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Introduction: Water Infrastructure Toolkit

June 19, 2014

In 2007, Atlanta--a city not accustomed to drought as Phoenix or other southwestern cities are--came within a month of running out of water during a severe dry spell. The Atlanta metropolitan area’s water requirements are expected to double by 2030 as the population balloons to 8 million. The U.S. Supreme Court recently ruled that Atlanta no longer has exclusive rights to Lake Lanier and must share its water with Alabama and Florida. Where will residents of the Peach State’s capital get their water?

Southern California has seen several years of acute drought. The state’s water infrastructure is designed to supply water to 18 million people. It now serves 38 million, and another 12 million more are expected in the state by 2040.

Philadelphia has an opposite problem in one way: Its population is dropping. But some of its water mains date to 1824, and a declining population means a weakened tax base. The city has responded with conservation measures such as groundwater recycling. (City examples are from Infrastructure 2010: Investment Imperative, by the Urban Land Institute and Ernst and Young.)

Many believe future wars won’t be over oil, but over water. States are already battling over water rights. Georgia is trying to get its border with Tennessee moved slightly north, based on a survey from 1818. If Georgia wins, it would have access to a reservoir on the Tennessee River.

“Water is a scarce commodity,” says Linda Romer Todd, owner of Associated Brokers and Consultants, Grand Junction, Colo., and water activist. “If we don’t start conserving by working on the infrastructure we have and building more storage areas that can survive five- to seven-year droughts, we’re going to run out.”

Every citizen should be concerned about water infrastructure, which includes water storage facilities, treatment, delivery systems, and watersheds. And real estate professionals in particular often find themselves in the thick of water battles. They must explain local water requirements to property buyers and answer their questions about water supply and quality. And sometimes land development projects are affected, or even stopped, by local rules on water rights. Water issues “have affected all aspects of the real estate industry,” says John Gall, Nextage Realty Solutions, Las Vegas and Scottsdale, Ariz.

This online toolkit will offer resources to REALTORS® who must answer buyers’ questions about water infrastructure and who want to offer an informed voice about water issues in their local communities.

Our Crumbling Infrastructure

The American Society of Civil Engineers, in its 2009 Infrastructure Report Card, gave both the nation’s drinking water and wastewater systems a grade of D-. The report estimates that we will need to spend $255 billion in the next five years to replace aging facilities and comply with regulations--but only $146.4 billion has been set aside. A whopping $1 trillion in water infrastructure investment will be needed in the next 20 years.

Why is our water infrastructure in such dire shape? Some of America’s water pipes are more than 100 years old, and much of the infrastructure was built just after World War II. Age itself isn’t the problem: Depending on when they were built and what they are made of, the pipes can last 75 to 100 years or more--if they’re properly maintained and rehabilitated. But many have not been.

A few years ago when states had more cash, they rarely saw updating water pipes as a high priority. Water infrastructure maintenance doesn’t have the popular appeal of some other municipal projects, and the effects of poor maintenance are often invisible until there’s a crisis.

In many cities, there have been crises. Washington, D.C., has had two major water main breaks just in the past year, causing the Water and Sewer Authority to issue temporary warnings to residents to boil their water before consuming it. A more serious problem emerged a few years ago when unacceptably high lead levels were found in the city’s drinking water, due largely to aging infrastructure. Although D.C. officials have acted to address the issue, uncertainty remains about the quality of the city’s drinking water.

And the nation’s capital is hardly alone. There are 240,000 water main breaks a year in systems nationwide, says the Environmental Protection Agency. The increasing danger of water main breaks and waterborne contaminants can cause significant disruption for business and homeowners.

Water Rights Battles

All property owners want to be assured that the water in their community is plentiful and safe to drink. Those are basic assumptions that most Americans take for granted--and they’re used to getting them at minimal cost.

But that era is already over in many parts of the West and Southwest, and other areas of the country won’t be far behind. REALTORS® find themselves involved in water battles whether it’s their choice or not. Terence Sullivan, Sullivan Realty, Spokane, Wash., had a development on hold for two years because he couldn’t get water rights for the 600 units.

“I’ve been a land developer since the late seventies, and I’d never had experience with a water rights situation,” says Sullivan. The state told him the water district had already exceeded its rights to extract water from the local aquifer, and no more water rights were available. His efforts to get help from the city or the Environmental Protection Agency came to nothing. He even approached a water broker to try to get water rights from someone who wasn’t using them. Sullivan was particularly frustrated because his proposal was for an infill project that met all the requirements of the state’s growth management law. “I was not asking a water provider to hook up a line to 20 homes 20 miles away,” he says.

The restrictions were lifted only when the state needed water rights for another piece of land it wanted to sell. Sullivan’s project and the state were able to connect to another water district. The transfer of rights will create a loop system, rather than a simple transfer of water from Point A to Point B. Water is pumped from the district with the surplus water rights to the beneficiary district, where there is room for expansion later if more water is needed for further development. Depending on the final agreement, the provider of water can have access to it when that district has more development. “Ultimately, the water will be connected so we expand the service area of both the water districts,” Sullivan says.
It was a creative solution to a seemingly intractable problem, and it offers hope that solutions can be found in other communities that don’t now see a way out of their water woes. Regions will have to cooperate if there is to be enough clean water for everyone. “Water knows no boundaries,” says Rachel MacCleery, managing director of the Urban Land Institute’s Infrastructure Initiative. “It defies our usual political solutions.”

