Four Finance Facts about Flint

As this blog is being written, water and community managers from across the country are talking about the water crisis that is occurring in Flint, Michigan. The City made a decision several years ago to discontinue buying Lake Huron water from Detroit in favor of an alternative supplier who was planning on constructing a major new transmission line to provide a “less costly” supply of Lake Huron water. While waiting for the project to be completed, the City relied on water from the Flint River. This source of water was determined to have a different chemical composition that led to water line corrosion causing lead to enter the drinking water supply. In addition to the acute public health impacts of the crisis, the impoverished community is facing a huge price tag to address their infrastructure problems.

As often happens with a crisis, the attention on Flint’s situation is shining a light on challenges that are by no means unique to Flint. While there are many specific circumstances that contributed to the problems in Flint, many of the underlying financial issues facing Flint will have or already have had an impact on water systems across the country. Here are four financial facts that played out in Flint that every water and community manager should be thinking about:

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How to Read Utility Financial Statements Like a Pro

How do unpaid bills affect utilities’ finances? Is customer debt similar to debt incurred investing in infrastructure, such as building new facilities? These are inquiries the EFC received a few weeks ago, related to recent news that Western Pennsylvania gas and electric utilities have hundreds of millions in outstanding, unpaid bills.

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EPA’s Environmental Finance Advisory Board

Last week, the U.S. Environmental Protection Agency released a survey showing that $271 billion is needed to maintain and improve the nation’s wastewater infrastructure, including the pipes that carry wastewater to treatment plants, the technology that treats the water, and methods for managing stormwater runoff. This story comes in the wake of national attention on our nation’s water infrastructure needs gap, where it is estimated that an investment of $384 billion is needed over the next 20 years to maintain existing drinking water systems. In the shadow of these large and looming estimates, communities across the country are tasked with meeting the everyday challenges of providing and paying for environmental services, including providing clean drinking water and wastewater treatment.

Recognizing these and other growing environmental challenges facing communities, EPA created the Environmental Finance Advisory Board (EFAB) in 1989 to find ways to lower the costs of and increase investments in environmental and public health protection. As an independent advisory committee, EFAB focuses on lowering the cost of environmental protection, removing financial and programmatic barriers that raise costs, increasing public and private contribution in environmental facilities and services, and building state and local financial ability to meet environmental laws.

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Consumer Considerations for On-Bill Finance Programs

On-bill financing is receiving a lot of attention as an innovative strategy to improve energy efficiency make people’s homes more comfortable. One of the major advantages of on-bill financing is that it can be offered to property owners who can’t cover the one-time investment in energy efficiency upgrades or aren’t able to qualify for traditional financing options. In this way, on-bill financing programs can be positive for consumers, but as with any consumer financing product, there are potential issues that program administrators should consider, including potential consumer concerns. In some cases, consumer advocacy groups have called into question whether sufficient consumer safeguards were in place to protect consumers within these programs.

For those interested in legal considerations around on-bill finance programs, there isn’t much reported case law to consider. This may be because either the programs are so new that there hasn’t been time for cases to be brought to trial or appealed. In this post, we briefly discuss some of the consumer issues that may arise in the process of designing or implementing an on-bill finance program.

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The Triple Bottom Line in Local Government Community Economic Development

A central tenet of community economic development is the belief that in fostering a healthy economy, we are working towards building healthy, vibrant communities. But many would contend that a healthy economy is only one piece of the puzzle. Local governments are increasingly paying attention to other elements of community development work in order to build healthy communities, realizing that they cannot foster a strong economy in isolation from social and environmental factors. One approach to development that addresses these issues is the “triple bottom line”, a method that integrates three dimensions of performance: social, environmental, and financial. Under the triple bottom line approach, growth and development should consider not only economic factors, but also social and environmental impacts of any initiative.

The triple bottom line framework has been adopted and championed by a wide variety of actors, including large corporations, community based nonprofit organizations, environmental groups, and international development agencies. Experts say that triple bottom line sustainability is most achievable at the regional and local scale, so it seems natural that local governments would adopt this approach in their economic development efforts. But what strategies can local governments in North Carolina use to foster triple bottom line impacts?

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