Fingers Crossed: 15th Annual Municipal Survey

After several years of the Great Recession, America’s underground infrastructure – already stretched thin before the economic crash – is rapidly approaching crisis levels, say city respondents to the 15th Annual Underground Construction Municipal Sewer & Water Survey. However, a majority of the survey participants believe that their city’s financial woes bottomed out in 2011 and anticipate the beginning of a slow turnaround late in 2012.

Municipal officials have budgeted an overall modest 1.3 percent spending increase for new underground infrastructure piping construction in 2012 to $7.8 billion. A more aggressive 3.5 percent increase is anticipated for rehabilitation at $5.7 billion.

Broken down more specifically, both new construction spending for water ($2.6 billion) and rehabilitation ($1.5 billion) will essentially be flat in 2012 before rebounding early in 2013. Storm water spending is expected to increase about six percent with storm water rehab remaining flat. New sewer spending should increase 2.3 percent to $4.3 billion with rehabilitation spending climbing to $3.4 billion (an increase of 5.9 percent).

Conducted in October and November 2011, the survey polled U.S. municipalities about their 2012 infrastructure funding plans along with perspectives on technologies, trends, issues and working relationships with consulting engineers and contractors. The survey results are subdivided by regions and city populations to develop a nationwide benchmark for projections.

Responding cities came in all sizes, from tiny Cherry Creek, NV (population 72) to the largest city in the U.S. (New York City, population 8 million).

Several years of tight or reduced budgets have forced sewer and water agencies into making painful decisions. “I feel like our sewer system is bordering on neglect,” bemoaned an Illinois city respondent.

Dare to hope
Still, there remains a strong feeling of encouragement and reason to believe that America’s cities have weathered the devastating economic storm, respondents said.

“I didn’t think it (budget cuts) could get much worse – then 2011 happened,” lamented an official from this Minnesota city. “But all our information indicates that we will probably see improvement in late 2012 and going forward into 2013, and we’re budgeting accordingly to address our many, many sewer and water problems.”

Overall, actual spending in 2011 decreased from 2010. However, many respondents emphasized that the last six months of the year saw city coffers actually receiving a slight bump in their revenue streams. “We felt good enough about the positive money trends that we actually bumped our 2012 budget slightly,” pointed out this Nebraska official. “It ain’t much, but its progress!”

Said this respondent from Tennessee, “We’re under a consent decree, so we’ve really been struggling to get through this recession and still meet our EPA obligations. But our budget is actually larger this year. Hopefully, we’re not being overly optimistic.”

“No doubt it’s going to be a very long road back – we were behind in 2008 and now we’re really behind,” said this Arizona city representative. “But we feel like the worst is behind us.”

The ongoing recession has put a financial strain on cities all across the nation. Municipal bankruptcies are rare but there were several in 2011. The net result is that sewer and water systems, already typically at the political bottom of a city’s financial pecking order, are being forced to deal with decaying infrastructure needs with less staff and a diminishing funding base. “We’re constantly being asked to do more with less,” complained a respondent from the Mid-Atlantic area. “But the problem is that we’ve already been doing that for years without relief.”

Another city official from the Southwest said his staff was outraged when “we’re struggling to have enough money and manpower to fix water leaks during the drought last summer and the big topic at a city council meeting was where they could find money to fix up a city park – the money came out of our budget!”

Absurd situations like that aside, municipal managers across the country are struggling with continued funding issues while striving to meet their fiduciary responsibilities to their citizens. “We know that money is very tight for all city departments,” said this respondent from New York state. “We all have to do our part. But when we have the EPA breathing down our neck for not making the repairs we promised, something has got to give.”

Maintaining services
Several respondents expressed concern that their cities will be able to maintain services if they don’t get some financial relief soon. “Attempting to do our work with a constantly shrinking budget and fewer man hours is by far the biggest issue we’re facing,” said a city official from Ohio. “And overtime is none existent as well.”

Indeed, funding was cited by an overwhelming majority of survey respondents as the defining issue of 2011 and going into 2012. The good news for contractors and consulting engineers is that rehabilitation work is piling up and delayed replacement or new construction projects mounting – all waiting for funding. “When we are finally able to start letting projects,” pointed out this municipal official from the West Coast, “it could be epic.”

