“Can you tell I’m excited about this?” asks Wausau mayor Katie Rosenberg as our call comes toward the end.
You absolutely can: Rosenberg leaves you in no doubt that while a project agreement to replace water pipes may sound like the kind of everyday, humdrum activity of a city council, this latest deal is different - and has the chance to change lives across the US.
The mayor is discussing the deal that she agreed with a team led by Community Infrastructure Partners (CIP) to utilize the first Community-Based P3 (CBP3) in the country, to replace over 8,000 lead service lines (LSLs) across the city over the next five years.
The deal is not only pioneering, but transformative for the residents of Wausau. “When we talked about replacement schedules in the past, we were looking at replacing 40-80 LSLs per year,” says Rosenberg. “That is how we have been doing things since the 1990s.”
This agreement blows that timeline out of the water and introduces the kind of pace that would be simply unthinkable without using private sector innovation, a range of local and federal funding streams, and the can-do attitude of Rosenberg and the wider city authorities.
For Shawn Kerachsky, president and chief executive of CIP, the positivity from the city authority and its willingness to explore new and innovative avenues was clear from early in their discussions - and gave him and the CIP team the confidence to work on developing a solution that could fit the needs of the Wausau community.
“I first met the mayor at the White House, during the meetings to discuss the replacement of LSLs,” Kerachsky says. “She was clearly creative and innovative, and willing to try things.”
In some ways, Wausau’s predicament with lead pipes was similar to that faced by Prince George’s County and its schools: a need to replace aging infrastructure that is no longer fit for purpose, while also ensuring that all areas of the community are properly looked after - regardless of the economic position. By choosing a P3 route, in both cases the authorities have been able to significantly speed up delivery, by providing the replacement infrastructure simultaneously over a shorter period of time, compared to the other option of simply continuing to build incrementally, as annual budgets allow.
However, Wausau’s choice of a CBP3 is not simply premised on speed: both the city and CIP believe there will be significant cost savings associated with delivering this project at scale. When initial estimates were produced last year, for a 15-year replacement program, the figure was around the $80m mark, excluding inflation. More recent analysis for CIP has suggested that would be over $100m with the impact of inflation and supply chain costs today.
However, Kerachsky says his company is comfortable that it will deliver the program for “well below” that figure - and in just five years. In fact, he suggests the cost is likely to be lower than the original $80m mark.
The hope for Kerachsky, his team and others in the industry is that Wausau’s bold decision to be the first mover in this market and take up the CBP3 option will encourage others to also take this route. As word spreads over what is possible, there could be many more authorities looking to take advantage of the CBP3 model.
Having been established by the Environmental Protection Agency (EPA) over 10 years ago, the CBP3 route has long failed to get any traction, largely because there was no obvious public sector funding to support it. However, Kerachsky explains that the advent of the Infrastructure Investment & Jobs Act (IIJA) has changed that, unlocking a funding stream that enables the model to work well for projects such as the one planned in Wausau.
“This is a microcosm of what people are seeing around the country,” says Kerachsky. “There is so much need but there have been so few dollars [to tackle it].”
If other cities want to replicate this approach, however, they will need to be quick: this funding stream is only available for five years under the IIJA, so programs will need to be progressed at pace if authorities are to secure the funding they need.
And while there are clearly more opportunities for this type of approach to be used elsewhere across the country, there are specific reasons that made Wausau the ideal candidate to be the first. To begin with, as already mentioned, Rosenberg is clearly keen to be innovative and try something that moves the dial. She references her background in business, working for Foot Locker subsidiary Eastbay, as an important part in being able to come at challenges from a different angle as mayor.
“There is a safe way to do things, but also a way to do something new and cool,” she says.
Furthermore, Wausau had already agreed to invest in a new water treatment facility - which would result in a rise in rates - when it became clear that the city’s wells had elevated levels of PFAS (per- and polyfluoroalkyl substances - a large, complex group of synthetic chemicals). The city was faced with further need to upgrade and improve its water supply, but a conventional solution would have meant returning to citizens to tell them their rates would be going up even more.
“The goal is to get as much of it paid for by using the IIJA and IRA dollars, and through foundations and charities, as possible,” Rosenberg explains.
One of the longstanding difficulties that all authorities have faced when trying to tackle LSLs is that, while the public sector pipes can often be replaced as part of standard maintenance work, the pipes that connect to people’s homes are classed as private, and as such there has rarely been any funding stream to support that work. While homeowners may be asked if they want their pipes replaced when the public connections are being dug up, the cost to the private individual is often prohibitive.
Kerachsky says that is one of the benefits of the CBP3 model, creating that funding stream from investment such as the IIJA that can subsidize replacements at private dwellings. In fact, he says the first year of the new program will be almost entirely focused on replacing the private pipes, to tackle that specific backlog.
No wonder Rosenberg is excited about being the first mover on this project: as Kerachsky points out, by being ahead of the game on applying for federal funds, there is an opportunity to claim a bit more of the pie during the first year of the program, as other authorities continue to get their bids ready and sit on the sidelines to see how schemes can be delivered effectively.
“It is perfect timing,” Rosenberg concludes.
Kerachsky says what is happening in Wausau is being watched with interest by others. With the prospect of far speedier delivery, at lower cost, it seems unlikely that the Wisconsin city will be the last to utilize the CBP3 concept.