of impervious area would be exempt: hospitals, schools, and other non-profit institutions. However, these institutions can sometimes be the biggest contributors to a community’s stormwater issues because stormwater runoff occurs when the water runs along impervious surfaces and cannot infiltrate the ground.

If stormwater management is paid for through a property tax increase, these non-profit organizations won’t pay for the services they’re using, but someone will have to, and that burden will fall on homeowners and small businesses.

Studies show time and again that the average homeowner would pay less for stormwater management if he or she were charged a stormwater fee than if the municipality raised property taxes.

The regional cooperation being pioneered by the Wyoming Valley Sanitary Authority is an especially good deal for local taxpayers: Our analysis showed that the average residential property owner will save 70 – 93% by paying a regional stormwater fee instead of paying an increased property tax.

The Wyoming Valley Sanitary Authority’s estimated stormwater fee is between $3.00 and $4.50 per month. This is lower than the other stormwater fees currently being paid throughout Pennsylvania, which average between $6.50 and $8.50 per month.

By using a regional approach, WVSA is able to lower costs beyond what an individual municipal authority could likely achieve. These numbers are even more impressive when you consider that the fees for most of the other municipal authorities included in the average above were calculated before taking 2018 MS4 permit requirements into account. Therefore, those communities may actually have to raise fees higher to meet the stricter requirements coming in the next permit cycle.  WVSA’s estimated cost already accounts for the 2018 permit requirements.

Municipal leaders are stewards of the public’s money, but they are also stewards of the environment. In our next post, we’ll discuss how regional cooperation on stormwater management can more effectively keep our rivers and streams clean for drinking, agriculture, and recreation.

 

Jim Tomaine has more than 30 years of engineering experience. He holds a bachelor’s degree in civil engineering from The Pennsylvania State University and a master’s degree in business administration from Wilkes University. He is the executive director of the Wyoming Valley Sanitary Authority and has been at WVSA for twenty seven years.  Prior to the WVSA, Mr. Tomaine worked in the private sector as a design engineer. He currently holds his A-1 Wastewater Treatment Plant Operators Certification in Pennsylvania and is also a registered professional engineer.

 

Adrienne Vicari is the financial services practice area leader at Herbert, Rowland & Grubic, Inc. (HRG). In this role, she has helped the firm provide strategic financial planning and grant administration services to numerous municipal and municipal authority clients. She is also serving as project manager for several projects involving the creation of stormwater authorities or the addition of stormwater to the charter of existing authorities throughout Pennsylvania.

 

How Municipalities in the Wyoming Valley are Cutting Stormwater Management Costs by up to 90%

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This article is an excerpt from the December 2017 issue of The Authority, a magazine produced the Pennsylvania Municipal Authorities Association (PMAA). Contact us if you’d like a copy of the entire article.

Justify your rates with asset management

Thirty-one municipalities in Luzerne County are piloting a regional approach to MS4 compliance that may revolutionize the way Pennsylvania responds to the growing challenges posed by stormwater.

They have signed cooperative agreements with the Wyoming Valley Sanitary Authority, which will serve as MS4 permit coordinator for the entire region. The following are just a few of the ways that partnership will save them money over the next 20 years:

 

Less paperwork.

Because the municipalities are submitting their permit requirements as part of a regional approach, the Department of Environmental Protection (DEP) is allowing them to submit just one Cheasapeake Bay Pollution Reduction Plan (PRP) for the region and a single PRP for each impaired watershed (for a total of seven Pollution Reduction Plans).

If each municipality had chosen to work alone, the region would’ve submitted more than 100 Pollution Reduction Plans to DEP. When the cost of producing one Pollution Reduction Plan can be more than $20,000, the cost to produce more than 100 would simply have been out of reach for this region.

But, by working together, the municipalities reduce the amount of paperwork that must be produced to comply with state requirements.  Fewer plans cost less money, and that lower cost is then divided among the participating municipalities.  At the end of the day, each municipality’s share of the Pollution Reduction Plan preparation cost is just $3,000.

 

 

Fewer, more efficient construction projects

Submitting the Pollution Reduction Plan is just step 1 of the compliance process. Once the plan is accepted by DEP, municipalities must implement it, and that typically involves the construction of Best Management Practices (BMPs) that reduce the quantity and/or improve the quality of stormwater runoff.

