February 2017 Vol. 72 No. 2
Features
2017 Municipal Infrastructure Survey: New Political Direction Brings Cautious Optimism
After experiencing an uptick in municipal sewer and water infrastructure spending in 2015 and budgeting for the trend to continue into 2016, America’s municipal personnel were, for the most part, sorely disappointed. But municipal personnel are anything if not resilient, and there is a strong anticipation that infrastructure funding could fare better in coming years as the United States transitions to new political leadership. This information and a wealth of insight into 2017 was examined through the results of Underground Construction’s 20th Annual Municipal Sewer and Water Infrastructure Survey.
The exclusive survey presents a detailed look at the current spending plans for America’s cities, along with insights and perspective on industry topics and technology. The survey reflects only information regarding sewer, water and stormwater piping infrastructure and does not include figures or data on pumping stations, treatment plans, etc.
Conducted in October and November of 2016, the survey polled U.S.-only municipalities about their 2017 infrastructure funding plans, as well as perspectives on technologies, trends, industry issues and working relationships with consulting engineers and contractors.
Survey results came from all 50 states plus the District of Columbia, and were weighted for regional population density and city sizes to develop a nationwide benchmark that would allow for statistical extrapolation.
The smallest cities participating in this year’s survey included Graettlinger, IA, with a population of 850, and the Village of Necadah, WI, sporting 890 residents. At the other end of the spectrum, large metropolitan cities such as Los Angeles, New York, Honolulu, Seattle, Phoenix, Denver, St. Louis, Chicago, Dallas, Houston, Atlanta, Miami, Pittsburgh, Tampa, Baltimore, Cincinnati and many more submitted information.
Spending struggles, hopes
For 2016, the year of high hopes for continuing budget increases never materialized. Some areas saw their infrastructure spending slashed by as much as 18 percent, while other cities saw little if any growth in the capital expenditures for 2016. Nationwide, sewer and water spending fell 4.2 percent in 2016.
“Our budget was supposed to be increased again in 2016, but that all went out the window,” said one municipal official from the Northeast. “Our overall city budgets were down and so a lot of our planned spending was cut.”
Another city official from
California lamented that “we had high hopes for this year (2016) but the money just went away. Several important projects had to be kicked down the road – again.” This Midwest respondent added, “We started 2016 with an aggressive plan before the budget was gutted.” And a Southeast municipal manager commented, “Our budget was flat at best. I don’t know if it was election jitters or what, but pretty much all of the city budgets in our state stepped back on infrastructure funding.”
Indeed, going into 2016, city municipal managers estimated spending nearly $19 billion on sewer/water piping infrastructure, but as the year went by, many projects were delayed or indefinitely postponed and overall spending plummeted to $18.2 billion.
Projecting forward into 2017, cities are cautiously optimistic that funding levels would experience a positive rebound. In total, survey respondents push 2017 spending estimates to $19.2 billion, a 5.2 percent increase over 2016. Several cited high hopes for dramatically increased spending over the next several years, particularly if the $1 trillion investment concept rolled about by new President Donald Trump and the Republican Congress comes to fruition. Trump and Speaker of the House Paul Ryan are both committed to such an investment spread over several years through a combination of government monies and leveraging public/private partnerships. To date, no specific formula for doling out the funds has been announced, but some survey participants want to make sure sewer and water markets are not overlooked in lieu of roads, bridges, railroad and airports.
“If money does become available, we’ve got to make sure that sewer and water get their fair share!” declared this Mid-Atlantic respondent.
Funding
As is often the case, the most important issues facing sewer/water agencies in 2017 by far is lack of adequate funding to address pressing needs, both for new and replacement construction, as well as rehabilitation. That lack of funding takes on many faces, according to municipal respondents.
“Infrastructure projects – or rather the lack of them – is our biggest challenge,” cited this Midwest official. “We have a severe lack of funding just to make water distribution and sewer collection improvements,” said a Southwest muni respondent.
“We need funding for our large rehabilitation projects,” lamented this Midwest manager. “Our biggest challenge is not letting infrastructure decline anymore,” said this Texas respondent. A Northeast city official said his organization is having trouble “working within our budget to accomplish maintenance and new items.”