But where the funding will come from and when those funds become available are the questions on everyone’s mind. Most experts concur that both the Clean Water Fund and State Revolving Loan Fund will be cut again. There has been talk of an infrastructure stimulus but there probably won’t be any firm action until after the presidential election.

Most agree that an improved economy is essential. Some municipal personnel don’t see any relief on the horizon for at least the next six months. However, a majority of the survey respondents said they are beginning to see some signs of improvement – albeit small. “Our budget people are telling us that we should see our finances improving the back half of the year and we may finally start to see some relief,” said this Northeast respondent. “We’re budgeting to let most of the work start in mid-summer – but keeping our fingers crossed that will happen,” admitted this Florida city representative.

Survey participants anticipated that if money was available, their budgets would need to increase by more than 30 percent just to catch up from the previous three years of shortfalls.

User fees
Increasing user fees is another revenue track that many cities are finally addressing. The survey revealed that more cities either passed or are considering passing sewer/water rate increases than at any time in the past 15 years. The average time between rate increases also fell to a new low at about three years indicating more cities are biting the proverbial bullet and boosting fees.

Many respondents expressed optimism that once the presidential election is over, the country will be able to move forward regardless of who is elected. This public works director from a large Midwest city stressed. “Our state and local officials are expecting our cash flow to ease somewhat by late in the year, and are hoping that Congress can do something to encourage growth and get us some relief.”

Much-needed rehabilitation of existing systems was also cited by a large number of respondents. A common thread among city officials was concern that aging infrastructure was not going to hold up much longer without major rehabilitation initiatives. “I know I can speak for most of us on the East Coast – and probably the rest of the country as well – when I say that we’re reaching an imminent failure situation. Something’s got to give – and soon,” predicted this survey respondent.

Another by-product of the recession and ongoing budget cuts is the loss of key personnel. Several survey respondents pointed out that their cities have encouraged early retirement and, in some cases, forced retirement, in order to meet reduced staffing quotas. “We have way too many retirees,” complained this Minnesota city representative. A survey respondent from Maryland agreed. “We’re short staffed without experience personnel and, as we are able to finally start tackling projects, it’s really going to hurt us by not having proper personnel resources.”

Also a major problem perceived by city personnel is ever-increasing regulations and unfunded mandates, both at the state and federal levels.

While the growing significance of water has clearly been documented in this survey over the past few years, the severe drought ongoing across much of West and Southwest drew many comments. From Oregon (“water reserves”) to Colorado (“water, water, water”), the concern over water resources is glaringly apparent. Their paramount issue, emphasized a large Texas city official, is going to be “water main breaks if the current drought continues.”

Trenchless impacts
Increasingly, cities around the country, large and small, are discovering the significance of having trenchless options. This small Florida city respondent said that “the town (residents) is highly influential with extremely limited right-of-ways. Trenchless is our only option for rehab.”

“Speed of projects, less permit issues and river crossings” are trenchless benefits says this Maryland city official. A California respondent added that trenchless is “great for non-closures and fewer interruptions.”

A Pennsylvania city official pointed out that, for them, trenchless “can perform more work on smaller budgets.” Another respondent from Wyoming emphasized that “bursting and CIPP has reduced road repair and traffic control issues,” while this Wisconsin city official said that trenchless “saved several million dollars on sewer rehab.”

A Texas city representative related that “our find-it/fill-it SSO reduction program using CIPP and pipe bursting methods demonstrated that we can renew more small mains quicker and cheaper, by far, than our conventional open-cut construction methods.”

But not all was roses for the trenchless industry. A California municipal respondent said that “trenchless works well with sewers if everything is known and there are no obstacles underground. The main advantage with trenchless is avoidance of long lengths of open-trench excavations.”

Observed this Alaska city official, “due to the lack of competition, the costs are somewhat the same as open-cut.”

“Trenchless is used for rehabilitating 6-inch and 8-inch VCP, which makes up 75 percent of our system, based on length,” explained this California respondent. “But the biggest deterrent to using it more is ACP water pipes in close proximity. The water distribution agency will not allow pipe bursting if it’s too close to their ACP pipe.”