The most expensive part of constructing BMPs is acquiring the land on which to build them. When municipalities work alone, they are limited to constructing their BMPs within their own borders, and most municipalities don’t have an abundance of publicly owned land available for BMP construction. If they partner with other municipalities on a regional approach, they can get credit for constructing BMPs anywhere within the watershed.  With that flexibility, communities can install projects that yield the greatest pollutant load reduction for the lowest cost.  This often means they can meet their goals with fewer construction projects.

According to our analysis, municipalities in the Wyoming Valley would’ve had to construct approximately 200 projects to meet the pollution reduction goals individually (at a cost of $69 million). As a group, the municipalities will only need to construct 65 projects to meet those goals (at a cost of just $12 million).  This will save the municipalities more than $50 million on the cost of implementing their Pollution Reduction Plans.

 

 

Lower O&M costs through economies of scale

There are a lot of fixed costs in managing stormwater.  When you spread those costs over a larger number of users, the cost to each user gets smaller.  A feasibility study conducted by WVSA’s engineer determined that, as a group, cooperating municipalities would save $274 million on operations, maintenance, and improvements over the next 20 years by working together on a regional approach to stormwater management.

 

 

Increased purchasing and borrowing power

Generally, you can negotiate lower unit costs for items when you buy them in larger quantities, so, for example, pipelines could be replaced or slip lined for a lower cost if the work was completed as part of a larger, regional project.

 

 

Increased access to government grants and loans

Funding agencies tend to favor entities that are cooperating regionally to streamline costs, and politicians tend to support projects benefitting a larger constituent base.  Therefore, funding applications submitted by a regional cooperative are more likely to be awarded a grant or loan than those submitted by individual municipalities. These funding awards can save a community significant sums of money versus funding a project out of its own revenues.

 

When municipalities save money like this, it stands to reason they can pass those savings on to residents and business owners. In a follow-up post next week, we’ll discuss how the regional partnership model being pioneered in the Wyoming Valley is benefitting taxpayers in the region.  In the final post of this series, we’ll discuss how regional cooperation prevents water pollution more effectively.

Jim Tomaine has more than 30 years of engineering experience. He holds a bachelor’s degree in civil engineering from The Pennsylvania State University and a master’s degree in business administration from Wilkes University. He is the executive director of the Wyoming Valley Sanitary Authority and has been at WVSA for twenty seven years.  Prior to the WVSA, Mr. Tomaine worked in the private sector as a design engineer. He currently holds his A-1 Wastewater Treatment Plant Operators Certification in Pennsylvania and is also a registered professional engineer.

Adrienne Vicari is the financial services practice area leader at Herbert, Rowland & Grubic, Inc. (HRG). In this role, she has helped the firm provide strategic financial planning and grant administration services to numerous municipal and municipal authority clients. She is also serving as project manager for several projects involving the creation of stormwater authorities or the addition of stormwater to the charter of existing authorities throughout Pennsylvania.

How Dauphin County Has Turned a Small Surplus Into Major Infrastructure Improvements

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This article about the Dauphin County Infrastructure Bank is excerpted from the February 2018 issue of Pennsylvania County News magazine. It is provided courtesy of the County Commissioners Association of Pennsylvania (CCAP) and is reprinted here with their permission. This is in no way an endorsement by CCAP of the products or services offered by HRG.

What would you do with an extra $350,000 per year in your county Liquid Fuels budget?

It sounds like a nice problem to have, doesn’t it?

That’s exactly the challenge Dauphin County faced six years ago as its aggressive bridge management program reached a very important milestone: The last load-posted, structurally deficient bridge in the county’s inventory was fully programmed to be replaced.

This video tells the story of the last structurally deficient bridge in Dauphin County.  Once the county funded the replacement of this bridge, it had a surplus of Liquid Fuels money in its budget. They decided to use this surplus as seed money for an infrastructure bank that has funded more than a dozen roadway, traffic and bridge improvements throughout the county in just a few years. (Learn more about the county’s last structurally deficient bridge in this profile.)

For almost 30 years, the county had patiently and strategically planned the rehabilitation or replacement of 51 bridges. Close to 1/3 of its county-wide inventory had been structurally deficient at the time they embarked on this effort in 1984.

Now that hard work and determination was about to pay off. The county could drastically reduce its spending on bridge capital improvements by shifting from a replacement phase to a maintenance phase.

The county’s engineer, Herbert, Rowland & Grubic, Inc. (HRG), analyzed what investments would be necessary to proactively maintain the bridges and determined that the county would have an annual surplus of approximately $350,000 in Liquid Fuels funding beyond what was needed for maintenance expenses.

