Congressman Bill Pascrell

Representing the 9th District of NEW JERSEY

Upgrading Water Infrastructure

Jun 11, 2011

There are jobs waiting to be created beneath our feet.

We see signs of them with every water main break. They were there when a 51-inch main burst behind a doctor’s office in Clifton last August, disrupting patient care, businesses and local traffic. They were there when a 6-inch plastic pipe cracked in West Orange in February and temporarily closed a nearby school.

Pick up a newspaper in any American city, and there’s a good chance you’ll find a story about a company’s job cuts or a community’s water main break – maybe both.

And our deteriorating water systems cost us even when we don’t realize it. We lose 25 percent of our treated water through cracks and leaks in our water systems. Try that on for size.

Upgrading our water infrastructure is a job that needs to get done, and there are people willing and able to do it. The question is whether we have the political will to stop wasting water and put people to work without significantly burdening taxpayers and water customers.

We have an opportunity to do exactly that in strong, bipartisan legislation that I, as a member of the House Ways and Means Committee, introduced with U.S. Rep. Geoff Davis, R-Ky., in the House last month. U.S. Sen. Robert Menendez, D-N.J., teamed up with U.S. Sen. Mike Crapo, R-Idaho, to introduce the bill in the Senate.

The legislation, the Sustainable Water Infrastructure Investment Act of 2011, H.R. 1802, encourages private investment dollars – instead of public tax dollars – to help fund critical water infrastructure upgrades.

Here are some highlights of the legislation:

* Use private activity bonds to fund water infrastructure upgrades:

The legislation focuses on private activity bonds, or PABs. These bonds provide tax-exempt financing for projects that benefit the public. They are used widely for airports, high-speed intercity rail and solid waste disposal sites. The trouble is, federal law requires states to put a limit, or cap, on the number of PABs sold for water infrastructure projects.

The legislation I have sponsored would raise or remove the cap, allowing for more PABs to be sold for these projects.

* How private activity bonds work:

Due to constraints on the national budget, water and waste water infrastructure projects can no longer only turn to the federal government for loans or grants. Instead, with this legislation, private water utilities will be able to approach a bank that will work with a state or local economic development authority to issue the PABs. The bank sells the PABs to investors, who are usually insurance companies, mutual companies, and the occasional private investor.

The money raised by the sale of the PABs goes to the economic development authority, which loans the money to the private water company. The water company is able to hire the professionals and laborers to complete the job. Best of all, it’s the company – not the taxpayers – that is liable for the money it borrows.

* What is the cost of this legislation and what do we get in return?

Because financing through PABs is tax-exempt, an estimated $354 million is not collected by the federal government during a 10-year period, according to the non-partisan Congressional Budget Office.

What the bill provides is a projected $50 billion of private capital invested in our water infrastructure. The Clean Water Council estimates that for every $1 billion invested, 28,500 jobs will be created in the first year. A total of 1.4 million jobs would be created during the first 10 years.

These are not "make work" projects. As I have pointed out, these are necessary.

Since the bill was introduced on May 10, it has won the support of the Associated General Contractors of New Jersey, U.S. Conference of Mayors, the U.S. Chamber of Commerce and International Union of Operating Engineers.

Now it’s up to the members of Congress to deliver on this vital legislation. Hopefully, the political will to tap into the jobs beneath our feet will be mustered before the next wave of water main breaks hits the papers.