One of the most significant sections of the survey queries municipal personnel regarding their comfort levels with various trenchless methods they are familiar with. Many manufacturers have felt compelled to limit their marketing due to the recession. Unfortunately, that has also been a factor in the declining confidence ratings of several trenchless technologies.

Overall, 24.1 percent of cities say trenchless construction and rehabilitation methods have had a “high” impact on their operations; 39.1 percent say a “moderate” impact; and 36.8 percent a minimal impact.

On average, each city plans to replace 290 manholes in 2012, according to survey results.

Contractor performance
The survey again queried municipalities regarding their relationships with contractors and consulting engineers.

On a five-point scale with 5 being the best possible rating, contractors received a score of 3.87, tied for the highest rating ever achieved. “When you have a lot of people bidding for a little work, they really try to do a better job,” observed a Kansas city representative.

When asked about what is most important attributes desired from their contractors, 82 percent of cities cited “quality” followed by “experience” (66 percent) and “timely completion” cited by 64 percent.

This Florida respondent would like “more effective bidding with fewer change orders.” A respondent from Missouri suggests that contractors should “increase their knowledge of installation procedures and products.” This Texas city official believes that it is time for contractors and cities to “look at risk sharing.”

Many respondents also expressed their growing displeasure with what they deem are excessive and unreasonable change orders. A Pacific Northwest municipal representative urged contractors to “provide a more reasonable and honest price for quality work; don’t expect change orders to make up the margin.” Another respondent from a Texas city added “they (contractors) need to be reasonable when dealing with to change orders.”

The recession has taken its toll on staffs, costing many construction firms veteran personnel. That fact has become pervasive in many areas. “Keep experienced personnel” was essentially the demand from a large number of city officials.

An interesting comment came from a small Alaska city respondent who stressed that contractors need to “make sure they make the utilities operations staff happy with the work they do; not just the engineering staff and management.”

Consulting engineers performance
Consulting engineers also experienced a substantial jump in their job performance approval rating (one being poor and 5 being the best) to a record high of 3.75.

“Quality” was the top trait cited by municipal personnel that they seek for consulting engineers with 77 percent, followed by “productive relationships with contractors” cited by 57 percent and “understanding of new technology” cited by 40 percent.

There was also plenty of advice for improving their relationships and job performance, according to city personnel.

One of the most common suggestions municipal personnel had for consulting engineers is to keep up with modern and innovative technology. “We need reasonable, practical and affordable options. Too many times, the engineers we deal with are low on all three,” summed up this official from a large Northeastern city. A respondent from a Georgia city agreed: “We depend on our consulting engineers to work with contractors and provide us with the technology and right now that’s rarely happening. They need to forget about billable hours for once and go to a trade show like UCT where they learn about technology and innovations that can help their clients.”

Another common concern expressed by municipalities is that engineers lack field experience. Said this city official from Ohio, “engineers have gotten away from going to the field and verifying conditions.” A person from a Colorado city said “engineers definitely need to get more field experience in their organizations.” And a California respondent said simple “engineers need to do a better job by being hands on!”

There were also several comments relating to better vision and project understanding. “Understand the long-term maintenance of proposed improvements,” is very important to this Illinois city representative. “They should look at the whole project and think it through before proposing projects,” added this Pennsylvania muni official. In Missouri, a city representative pointed out that they need engineering firms to design for future access, durability and use.” And a Texas respondent wants engineers to “admit to their mistakes.”

This Oregon city employee would like “increased quality assured/quality control of project specs and drawings.” Indeed, QA/QC was another common theme for many respondents along with project inspections. “Engineers need to provide better inspection – especially with newer trenchless methods,” pointed out an official from North Carolina. (Editor’s Note: Industry association NASSCO currently offers an inspector training course for Cured-In-Place Pipe and will be launching a similar course for pipe bursting this spring.)

As with contractors, many consulting engineers have not retained some of their experienced employees for a variety of reasons. That fact has not gone unnoticed by many of the survey respondents. “We need to deal with more experienced people,” summed up a New Mexico city official.

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