County commissioner Jeff Haste wanted to make sure the money was used wisely: “The county’s bridge management program had delivered tremendous value to our residents, drastically improving the safety and efficiency of our transportation system for drivers. We wanted to use this money to deliver even more value.”

Dauphin County Commissioners celebrate a ribbon cutting

County Commissioners Haste, Pries and Hartwick wanted to maximize the benefit of these surplus dollars for county residents. The infrastructure bank approach has allowed them to fund more than $11 million in improvements with an initial investment of $1 million.

Haste and his fellow commissioners, Mike Pries and George P. Hartwick, III, were thinking big, but regulatory requirements threatened to make the impact of this money small.

“Because of the forced distribution procedure associated with Liquid Fuels funding,” Haste explained, “the county had to come up with a use for this money or disburse it evenly to all 40 of our member municipalities.”

On average, each municipality would’ve received less than $10,000, which is too small a sum to do anything more significant that buy a little extra road salt for the winter.

Yet, even if the county used the entire $350,000 surplus itself, they wouldn’t be able to cover the cost of even one small capital improvement like a single-span bridge replacement (which typically costs between $500,000 to $1 million).

Haste, Pries and Hartwick wanted to have a larger impact, so they asked county staff to collaborate on a solution with the engineer who’d designed the successful bridge management program in the first place.

Together, they came up with an innovative program in which the county would use this annual Liquid Fuels surplus to dramatically reduce the cost of infrastructure improvements for local municipalities.

 

How the Dauphin County Infrastructure Bank Works

The Dauphin County Infrastructure Bank offers loans to municipalities (or private sector companies) to design and construct local roadway, bridge and traffic improvements – at unbeatably low interest rates. Municipalities can borrow money for as little as 0.5% interest.  (Private sector borrowers pay a 1% interest rate.)

As an added bonus, Dauphin County provides loan recipients with optional engineering design support. This is very beneficial to smaller municipalities who have never completed a large capital improvement project before and may not know how to navigate the complicated state and federal requirements these projects must meet.  An experienced consultant can save these municipalities from costly and time-consuming mistakes and re-work.

But, if $350,000 wasn’t enough money for the county to complete one major capital improvement project on its own, how can it use that money to fund multiple projects by its municipalities?

The power of partnerships.

Dauphin County multiplies the value of its $350,000 investment by combining it with additional funding from Pennsylvania’s state infrastructure bank.

Essentially, the county uses its Liquid Fuels surplus to make it more affordable for municipalities and private sector organizations to borrow money from the state by paying a portion of their interest. Interest on Pennsylvania Infrastructure Bank loans can vary, but it is currently 2.125% at the time this article is being written.

A municipality could borrow funds directly from the Pennsylvania Infrastructure Bank at an interest rate of just over 2%, or it could borrow from Dauphin County, and the county would pay approximately 75% of the interest expenses.

The following diagram shows exactly how the Dauphin County Infrastructure Bank funds its projects:

Diagram - How the Dauphin County Infrastructure Bank Works

It is a self-renewing process. As municipalities or private sector organizations repay their loan to the county infrastructure bank, the county repays PennDOT.  Once the debt is satisfied, the county has the ability to issue new loans to other municipalities or private sector companies.

For some municipalities, the cost savings provided by an infrastructure bank loan can be the difference between being able to move forward with a project at all or having to postpone it a few more years.

In the first three years of the infrastructure bank program, Dauphin County multiplied close to $1 million in Liquid Fuels funding into $11 million worth of improvements to the local transportation system: 7 bridges, one traffic signal, one streetscape, and one intersection improvement.

Middletown Streetscape

This streetscape project in Middletown Borough is one of the projects that has been funded by the Dauphin County Infrastructure Bank.  You can read more about the award-winning project and its potential economic benefit for the community in this article from The Authority.

“This is the kind of dramatic impact we were hoping to have,” says Pries, who oversees Dauphin County’s Community and Economic Development Department.

“The success of our bridge program and the creation of the Dauphin County Infrastructure Bank has allowed us to help residents without the need to raise property taxes. Unlike many other parts of the country, our residents don’t have to worry about crumbling bridges and road networks.”

Read more about the Dauphin County Infrastructure Bank, the benefits of implementing an infrastructure bank in your county, and other counties that are considering a program of their own in the February 2018 issue of Pennsylvania County News.