Is it Safe to Drink the Water?

That’s a question Americans might ask before traveling to Mexico or parts of Asia--but surely not about the water coming from their own taps. Yet 20 percent of U.S. water treatment systems fail drinking water standards. When aging pipes in water delivery systems and wastewater treatment systems corrode or break, the water is vulnerable to contaminants. The older systems were designed to fight parasites and bacteria, but don’t do as well with the pesticides, chemicals, and pharmaceuticals in runoff from industrial sites and in modern wastewater.

The projected population increase, aging pipes, and tight budgets at the municipal, state, and federal level won’t make it easy to improve drinking water standards anytime soon. Increased funding at all levels is needed. So are innovative funding mechanisms such as an infrastructure bank, more use of state revolving loan funds, and public-private partnerships (see the section on financing for more information).

Water and Private Property Rights

In the Eastern United States, residents are often accustomed to having the right to use whatever is found on their land, whether it’s gold (unlikely) or water (which someday may seem as valuable). But it’s not that simple in states with a scarce water supply, like Colorado. “Too many people who move here think if they live close to a stream, they can do whatever they want with it, and that’s not the case,” says REALTOR® Todd from Colorado.

In her city of Grand Junction, when farmlands get developed into housing, the water rights get transferred to the homeowners associations. Although the association has rights to the water, the water itself may come from someone else’s land. So the people whose land it’s on may not be able to access it. It’s the real estate practitioner’s job to explain that to the property owners. That means any competent real estate agent--not just those in the West--must be well versed in the local rules and requirements for water rights. That’s one purpose of this toolkit (a separate section will cover state and local regulations and legislation).

Particularly in the West, “some of the federal rules keep us from providing water for local communities,” says Todd. New water storage areas may not be built in officially designated wilderness areas. It becomes a problem because in higher elevations, wilderness areas are sometimes the only logical place to store water.

Conservation and Sustainability

Is there any way to deal with the situation other than to throw at it massive amounts of money we don’t have? Luckily, yes. Conservation is an important weapon in this battle. Among other topics, this toolkit will explore conservation measures such as rain barrels, green roofs, and xeriscaping (landscaping with minimal water). Emerging technologies including smart meters and alternative rate structures will also be discussed.

On a broader scale, sustainability will be crucial. It’s not just another buzzword. EPA’s water infrastructure sustainability policy, issued in October 2010, states the agency’s goal of encouraging communities’ sustainability “as a condition of financial assistance”
(http://water.epa.gov/aboutow/upload/Sustainability-Policy.pdf). For water infrastructure, the term refers to “investments that are cost-effective over their life cycle” and “resource efficient.” EPA--which provides much of the money that goes to states for infrastructure projects--also says water infrastructure decisions should be made collaboratively among all stakeholders. REALTORS® can play an important role making their voice heard in the collaborative process.

The American Water Works Association, which represents water utilities nationwide, says sustainability means “providing an adequate and reliable water supply of desired quality--now and for future generations--in a manner that integrates economic growth, environmental protection and social development” (emphasis added). There can’t be prosperous, livable communities without a strong water infrastructure.

Sustainable Development

What does sustainability mean for REALTORS® other than pointing to the need to have a voice in water issues? Many communities are moving toward sustainable development, which can affect where property can be developed and sold. As in the case of REALTOR® Sullivan from Spokane, goals of sustainability and smart growth sometimes conflict with the need to provide water to communities.
There are good reasons why concentrated development makes sense for water supply. A great deal of water is lost to runoff in developed areas, but that diminishes with more concentrated building that minimizes impervious surfaces. An example from the Urban Land Institute: The runoff from eight homes on eight acres totals 149,600 cubic feet per year, but that drops to just 39,600 cubic feet when there are eight homes on one acre.

In metropolitan areas, a huge amount of water is lost when rain runs off of impervious surfaces like asphalt and washes to places far away. That water doesn’t get infiltrated back into the ground or captured for future use and so is not recovered. The answer is a combination of open space and other permeable surfaces. Of course, that goal may come up against the reality of housing needs--and that is where REALTORS® can again provide a voice for compromise and creative solutions.

Housing and Land Affordability

The difficulty obtaining water rights in some parts of the country and the likely rise in water rates will affect prices for homeowners. As Sullivan knows from his experience fighting for water rights for his development in Spokane, hooking up to the water supply in a private water district is more expensive than using a municipal supply. The extra cost for water adds to the cost of the homes.

Water availability can affect land prices, too. Bob Snowden, owner of the Smith Brokerage Inc., Buffalo, Wyo., offers this example: In many rural areas, a developer or homeowner must drill a well to get water. If there’s not an established water table, the ability to find water easily can depend on the luck of the draw--and can make a big difference to the price of the land. Especially when a buyer is new to an area, their real estate agent may be their only knowledgeable resource regarding water availability and cost.

REALTORS® are in a unique position when it comes to water. They see the situation from all sides, whether it’s fighting for water rights for a development; keeping on top of local, state, and federal regulations so they can inform their customers; or tracking the effect of water availability on the value of area real estate. This toolkit is intended to offer a grounding in the basic issues of water infrastructure and to point to further resources for those wanting to delve deeper into particular aspects. The information can help REALTORS® be strong advocates for the water rights of their customers and be community leaders proactive in finding solutions to infrastructure challenges. REALTORS® can become an important source of information not just for their customers, but for the public at-large.