A Northeast survey respondent claimed budget woes across all departments for his city are creating major issues for the sewer/water departments: “The government tax cap is causing local officials to take money from utilities to make up the difference!”
However, in a sarcastic vein, this Midwest respondent claimed that “We’re doing great. As of late 2016, we will have all our lead service lines replaced!”
Another face to inadequate budgets is the growing national workforce crisis. Contractors have already documented and are working to address a severe shortage of skilled labor. The issue is apparently emerging as a major problem for municipalities as well – especially when budgets for retention and hiring are tight.
“We’re not replacing retiring employees due to lack of funding,” complained this official from the Pacific Northwest. A Southwest city respondent pointed out the biggest challenge is hiring “qualified employees, employee retention and paying employees more to attract better candidates.” Echoed another Southern city representative, “keeping a well-trained and experienced staff,” poses a major challenge.
Other areas of prime concern for cities include onerous federal regulations and negotiated Consent Decrees. “Timely meeting our EPA Consent Decree requirements and overall federal regulations will be our greatest challenge,” stated this Central U.S. municipal official.
Inside the numbers
Survey information reports that cities hope to spend about $11 billion in 2017 on new and replacement construction for underground pipes. Sewer comprises $5.2 billion, water $3.8 billion and $2.0 billion of that total. About $8.2 billion is anticipated to be spent on pipe rehabilitation including $4.7 on sewer, $2.1 for water and $1.4 billion for stormwater. Overall, that represents about a 5.2 increase in 2017 anticipated spending.
One of the bright spots in 2016 was the culvert replacement and rehabilitation market. A strong increased spending emphasis in that area is anticipated to continue in 2017. Significant public attention combined with a variety of federal regulations have brought culvert maintenance and repair to the forefront of public awareness.
While water construction and rehabilitation receded in 2016, a jump in rehabilitation and replacement of water lines is expected for 2017, according to survey respondents. There has been a steady, dramatic increase in public perception and concerns over public water supply – and that was before the lead pipe issue in Flint, MI, became a national horror story evoking Congressional action. While most of the national fallout was overblown and unfounded, nonetheless, there is plenty of Congressional and public outrage remaining over the situation. In 2017, industry should expect immense pressure to be exerted upon water agencies to upgrade their systems and replace any lead pipe still in use. Where the money will come from is still an unknown.
Until details begin to emerge regarding the proposed $1 trillion infrastructure investment – such as when will money be available, how much will sewer/water agencies receive, what is the formula for funds allotment, etc. – cities will have to largely continue finding their own funding mechanisms. As was discussed earlier, that remains a huge issue – and problem – for municipalities.
Inevitably, one of the funding sources is boosting user fees. Historically, city councils have been averse to raising sewer and water rates in lieu of dealing with public complaints. This practice has often led to years between rate hikes. When rates are raised, it is mainly to catch up with inflation rather than address infrastructure issues. But as infrastructure woes have deepened, municipal governments are more willing to face the new reality that user fees must more closely reflect true maintenance costs. Still, cities are averaging almost four years between rate hikes for sewer, and three years before boosting water rates.
To illustrate just how much of a problem funding represents, the survey asked for an estimate of how much additional funding over current budget plans is needed to meet the many needs of both construction and rehabilitation of water and sewer infrastructure in 2017. That amount was a whopping $151 billion – for just one year. As one respondent from the western Mountain region observed: “Sure hope that stimulus is for real – it can’t come soon enough.”
Asset management efforts continue to be a significant area of concentration for cities. Only 31.2 percent said they have a program fully in place; however, that does reflect an increase over the 29.9 percent with a program entering 2016. More than 48.4 percent of cities report actively developing at least a partial asset management program, while 20.2 percent have no plans to implement a program at this time.
Maintaining, rehabilitating and replacing manholes are ongoing challenges for virtually all municipalities, large and small. As such, plans call for replacing or rehabbing 194,000 manholes in 2017.
In addition to funding woes and onerous government/EPA regulations, which were both cited as top concerns by 71.4 percent of respondents, 53.9 percent of cities said that retaining and attracting qualified employees has become a major problem. Other areas of concern mentioned prominently were community relations and safety issues.