 

 

Brian Emberg, P.E.
Brian Emberg, P.E., is senior vice president and chief technical officer of Herbert, Rowland & Grubic, Inc. (HRG). He helped design Dauphin County’s bridge management system and worked with the county to develop the Dauphin County Infrastructure Bank. He has more than 30 years of experience designing roadways and bridges and is particularly skilled in creating unique funding solutions to help local governments accomplish their infrastructure goals with limited revenue.  You can contact Brian by phone at (717) 564-1121 or by email at bemberg@hrg-inc.com

Adrienne Vicari Named One of Central PA’s Top 40 Under 40

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Adrienne VicariThe Central Penn Business Journal named Adrienne Vicari to its 23nd annual Forty Under 40 list, which honors individuals for their commitment to business growth, professional excellence and the Central Pennsylvania community.  She and the other honorees will receive their award at a banquet on October 2 at the Hilton Harrisburg.

Adrienne is the financial services practice area leader at Herbert, Rowland & Grubic, Inc. She has more than 15 years of experience in financial consulting, project management and engineering design for municipal wastewater, water and stormwater clients. In her current role with the firm, she uses asset management and capital improvement planning as tools to complete long-range strategic financial planning for her clients.

But she began her career at HRG in a very different role: as a professional engineer designing water and wastewater treatment facilities. She quickly developed an interest in helping her water and wastewater clients obtain and manage their funding for capital improvement projects and transitioned into the firm’s financial service group. As communities have developed a growing need for increased stormwater management funding and utility valuation, she has become an industry leader in these areas, as well.

Russ McIntosh, a vice president of HRG, says:

“Adrienne is an unstoppable force. When she sees something needs done, she dives right in and gives it everything she has. She is extremely knowledgeable of the issues municipal water quality professionals face and very creative in addressing those challenges. There is nothing she can’t or won’t do to help her clients succeed.”

Adrienne Vicari volunteers for STEM educationThis dedication extends outside the office to the Central Pennsylvania community, as well. Adrienne encourages young people to achieve success in science, technology engineering, and math related fields by participating in STEM-related events like the “Introduce a Girl to Engineering Day” at the Whitaker Center. She also serves as a board member with the Girl Scouts in the Heart of Pennsylvania organization and takes part in their annual STEM expo. In addition, she coaches Central Penn Mini Sticks field hockey and a Cumberland Valley softball 10U team.

She also co-founded a women’s volunteer group for West Shore mothers that encourages them to pursue diverse volunteer opportunities with their children. The group has had a significant impact on mid-state organizations such as Caitlin Smiles, Leg Up Farm, Ronald McDonald House, Dress for Success, and others.

 

ABOUT HRG

Originally founded in 1962, HRG has grown to be a nationally ranked Top 500 Design Firm, providing civil engineering, surveying and environmental services to public and private sector clients. The 200-person employee-owned firm currently has office locations in Pennsylvania, Ohio, and West Virginia. For more information, please visit the website at www.hrg-inc.com.

 

Dauphin County Infrastructure Bank Honored with Governor’s Award

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Herbert, Rowland & Grubic, Inc. (HRG) is pleased to announce that our client Dauphin County received a Governor’s Award for Local Government Excellence for the infrastructure bank program we helped them create. The award for “innovative community or government initiative” was presented to Dauphin County officials at the Governor’s Residence on April 12, 2017. Commissioners George Hartwick, Jeff Haste, and Mike Pries attended the ceremony with George Connor, the executive director of Dauphin County’s Department of Community and Economic Development and the administrator of the infrastructure bank program.

HRG worked with PennDOT and Dauphin County officials to develop this program, which provides a creative solution to one of local government’s biggest challenges: successfully maintaining and replacing infrastructure. It leverages the county’s Liquid Fuels funding and the underutilized Pennsylvania Infrastructure Bank program to stretch the value of local government dollars. In its first three years, Dauphin County turned an annual investment of $325,000 in Liquid Fuels money into 10 projects worth $11 million: 7 bridges, 1 streetscape, 1 intersection improvement, and 1 traffic signal improvement.

DCIB turns 325K into 10 projects worth $11M

While people on both sides of the aisle agree that infrastructure improvements are badly needed, the debate often stalls over where the money will come from to pay for these improvements. The Dauphin County Infrastructure Bank shows that new revenue is not necessarily needed to begin addressing these problems; applying existing revenue in new ways can help us make significant progress. By combining several sources of funding – each of which would’ve been inadequate to meet the infrastructure need alone – the Dauphin County Infrastructure Bank has accomplished so much more for the county’s residents than these funding sources could’ve done individually.

Brian Emberg is an engineer who helped develop this program. He began working with the county in the 1980s on a similarly forward-thinking program that helped the county eliminate significant structural deficiency of its bridges. (In 1984, one-third of the county’s bridges were structurally deficient, but today the county has no load-posted, structurally deficient bridges at all, thanks to a bridge management system they designed with HRG.)

