Many water utilities, faced with complex budget issues and a lack of funds for new or upgraded water infrastructure, are examining how financing can enable them to renew or replace outdated water equipment.
In a new article in the AWWA Journal, a publication of the American Water Works Association, Brian DePonte, senior vice president of energy solutions at Key Equipment Finance, lays out approaches to financing water infrastructure equipment.
These topics include:
- Managed services agreements (MSAs)
- Tax-exempt lease purchase financing (TELP)
- Lease purchase financing
- Debt coverage ratio
- Debt service reserve
- End-of-term flexibility
"As any water industry veteran can attest, bond financing and state revolving funds were the only ways to pay for water utility equipment upgrades 20 years ago. However, as technology evolves to meet the needs of water utilities, financing options are becoming available to help pay for these solutions," DePonte writes.
The article also details the ways in which financing has become more flexible and convenient, including through bundled agreements that include equipment, services, software and training.
Water equipment financing options can involve less paperwork and take less time for applications and approval than typical bond issues. They also can save money by eliminating the fees associated with cost of issuance (COI).
The six-page article also advises on:
- pitfalls to avoid
- service agreements
- creating new sources of revenue
- questions to ask when selecting a financing partner
The full article is free to AWWA members or can be purchased by non-members here: