- Associated Press - Saturday, September 26, 2015

RICHMOND, Va. (AP) - While Virginia faces almost $7 billion in drinking water infrastructure needs over the next two decades, more than $14 million that’s available to help cities and towns fund improvements to pipelines, treatment plants and storage tanks remains unspent, a review by The Associated Press shows.

Virginia officials say a lag in spending is inevitable because projects must meet stringent state and federal requirements before they can receive loans and grants from the Drinking Water State Revolving Fund.

Meanwhile, fewer cash-strapped water systems are applying for the program because they can’t afford to take on new debt, said Steve Pellei, division director for Virginia’s Drinking Water State Revolving Loan Fund.

“They feel like they’re maxed out on what debt they can pay,” Pellei said. “It’s not that there’s a lack of recognition of a need.”

The U.S. Environmental Protection Agency estimates that $6.7 billion in drinking water infrastructure improvements are needed across Virginia, including $4.5 billion for pipelines and water distribution projects.

Nationwide, it’s expected to cost $384 billion over 20 years just to maintain existing drinking water infrastructure. Replacing pipes, treatment plants and other infrastructure as well as expanding drinking water systems to handle population growth could cost as much as $1 trillion over 25 years.

Despite that need, more $1 billion is sitting unspent in drinking water loan accounts across the country, largely because of project delays, poor management by some states and structural problems, the AP review found.

In Virginia, about 5 percent remains unspent from the $272.5 million the state has received from the fund since its inception in 1996.

The backlog here and elsewhere is smaller than it once was, but federal data shows that Virginia and more than two dozen other states aren’t on track to spend any money dating to 2013 by next year, as the EPA has asked states to do.

Pellei said he wishes the state could get the money out quicker, but that water systems are reimbursed for the cost of the projects and that they can take years to complete. They must also pass credit checks and other reviews before they can receive funds, he said.

Since the economic downturn in 2008, the state has also seen a drop in the number of water systems seeking loans as municipalities fear that they won’t be able to raise rates enough to pay them back, he said. Roughly 15 percent of the funding is handed out in grants and the remainder is provided to water systems in the form of low-interest, long-term loans.

Taking out a loan for much-needed infrastructure improvements isn’t even an option for some small water systems, like Pocahontas in southwestern Virginia. The town of less than 400 people was already $900,000 in debt from past water infrastructure projects when it learned in 2014 that it needed to spend $4 million to replace its water treatment plant, said Mayor Benjamin Gibson.

“It’s like a buying a car. If you don’t’ have the revenue they’re not going to give you a car. It’s the same things with these loans,” Gibson said.

Without a way to pay for the new water plant, the town decided that it would instead begin purchasing its water from a larger regional water system, the Tazewell County Public Service Authority, Gibson said. It’s will use a $150,000 grant from the Drinking Water Revolving Fund to replace existing lines and upgrade pump stations to get the water to Pocahontas.

The idea isn’t very popular among residents, who fear that their rates will go up, Gibson said. But he believes that, more and more, small communities will be forced into similar situations because their ability to fund big infrastructure improvements is so limited.

“When you’re a smaller town and you can’t afford to take loans out and you’re light in population and revenue, it’s a major issue,” he said.


Follow Alanna Durkin at https://www.twitter.com/aedurkin

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