Emberg says, “Dauphin County’s officials are dedicated public servants and true visionaries. They continually challenge the status quo to deliver the best service to their constituents for the highest return on public tax dollars. This program provides a great example to other counties on how the seemingly impossible task of addressing our infrastructure can be solved.”

Indeed, HRG is currently in talks with counties around the state about implementing similar infrastructure bank programs of their own. Though Dauphin County uses its program for transportation improvements, the program can be used to fund any type of infrastructure, depending on the sources of money used to capitalize the loan program. For more information about the program, read our white paper on county infrastrastructure banks.

  • Funded by the Dauphin County Infrastructure Bank: Middletown Borough Streetscape

  • Funded by the Dauphin County Infrastructure Bank: Londonderry Township culvert

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HRG Named a Utility Valuation Expert by the PA Public Utility Commission

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Many municipalities are considering selling their water and wastewater systems in order to address long-term budget and debt obligations. As one of PA’s first Utility Valuation Experts, HRG is ready to help municipalities attain fair market value for these assets.

HRG can help you determine your utility's fair market value as a registered Utility Valuation Expert

 

Herbert, Rowland & Grubic, Inc. (HRG) was recently recognized by the Pennsylvania Public Utility Commission as a Utility Valuation Expert. Under legislation signed by Governor Tom Wolfe in 2016, municipalities wishing to sell their utility assets to a PUC-regulated utility can engage the services of a registered Utility Valuation Expert to determine fair market value of their system.

The program is voluntary, but it benefits both the municipality and the potential buyer by presenting a more accurate picture of a utility’s value than the traditional method.

In Pennsylvania, the purchase of water and wastewater systems by a regulated utility must be approved by the Public Utility Commission. Traditionally, the commission has considered the value of a system to be equal to its depreciated original cost (construction cost minus grants and depreciation). This approach did not consider the potential income that could be generated from the assets and frequently resulted in valuations so low that municipalities couldn’t benefit from a sale.

At the same time, with no consideration to the market or revenue, potential buyers could not be sure whether they would achieve an adequate return on their investment with the purchase.

To remedy these problems, Act 12 of 2016 created a new, voluntary approach to utility valuation based on fair market value. Under this system, the buyer and the seller each retain a registered Utility Valuation Expert to conduct independent appraisals of the utility using industry standards: cost, market, and income approaches. These appraisals use data on the physical system assets that was assessed by a professional engineer retained by both parties.

After both appraisals are submitted, an average of the fair market value calculated in each one is used as the final valuation.

HRG was one of the first firms to be listed on the PUC’s official Registry of Utility Valuation Experts. The firm specializes in providing financial services to the water and wastewater industry and has conducted numerous system reviews and valuation studies for municipalities throughout the state. Vice President Russ McIntosh has published dozens of articles on water and wastewater system financing and was honored by the Pennsylvania Municipal Authority Association for outstanding contributions and exceptional service to the industry in 2014. McIntosh has also served as an expert witness on matters of utility financing in several court cases.

“Our goal at HRG is to provide a fair and honest accounting of a utility’s value, so that the municipality can decide what is best for the long-term health and financial stability of its community,” McIntosh says. “We can go beyond mere valuation to help communities weigh all of their options for generating the money they seek to address budget needs while protecting the value of their most important assets.”

For more information about the utility valuation process defined in Act 12 of 2016, please contact Russ McIntosh at (717) 564-1121 or rmcintosh@hrg-inc.com.

 

Could infrastructure asset management improve your municipal bond performance?

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Financial Reports

If you’re a frequent reader of our newsletter and postings, you know we believe strongly in the benefits of infrastructure asset management. (This is a sampling of our prior articles about infrastructure asset management.) By regularly assessing the condition of your infrastructure and proactively planning its maintenance and replacement, you can reap many benefits. Most importantly, you will increase the useful life of your infrastructure for a lower long-term cost than the typical reactive approach many governments and authorities take.

A recent article in Governing magazine gives another good reason why investing in asset management can be beneficial: it just might lower your cost of borrowing through bonds. In this article, Justin Marlowe discusses the benefit of using the modified approach for calculating the value of infrastructure required in annual GASB reports.  Under GASB standards, governments can either subtract a standard portion of their infrastructure’s value each year to account for depreciation (the traditional approach), or they can regularly assess the condition of the infrastructure, invest in maintenance to keep it in good condition, and then report the amount of money they have invested in maintenance (the modified approach).  Using the modified approach, the assets don’t have to depreciate in value like they would in the traditional approach.

