Chris Fierros, Chief Operating Officer of Midwest Assistance Program, the Midwest RCAP, testified March 23 before the House Agriculture Committee’s Subcommittee on Rural Development, Biotechnology, Specialty Crops, and Foreign Agriculture. The subcommittee’s Capitol Hill hearing was to review efforts to improve rural water infrastructure.
Representing the national RCAP network, Fierros was on a panel of five people who testified during the hearing. She spoke of the challenges that small, rural communities have in meeting their water and wastewater needs and how the U.S. Department of Agriculture’s Rural Development program provides services and financing that benefit communities, public health and the environment.
“There is a point at which an infrastructure project is simply not affordable without federal assistance. Without grants and subsidized long-term loans, most projects in rural America – many of which are only marginally affordable even with these funds – are simply not feasible,” Fierros told the subcommittee. She provided examples of RCAP’s work in communities in her statement.
Fierros’ recommendations to the committee were to increase annual appropriations for Rural Development programs, improve the grant-to-loan ratio in the Water and Waste Disposal Program, and increase technical assistance funding to allow RCAP and other providers to keep pace with growing demand.
(See Fierros’ full statement below.)
Also testifying at the hearing was Jonathan Adelstein, Administrator, Rural Utilities Service (RUS) of the U.S. Department of Agriculture. In his statement, Adelstein cited RCAP as an organization of technical assistance providers that RUS has leveraged to implement the American Recovery and Reinvestment Act.
“In early March 2010, we awarded a $5 million Technical Assistance and Training Grant, made possible by ARRA, to the Rural Community Assistance Partnership,” said Adelstein in his testimony. “RCAP’s field teams will continue our efforts to identify communities with water and wastewater infrastructure needs, particularly those in areas of persistent poverty. The technical assistance providers have been a tremendous resource for recipients of RUS funding for rural water and wastewater infrastructure.”
The U.S. Department of Agriculture's Rural Utilities Service (RUS) administers programs that provide loans, grants, loan guarantees and technical assistance for drinking water, wastewater, solid waste and storm drainage facilities in rural communities with populations under 10,000 people.
“The majority of community water systems in America serve small populations, which makes their long-term health vital to those of us who represent rural constituencies,” said Subcommittee Chairman Mike McIntyre (D-N.C.). “At today's hearing we heard how RUS is meeting the demands for clean water and how they are assisting communities like those on our second panel, who know the importance of clean water systems to the growth of their communities."
Testimony to the
Subcommittee on Rural Development, Biotechnology, Specialty Crops, and Foreign Agriculture
Committee on Agriculture
United States House of Representatives
Christina Fierros
Midwest Assistance Program (the Midwest RCAP)
Midwest Assistance Program (the Midwest RCAP)
March 23, 2010
Thank you, Chairman McIntyre and Ranking Member Conaway, for the opportunity to address the committee. USDA Rural Development programs play a vital role in rural America, and we applaud your efforts to ensure that they are working as intended and having an impact, particularly in today’s economically challenging times.
My name is Christina Fierros. I am the Chief Operations Officer of the Midwest Assistance Program (MAP), based in Minnesota and serving the states of Iowa, Kansas, Minnesota, Missouri, Montana, Nebraska, North Dakota, South Dakota, and Wyoming. MAP is part of the national RCAP network, whose regional service providers help small, typically low-income, rural communities address water, wastewater, and other community development needs. The RCAP network provides technical assistance and training that build the capacity and sustainability of small systems and assist them with the development of needed facilities. The RCAP network serves more than 800 communities every year with funding provided by USDA’s Technical Assistance and Training Grant Program under its Water and Waste Disposal Program.
The RCAP regional partners also make use of other Rural Development programs to support comprehensive community development. As such, we work with Rural Development programs and staff on a daily basis.
The technical assistance that RCAP provides serves as a bridge between Rural Development and communities. RCAP assists not only with funding applications and every phase of the project development process, but also provides training and technical assistance after construction is complete, helping communities understand how to properly manage and operate their system in a financially sustainable manner.
One example is Laporte, Minnesota, a town of 150 people, where local officials discovered that septic systems were failing and contaminating individual water wells, and that some of their wells were also contaminated with petroleum. They faced two potentially expensive infrastructure projects simultaneously. The town contacted Midwest Assistance Program for assistance. MAP staff worked with them over a number of years to evaluate alternatives, find an engineer to design an affordable system, prepare funding applications and fulfill the related requirements, and follow the project to completion of new water and sewer systems.
Rural Infrastructure Needs
The infrastructure needs of rural America are staggering. The most recent needs surveys by EPA estimate small systems and rural areas need $34 billion for drinking water and $69 billion for wastewater over the next 20 years.