Trenchless perceptions
The survey also measures impacts from trenchless construction and rehabilitation methods. During budget-crunching times, trenchless rehabilitation gained ground as a cost-effective and successful stop-gap measure to stretch dollars. However, many survey respondents still express the belief that trenchless tends to be more expensive and with 2016’s belt tightening, some cities reverted to simply digging down to problem areas for repairs and dealing with related pavement and social costs. Still, trenchless work has gained growing and irreversible footholds in all aspects of construction and rehabilitation in the United States and abroad. The survey revealed that 51.8 percent of cities prefer to use trenchless for rehab, and for new construction, trenchless is used in about 25 percent of projects.
Municipal personnel were also asked about their perception of the quality and efficiency of a variety of popular trenchless methods, using a scale of 1 (low) to 5 (high). Achieving the highest performance rating for 2017 are standard water/steam cured-in-place pipe (CIPP) and horizontal directional drilling (HDD) with ratings of 3.8. However, another method of CIPP, ultra-violet light cure, is still new enough to industry that many respondents simply have very limited experience of the technology, so it received a rating of only 2.2. Still, that marked a performance rating increase of 2.0 in 2016.
Also rating well were manhole epoxy spray-on coatings at 3.7 followed by point repairs, chemical root control and pipe bursting at 3.6.
Historically, the municipal survey also asks city personnel to rate their contractor and consulting engineering partners. These relationships are critical to the success of virtually any project regardless of whether it’s open-cut or trenchless. With tight budgets, municipalities count on their contractors and engineers to provide up-to-date, comprehensive solutions and options for their pressing needs. The survey tracks year-to-year ratings so contractors and engineers can gauge their perceived value to the municipal markets. The ratings are based on a scale of 1 to 5, with 5 being the highest mark.
Rating engineers
For the second consecutive year, consulting engineers saw their rating climb − 3.47 compared to 3.36 last year. That continues a remarkable rebound from a low rating of 3.14 in 2014.
When asked what is the most important aspect of working with consulting engineers, quality was cited by 93.4 percent of all respondents – a huge jump from a year ago, when only 41.9 percent cited that factor. Several of the respondent comments linked quality with field experience. Understanding new technology was cited by 62.2 percent, and productive relationships with contractors are considered very important by 60.6 percent. Surprisingly, cost considerations were cited by less than half of the respondents.
As usual, city personnel had plenty of suggestions for how engineers could do a better job of working with sewer/water agencies. “Engineers need to put seasoned personnel in these positions and not engineers right out of school. Field experience speaks volumes,” stressed this Midwest official. A Southeast survey participant advised, “Stop using politics to get work. Let quality be the tool used to increase workload.”
“Engineers should design projects with the ease of future operations and maintenance in mind,” suggested this Texas respondent. “Engineers need to fully understand the scope of work and find new technologies and innovative ways,” added this Southwest city staffer. Further, said this person from the North Central area, engineers must get better at “anticipating, understanding the needs of the program.”
A respondent from the Mid-Atlantic region encouraged engineers to “not be afraid to speak up with owners when their point of contact is being onerous or making bad decisions.”
Rating contractors
Prior to 2016, contractors saw their performance rating essentially flatline for the past three years. However, after 2016, municipal personnel gave contractors a big boost in their rating, climbing from 3.61 to 3.81.
Like engineers, city officials see quality as a major need in the work with contractors. It was cited by 92 percent of all respondents. Following closely behind is the need for overall experience, which was cited by 88.8 percent of cities. Apparently, timely completion of project is also an issue, as 79.3 percent of muni personnel emphasized that quality.
This East Coast city official wants contractors to “complete projects and not leave the punch list hanging out for a protracted period of time.” A Midwest respondent stated succinctly, “deliver jobs on time and within the budget.” Another Midwest city staffer recommended that contractors “be more prepared to abide by the rules and regulations of the city. Have the appropriate tools on hand to do the job most efficiently. Have trained and experienced laborers that know what they are doing.”
A city official from the West Coast said that “we need more contractors that can do a variety of trenchless methods. We normally only get one or two bids.”
This Southwest city respondent pointed out how contractors could do a better job when working with municipalities: “Effective communication, quality work executed on time, use skilled personnel and provide timely response to public issues.”
Comments