Marlowe cites research he’s conducted that shows investors appear to prefer trading bonds from governments that use the modified approach:

“Governments that use the modified method trade at much narrower price ranges compared to bonds from governments that depreciate. In other words, when a government uses the modified approach, investors are much more likely to agree on how to price its bonds. For governments, this can ultimately translate into lower bond interest rates.”

(excerpted from “Selling Your Sewer’s Story – Financial statements can make the best case for public works investors”)

 

He goes on to state that very few governments at the state and local level actually use the modified approach, so with a lower supply, the demand for such investments would likely be stronger yet.

The truth is, you’re going to have to invest in maintenance and repair anyway. At HRG, we believe that, if you invest in an asset management program, you can take a proactive approach to determining what maintenance is needed and then plan and budget for it in advance. This means you can target your maintenance dollars where they’re needed most and make sure you have the funds available to do the work before infrastructure failure brings even greater costs to bear on your budget.

Justin Marlowe’s study adds a bonus benefit to this type of approach: you can cite those proactive investments in your financial statements to make your government bonds a more attractive investment to traders.

Every client need is different, and HRG would be happy to discuss asset management planning, capital improvement planning, budgeting and/or rate making options to fit the unique needs of your community. Contact us to discuss your community’s infrastructure and financial goals today: (717) 564-1121!

Adrienne M. VicariAdrienne Vicari, P.E., is the financial services practice area leader at Herbert, Rowland & Grubic, Inc., a civil engineering firm that serves local governments and authorities in Pennsylvania, Ohio, and West Virginia. Ms. Vicari has assisted numerous municipalities and water and sewer authorities with the creation of asset management programs that have created increased value and lowered costs for her clients.

 

 

Benefits of Utility Asset Management

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As our water systems continue to age past their useful life and utilities face increasing budget pressures, the terms asset management and capital improvement planning have become buzzwords in the industry. However, as utility managers struggle to squeeze as much out of their budgets as possible, it is hard for many of them to justify the additional expense associated with developing and implementing an asset management program. Just like with any other purchase, they want to be sure the benefits outweigh the cost.  So what are the benefits of asset management and capital improvement planning?

Target your money with asset management

Target budget dollars where they’re needed most and eliminate wasteful spending.

An asset management and capital improvement program helps you identify exactly what maintenance and repair work is necessary without guesswork. Why allocate money toward cleaning out pipes selected at random, when you could target that money to the pipes that need it most (and use the savings to accomplish other system goals)?  Why replace pipes simply because of age when they may be in perfectly good condition?  Many factors besides age can cause the deterioration of infrastructure.

Photo by TheeErin. Published via a Creative Commons license.
water main break sinkhole

Minimize Risk

Knowing which infrastructure is most likely to fail (and correcting deficiencies before it does) can save you major expenses later in the form of property claims, water loss, etc. Knowing which failures would be the most catastrophic helps you target money toward their prevention as a first priority. With the budget limitations of municipal utility management, you might not be able to prevent every system failure, so it’s important to know which ones have the potential to cause the most financial damage and impact the most customers.  This way, you can focus your efforts on preventing those first.  If a failure does occur, a good asset management plan will include a proactive response plan, allowing you to respond quicker and more efficiently (thereby reducing damage and disruption).

Increase ROI with asset management

Maximize Returns

Asset management and capital improvement planning is all about proactively investing in measures to extend the life of your infrastructure.  These small investments can extend the life of an asset by several years.  Over time, the money you save delaying replacement will far surpass the money you spent to maintain the asset, and your customers will have enjoyed better, more consistent service for this lower cost.

Water sustainability

Promote Sustainability

Finding and detecting failures in the system like leaks can prevent water loss and the wasted energy consumed to treat water that never makes it to a customer.

Rating Five Golden Stars on Blackboard

Optimize Customer Service and Satisfaction

Proactively maintaining your assets ensures they function at peak performance for a longer period of time and are replaced before they fail. This means your customers receive top quality service without disruption and are happier for it. In addition, many asset management solutions include optional customer service applications that make it easier for customers to submit service requests and track them to completion.

 

Justify your rates with asset management

Justify Your Rates

Rate increases are never popular with customers, but they are easier for them to accept when they are backed up with clear data showing exactly what improvements are needed and why.

