‘Territories need up to $800M for infra upgrades’

Insular areas, including the CNMI, require over half a billion dollars to upgrade critical environmental infrastructure such as water systems in the next five to 10 years.

A preliminary report by the Northbridge Environmental Management Consultants showed that Guam, the CNMI, American Samoa, and the U.S. Virgin Islands, would have a total need of $600 million to $800 million over the next five years for the upgrade or reconstruction of water, sewer, wastewater, and solid waste disposal systems.

These, according to Insular Affairs director Nikolao Pula, are needs that cannot be met by existing resources in the islands or through existing federal funding. He said that current funding only totals $20 million a year.

The Northridge report was submitted to the Interagency Group on the Insular Areas’ Working Group on Environmental Infrastructure.

“The challenge for this Group has been and continues to be, to find some way of meeting these needs with the resources available,” said Pula in a Nov. 2 letter to Gov. Juan N. Babauta.

Based on the report, the CNMI would require some $173 million; Guam, $315 million; American Samoa, over $50 million; and the U.S. Virgin Islands, over $200 million.

The Northridge report noted that Saipan residents do not only lack 24-hour water service but their tap water is too saline to drink.

It cited that residents pay $30 to $40 a month for bottled water and an equivalent amount “for the undrinkable municipal ‘washing’ water” provided by the Commonwealth Utilities Corp.

The report cited the 2003 U.S. Army Corps of Engineers report, which estimates that Saipan needs some $93 million in water and wastewater infrastructure investments, while Tinian and Rota would require close to $60 million.

The report said that the existing Water Task Force has begun water metering, leak detection, well field optimization, and some planning—“all with a piecemeal budget.”

“CUC, the drinking water, wastewater, and power utility, is struggling to meet compliance orders. The DOI provides the largest external source of capital improvement funding, but financial planning for environmental infrastructure is weak. In addition, an economic downturn has reduced tax revenues for capital projects,” said the report.

It also mentioned that the CNMI would further need $20 million for improvements in solid waste infrastructure over the next 10 years.

Guam, following a federal court order to correct violations of the Clean Water Act and Safe Drinking Water Act, requires some $215 million by 2008 to install a new, islandwide transmission system ($96 million), repair pump stations, outfalls, and water and sewage treatment facilities ($40 million), enact a meter replacement service contract ($13 million), enact a leak detection and link replacement program ($6 million), rehabilitate water wells ($5 million), and create a master plan ($5 million).

It also needs $100 million to construct a new municipal solid waste landfill following a lawsuit by the U.S. Environmental Protection Agency to close the Ordot Dump.

The report said Guam Water Works Authority is considering privatization to help finance the stipulated projects and to implement better management systems. It also plans financing some capital improvement projects using $180 million in short-term bonds.

Meanwhile, the American Samoa Power Authority, which serves all of that territory’s electric, water, wastewater, and solid waste needs to invest about $8 million in several projects to help service its 55,000 customers.

The report said good management of ASPA, which is exclusively dependent on federal grants and loans, allows the utility to fund majority of its daily operations from rate revenues.

For wastewater, ASPA estimates $36 million in funding needs and $6.8 million in capital improvement needs for solid waste collection and disposal by 2010, including a new sanitary landfill.

In the U.S. Virgin Islands, its Water and Power Authority estimates that it needs $21.5 million to fund its water supply needs in 2005 but over $3 million of this does not have a funding source yet. For wastewater, WAPA would need $200 million.

While plans for financing these investments exist, the U.S. Virgin Islands’ strategy of bonding its rum tax proceeds weakens as outstanding debt increases beyond $1 billion.

The Northbridge report noted that while the infrastructure needs total up to $800 million, current federal government financing only amounts to some $20 million a year. These funds come from DOI, EPA, U.S. Agriculture, and Federal Emergency Management Agency.

The report said that only a percentage of DOI’s $27.7 million funding for insular areas support water, wastewater, and solid waste infrastructure.

The islands compete for funds based on their baseline level of funding: $11 million to $12 million for the CNMI, $10 million for American Samoa, and $3.3 million each for Guam and the U.S. Virgin Islands.

Other grants available through OIA are technical assistance funds ($7 million to $10 million a year) and Compact Impact grants ($30 million a year).

EPA grants over $6 million for water and wastewater projects for the island territories; Department of Defense provides some funds mainly for Guam due to the presence of a military base on the island; the Army Corps of Engineers supports infrastructure projects but often require a 50-percent matching funds.

The USDA, through its Rural Utilities Service, has made available $1.7 million in loans and grants to Pacific territories each year for water, sewer, and solid waste projects but the islands typically have not taken advantage of all of these funds, the report said.

FEMA provides emergency funding for rebuilding efforts after typhoons and other disasters, while Housing and Urban Development’s $7 million annual funding for Community Development Block Grants program, is mostly spent on projects other than environmental infrastructure.

To gain access to the funding, Northbridge said that territory governments must set funding priorities and distribute the assistance.

Other financing options that can be explored by the territories to finance its needed projects include tax-exempt bonds, island territory bond bank, island territory revolving fund, privatization, and pay-as-you-go or user charges.

Pula, in his letter, asked territory governments to submit comments on the report by Nov. 30.

The final report, along with recommendations, will be submitted in February at the 2005 meeting of the full IGIA.

President Bush reactivated the IGIA, which was started by former President Clinton, to guide U.S. insular areas and territories on federal policies and programs.