Can D.C. Really Pay For Massive Sewer Upgrades?
Probably not, according to a study out today from the Brookings Institution.
Last October, D.C. Water broke ground on the Clean Rivers Project, a $2.6 billion, 20-year effort to control and cleanse the water that pours off the land and into the Chesapeake Bay. To pay for it, the agency has issued bonds, which are supposed to be paid off through user fee revenue.
The problem is, user fees are actually decreasing as consumers get more efficient with water use—a good thing!—and rate hikes fall disproportionately on poor people. To offset the direct cost to the public, D.C. Water charges landowners "impervious area fees" for all the new concrete they create, since it accelerates runoff into the system. But that isn't nearly enough to cover debt service on the bonds, Brookings says. The federal government—which mandated the improvements in the first place—has contributed about $150 million in earmarks, and there's no telling whether any more is on the way.
The Brookings report (which was underway before the D.C.-focused Greater Washington Research program was folded into their larger division on American cities, meaning fewer such reports in the future) doesn't give a number for how big a dollar gap D.C. Water is facing to finish this thing. But it does express fear that getting it done will crowd out other D.C. Water priorities, and urges everybody in the region to get together and figure out how neighboring governments might help foot the bill. Of course, as we know from perpetual Metro funding shortages, that's always a difficult conversation to have.
UPDATE, 8:38 a.m.: D.C. Water says that current revenues will be enough to cover the rest of the project without help. "If we ran a serious risk of not being able to pay back the bonds, nobody would buy them and our credit rating would be terrible," writes spokesman Alan Heymann. "Instead, our last two issues were oversubscribed and our credit rating increased the same year the US government got a downgrade."
Photo by Darrow Montgomery. Full report after the jump.