Attract funding with asset management

Access grants and loans

Competition for funding is fierce, and government agencies are under pressure to make sure the money they invest is used wisely. As a result, they’re more likely to award funds to utilities who have clear documentation of the project need, its benefits, and a plan for getting it built, operating it, and maintaining it at optimum levels over time.

Know your worth with asset management

Know your worth

Many utilities have been considering the option of leasing or selling their assets as a response to growing financial obligations in the public sector. A comprehensive asset management system provides documentation of the value of your assets, so you can ensure you are in a position to negotiate the best possible deal for you and your customers.  Potential investors will be more comfortable making a significant investment if they fully understand the value and the risks they’re assuming. (For more Insight into the utility leasing trend, see our article on calculating fair annual rental value.)

Every manager must take careful stock of his revenue and his expenses, but not all expenses are created alike. There is a difference between a cost and an investment, and asset management is clearly an investment in your utility’s future.  In essence, it helps you provide better service at a lower cost with reduced risk and improved financing options. How many investments can you make that provide that kind of return?

 

Duke Street Illustrates an Infrastructure Funding Solution

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  • Dauphin County eliminated all of its load-posted, structurally deficient bridges with an ambitious approach to infrastructure funding.
  • Now the county is using the money it’s saved to fund a new infrastructure program benefiting its municipalities and private sector.
  • The program has already funded 10 projects worth $11 million with just a $1 million investment from the county.
  • Read on to learn more about Dauphin County’s innovative infrastructure funding solution.

Duke Street Bridge Under Construction

We begin this story in its final chapter, celebrating the construction of the Duke Street Bridge in Hummelstown Borough and South Hanover Township.

It’s a story that plays out all over America every day: a local government struggling to address aging, deteriorating infrastructure.

But Dauphin County’s story is different. With HRG’s help, they’ve found a solution to the infrastructure funding problem and are turning the page to a new, brighter future: a future they have the freedom to author themselves.

How did they get here? Asset management and capital improvement planning.

Ambitious Capital Improvement Program Eliminates Structurally Deficient Bridges

In 1984, 1/3 of Dauphin County’s bridges were structurally deficient. It’s the kind of problem many local governments – under tight budget constraints – might find insurmountable.  But Dauphin County knew that solving big problems is not done in one swift motion; it’s accomplished piece-by-piece.

Accordingly, HRG designed a long-term asset management and capital improvement planning program for them. It has several components:

  • Inspecting and assessing the condition of each county-owned bridge every two years.
  • Identifying the appropriate type and timing of maintenance, restoration or replacement measures.
  • Creating (and updating) a Bridge Improvement Plan that prioritizes these measures over a 10-year period. (Projects are ranked not just on the bridge’s structural condition but also its importance to the local transportation network [as determined by the amount of traffic it carries, whether it’s located on EMS or school bus routes, etc.])
  • Using this data to seek funding.
  • Leveraging this funding to complete projects over time, addressing the most urgent needs first and steadily whittling that list of structural deficiencies down to nothing.

By taking a proactive approach like this (vs a reactive approach that addresses bridges only after they’ve failed), Dauphin County extends the life of its bridges, maximizing their usefulness while minimizing their life cycle cost.

They also position themselves well for outside funding. A good capital improvement plan includes plenty of data about how many people rely on a piece of infrastructure and how they would be impacted if it were to fail or be taken out of service.  This information is very persuasive to funding agencies, who want to make sure their investment provides the biggest possible benefit to the community.

But agencies also want to be sure the money they invest will produce results: that the project will successfully transition from concept to construction. A well-designed capital improvement plan does just that. It shows you have identified exactly what is required to get a project built (including the timelines for permits and approvals) and that you know the full scope and cost of what you want to accomplish.  It also shows you have allocated money in advance to get the job done.

This level of detail reassures funding agencies that the money they invest will be used wisely and the project will be completed successfully. (See our article on Positioning Yourself for Grant Funding for more detail.)

In fact, funding agencies are increasingly requiring data like this in their application process, so a capital improvement plan is quickly transforming from a nice-to-have item into a necessary part of your infrastructure approach. (Our article on successfully applying for Pennsylvania Act 89 transportation funding explains this in more detail.)

Many pages have been written about Dauphin County’s success with this strategy over the years. (It has been featured in Pennsylvania County News and Road and Bridges magazine among others.)  In addition, the county has won several awards for projects accomplished using this approach: two Road and Bridge Safety Awards, a National Timber Bridge Award, and a historic preservation award from the PHMC.