Nationwide, small systems constitute over 80 percent of all public drinking water systems and 75 percent of public wastewater facilities, though they account for a much smaller share of the total population served. Small utilities face distinct challenges in operating and improving their facilities; they have fewer customers among whom to spread costs – including fewer large volume users – making it difficult to achieve economies of scale found in larger systems. As a result, customers in small systems pay, on average, three times more than their urban counterparts for water and wastewater services, according to EPA data.
RCAP is committed to educating local officials about the importance of sustainability and asset management – maintaining infrastructure investments, encouraging local responsibility, and ensuring that residents pay their fair share for services. RCAP provides training to utility boards and staff on topics such as budgeting, rate-setting, and system management. However, there is a point at which an infrastructure project is simply not affordable without federal assistance. Without grants and subsidized long-term loans, most projects in rural America – many of which are only marginally affordable even with these funds – are simply not feasible.
Consider the case of West Odessa, Texas, an unincorporated area outside Odessa where individual wells have extremely limited production combined with high levels of contaminant from oil field by-products. With the help of Community Resource Group, the Southern RCAP, residents formed a legal district to tackle the problem and developed a plan to construct a community system and purchase water from a nearby system. The West Odessa Water Supply Corporation secured funding from USDA, but construction bids came in more than double the estimated cost, so they have struggled to obtain additional funding and keep the project affordable for residents.
USDA Rural Development
USDA Rural Development, through the Water and Waste Disposal Loan and Grant Program, is the “lender of last resort” for rural water and sewer systems. The program enables communities to complete infrastructure projects that are critical to public health, the environment, and future development.
Rural Development staff on the ground do a tremendous job working with communities and unincorporated areas that have water or wastewater funding needs. They provide guidance on application and funding requirements, process applications, service loans, and steer communities to technical assistance providers such as RCAP, when needed. Together, these services provide crucial support to rural communities constrained by limited resources.
The American Recovery and Reinvestment Act
USDA’s ARRA funding has provided a vital boost to rural America to meet infrastructure needs. Over $3 billion is being made available under the Water and Waste Disposal Program alone. Rural Development staff has worked diligently to process applications and award loans and grants, and as we enter the 2010 construction year, many rural communities will see the positive impact of that investment.
For example, Priest River, Idaho, with a population of about 2,000, was working to upgrade its water system, including new distribution lines, an elevated storage tank, and drilling a well to eventually replace a surface water source. However, the nearly $6 million project would result in unaffordable user rates for residents unless federal assistance was provided. Rural Community Assistance Corporation, the Western RCAP, worked with local officials to establish water rates that would be reasonable, yet cover debt service for the project. As a result, USDA Rural Development awarded $4.3 million in ARRA grant and loan funds and the State committed $600,000 of CDBG monies to complete the project. When the new system is operational, Priest River will have adequate fire flows and water pressure, reduced operating costs (because ground water is cheaper to treat than surface water), and a distribution system that will serve them for decades.
Recommendations
Solving the problems facing rural communities requires a multi-pronged approach that includes adequate funding, along with steps to ensure that grant funding is available only to the neediest communities and that technical assistance is available to ensure that the funds are distributed where they are most needed. Specifically, RCAP offers the following recommendations:
- Increase annual appropriations for Rural Development programs. Since 2003, funding has been reduced by 25% for the Water and Waste Disposal Program (excluding ARRA). While it may be unrealistic to annually fund programs at ARRA levels, funding should be restored to pre-2003 levels.
- Improve the grant-to-loan ratio in the Water and Waste Disposal Program. Grant funding for water and sewer projects, as a percentage of the overall allocation, declined from 39% in 2003 to 26% as of 2006. As previously noted, grant funds are critical to help defray the enormous infrastructure costs for the smallest and lowest-income communities. The 2008 Farm Bill authorized lower interest rates, which helps make projects more affordable for communities. However, the additional loan subsidy further reduces available grant funding, and many low-income communities simply cannot develop feasible projects without grants. If the trend of reducing the grant-to-loan ratio continues, the program will cease to be a viable option for most small communities, especially those serving low-income populations.
- Increase technical assistance funding to allow RCAP and other providers to keep pace with growing demand. There is far more demand for assistance than can be met with existing funding. These projects tend to be time and labor-intensive, as they are typically the smallest and, hence, the most difficult to fund, communities.
In addition, stagnant administrative budget levels in recent years have resulted in fewer Rural Development field staff. Though the agency has done an impressive job in compensating for these losses, it has done so, in part, by relying more heavily on technical assistance providers to work with applicants to complete the myriad paperwork and other funding requirements.
Thank you for considering my testimony on Rural Development water programs and the ARRA and thank you for your commitment to meeting the needs of rural America’s communities.