Steps toward Financial Viability: How Ahoskie Paid off Millions in Debt

The past year has forced local government utilities to make difficult decisions about how to maintain operations while providing essential services during an infectious disease pandemic, as discussed in several of our past blog posts (here, here, and here).  

Financial viability is a cornerstone of a utility’s ability to weather a proverbial storm that disrupts revenue flows. A viable system is one that functions as a long-term, self-sufficient business enterprise while providing reliable water services. The EFC has been on the look-out for stories of utilities and municipalities that are making steps towards financial viability, even in the midst of challenges like COVID-19.  

The town of Ahoskie, located in rural Hertford County, has been implementing financial best practices over the past few years to decrease expenses and pay off debt, which set them up to survive a financially straining event like a lockdown. Below is a part of their story, here is a video that highlights the work they’ve done, and here is a more in-depth reportMore resources regarding evaluating costs can be found at this webpage.

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Trends in utilities’ financial condition reveal early effects of the pandemic

At the start of the pandemic, there was uncertainty about how water and wastewater utilities’ revenues and finances might be affected. Many utilities and local governments were concerned with loss of revenue from the commercial sector, as well as the financial implications of statewide moratoria on late fees and disconnections for non-payments designed to ensure that everyone has adequate access to water and sanitation during a designated public health emergency. Various polls and case studies were analyzed to gauge early and ongoing effects on the utilities’ financial condition. Now, the release of audited data in local governments’ annual financial statements provides additional information and insights. This blog post summarizes how over 300 local government water and wastewater utilities in North Carolina fared at the end of Fiscal Year 2020 (end of June 2020 for all local governments in the state) compared to previous years. The audited data include the first three months of the pandemic.

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Behind the Scenes of the Revenueshed Tool

This is the second post in a three-part blog series on data management. This post will focus on the data handling processes involved in the development of the EFC’s Revenueshed tool.

 

As mentioned in the first part of this blog series If you build the data platform, will they come?, EFC’s design team regularly asks the following three questions when creating a new tool.

(1) Who are the users? 

(2) What is the project’s purpose?

(3) What data exists to support this purpose?

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Alternative Metrics to Examine Financial Capability to Implement Clean Water Act Controls

The 1997 EPA Financial Capability Assessment (FCA) consisted of a two-part assessment to determine a municipality’s financial capability to implement projects to comply with Clean Water Act (CWA) requirements.  The EPA has used the 1997 FCA to negotiate implementation schedules for both combined sewer overflow and sanitary sewer overflow controls. The first part of this assessment is the Residential Indicator (RI), which is the cost per household of CWA compliance divided by the median household income. The second part is the Financial Capability Indicator, which evaluates the municipality’s fiscal health and its demographics relative to national norms.

In part due to the simplicity of the Residential Indicator, the water and wastewater community has used a similar metric known as median affordability or % median household income (MHI) to assess affordability at the local level. Median affordability is the annual water and wastewater bill at a set consumption volume divided by the MHI of the service area. State revolving funds also have used median affordability to determine which municipalities are eligible for principal forgiveness on loans. The difference between the RI and median affordability is that median affordability uses the current cost to the customer and the RI uses the total cost to implement CSO or SSO controls to comply with Clean Water Act requirements. Because both the RI and the median affordability rely on MHI to determine affordability, they have both received criticism over the years, including from the EFC (here, here, here).

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Funding Climate Change Adaptation: How Maryland is Paving the Way in Resiliency Financing

In May 2020, the shortened Maryland 2020 General Assembly Session passed Senate Bill 457, which authorizes local governments in the area to establish Resilience Authorities. The first of its kind, the bill enables a local jurisdiction to flexibly organize funding structures for, and manage, large-scale infrastructure projects specifically aimed at addressing the effects of climate change[1]. The Bill allows local governments to establish and fund Resilience Authorities under local law, outlines the requirements to do so, and stipulates the powers local governments may, and may not, grant to their Resilience Authority.

The Maryland Senate Bill was passed with a bipartisan vote on May 8, 2020. It was supported by Democrats and Republicans on both sides of the Chesapeake Bay. Senator Sarah Elfreth (District 30) sponsored the bill, stating that, “The bill ensures Maryland remains a national leader in preparing ourselves for the impending crisis presented by climate change and sea-level rise.[2]” Annapolis mayor Gavin Buckley and Anne Arundel County Executive Steuart Pittman championed the bill, and Maryland Governor Larry Hogan allowed the bill to go into effect without his signature.

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