But the successful completion of Duke Street in 2017 is not just an ending; it’s the beginning of a whole new story for Dauphin County. With no more load-posted, structurally deficient bridges to address, the county transitioned its focus from replacement to maintenance.  This has enabled county officials to create a new program for funding infrastructure, using a portion of the Liquid Fuels funds it used to need for bridge replacements.

Savings Are Used to Encourage Economic Growth With a New Infrastructure Funding Program for Municipalities and the Private Sector

The Dauphin County Infrastructure Bank combines this Liquid Fuels funding with additional money from PennDOT’s Pennsylvania Infrastructure Bank to offer loans to county municipalities, businesses, and non-profits at unbeatably low interest rates (as low as 0.5%) for the construction of roads and bridges under their jurisdiction. Over the past three years, the county has turned a $1 million investment into 10 projects worth $11 million.

DCIB has funded 10 projects worth $11 million

Again, Dauphin County has its eye on the long view, using its funds to promote economic development throughout its municipalities.

As their example illustrates, the solution to funding our infrastructure is not a short story; it’s a novel with many chapters and a carefully planned arc. In fact, it’s a story that never ends – with the construction of Duke Street serving as the beginning of a new chapter: the Dauphin County Infrastructure Bank.  This program will, in turn, fund many new stories with new characters: municipalities and private developers rewriting the future of their communities one roadway or bridge at a time.

Are you ready to become the author of your  community’s future?

 

UPDATE: Dauphin County celebrated a ribbon-cutting for the completed bridge in the spring of 2017.  Learn more about the bridge in the video below

Brian Emberg, P.E.Brian Emberg, P.E., has more than 30 years of experience and has designed hundreds of infrastructure projects. His understanding of project management and keen sense of business practices has lead him to his current position as Senior Vice President and Chief Technical Officer at HRG. He is responsible for the management and oversight of the firm’s technical service groups, sales and marketing, client management, and the maintenance and execution of quality management plans.

Vicari Named Shining Star by West Shore Chamber

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Vicari Wins Luminary Award

(Names of individuals pictures from left to right:  Marissa Price, Jamie Keener, Russ McIntosh, Ryan Brockman, Adrienne Vicari, John Vicari, Andrew Kenworthy, Howard Hodder, Ryan Albright)

The West Shore Chamber of Commerce recently honored Adrienne Vicari with the Shining Star Award at their 2016 Luminary Awards luncheon.  This award is given to a woman who excels both as a professional in her industry and as a volunteer in the community, and Vicari is a true leader in both areas.

Vicari is the financial services manager at Herbert, Rowland & Grubic, Inc. (HRG) and a shareholder of the firm. As a dedicated team player, Vicari has excelled at any role the firm has given her.  She first joined the firm as an engineer but quickly developed expertise in water and wastewater system financing, too.  After taking on a role in the firm’s Financial Service Group, she quickly became a thought leader in the industry, publishing articles in industry magazines and making presentations at conferences on a wide variety of water and wastewater system finance issues.  She is also developing a reputation as a leader in the emerging field of stormwater authorities in Pennsylvania.

Beyond her work at HRG, Vicari works hard for various community organizations:  She serves on the Board of the Cumberland Valley Softball Association and coaches for both the Cumberland Valley Softball 10U team and Central Penn Mini Sticks field hockey team.  She is also a founding member of Sp*rk, a group of West Shore moms who volunteer with their children for local community groups like Caitlin Smiles, Leg Up Farm, Ronald McDonald House, Dress for Success, and others.

It is such an honor to be recognized alongside so many talented women who have contributed to their profession and the entire Harrisburg community,” Vicari says. “I’m so happy that the West Shore Chamber is donating to the New Hope Ministries in recognition of this honor.  I can’t think of a more deserving organization that benefits this community.”

The West Shore Chamber of Commerce donates a portion of the proceeds from the award ceremony to a non-profit chamber member chosen by the award winners.  New Hope Ministries helps close to 15,000 residents of York and Cumberland Counties each year to become self-sufficient through counseling, workforce training and development, crisis assistance, and youth programs among others.

 

ABOUT THE LUMINARY AWARDS

The Luminary Awards Luncheon was held at the Radisson Hotel in Camp Hill on August 31. The Chamber’s Women in Business Roundtable Committee selected the winners from a group of nine female nominees who exemplify leadership in the workplace and the community.

ABOUT HRG

Originally founded in 1962, HRG has grown to be a nationally ranked Top 500 Design Firm, providing civil engineering, surveying and environmental services to public and private sector clients. The 200-person employee-owned firm currently has office locations in Pennsylvania, Ohio, and West Virginia. For more information, please visit the website at www.hrg-inc.com.