LOS ANGELES -- The nation's major wastewater treatment agencies plan to finance more than $20 billion of projects over the next five years, and bond proceeds will supply more than half of those funds, according to a survey released this month.
The Association of Metropolitan Sewerage Agencies, which includes 117 of the nation's largest wastewater agencies, said in its newly released 1990 financial survey that members expect to sell $8.8 billion of revenue bonds and $2 billion of general obligation bonds over the next five years to help meet long-term financing needs.
State revolving fund loans, federal and state grants, and other financing mechanisms will meet the balance of long-term funding needs, the survey said.
The association's financial survey -- its fifth over all and the first one since 1987 -- reflects numerous trends affecting wastewater financing.
In particular, the association noted that local revenue sources now play a much more important role after changes to the Clean Water Act sharply reduced federal grants in recent years.
For example, about 90% of the estimated $20 billion in future projects will be financed with local revenue sources, the association said. By contrast, the association's 1987 survey indicated that federal grant monies would finance 54% of projects, which at the time totaled $5.4 billion.
"The local share of capital projects financing has skyrocketed sevenfold over the past three years from $2.5 billion to $16 billion," the association said in a press release. Member agencies who participated in the survey reported total debt outstanding of $11.5 billion, representing a 65% increase over the last three years, the association added.
Increased local funding pressures also are showing up in local sewer service charges, which "are now doubling every six years," the association said. The trend toward higher charges is expected to continue because of decreased federal and state funding for new waste-water facilities, increased capital burdens on local agencies, newly mandated environmental programs, and higher operation and maintenance costs associated with stricter treatment level requirements.
About 90 agencies responded to most of the questions in the 13-page survey, which covered topics such as finances, rates, and sewerage volume.
The appendix also includes information that might particularly interest financial advisers and other municipal market participants. One table provides an agency-by-agency breakdown of their anticipated long-term financing mechanisms within the next five years. For example, anticipated revenue bond programs range from the miniscule -- such as $100,000 in Tampa, Fla. -- to much larger plans, including $591 million in Seattle and $2.9 billion by the Massachusetts Water Resources Authority.
The sewerage association's members serve more than 90 million people, of 176 million people who are connected to sewer systems in the United States. The 90 agencies responding to the survey serve a residential population of 68.6 million.
According to the 1990 survey, the average debt outstanding of the respondents was $128 million. The median figure for debt outstanding was $61 million in 1990, up from $37 million in the 1987 survey.
