Keep Funds Flowing: Pittsburgh infrastructure project underscores importance of SRFs

Pittsburgh Water, the largest water service provider in the Steel City, is working toward its goal to replace all residential lead service lines by 2027.

The utility announced the project will stimulate the Pittsburgh economy, create jobs and improve tap water quality, but such an undertaking wouldn’t be possible without assistance from federal funding.

“The state revolving fund [SRF] here in Pennsylvania, it’s called PENNVEST, has really been the lifeblood of our capital improvement program,” said Pittsburgh Water CEO Will Pickering. “The majority of our capital improvement program is actually financed using low-interest loans and grants from our SRF. What that means for customers and what it means for the public is it allows us to continue to be aggressive in replacing our aging infrastructure.”

The project, which is expected to cost $75.4 million, is mainly funded by a $69.3 million investment from PENNVEST, which includes grants that do not have to be repaid.

“What that means in terms of dollars and cents is that when we go to PENNVEST, we get a much better interest rate to finance that work,” said Pickering. “The difference between a 5% or 6% loan in the bond market and a 1% or 2% loan through the PENNVEST program — when you factor in the cost savings over a 20- or 30-year period — we are saving our ratepayers hundreds of millions of dollars. The alternative is we either do less work or put forward steeper increases to our water rates. … So it is absolutely essential that we maintain, if not expand, these programs.”

SRFs are among the federal financing programs that are facing budget cuts in the U.S. Congress. SRFs differ from other loan programs; as SRF loans are paid off, the funds are reallocated to support other projects — hence the revolving nature of the program — making funds self-sustaining over time.

For Pittsburgh, the benefits far exceed replacing service lines. “It is estimated that the engineering and construction activity associated with the replacement of water mains and removal of lead service lines will generate over $112 million in economic output,” officials said in a press release, “and create over 500 jobs that are directly related to the project, generated through business-to-business purchases, and stimulated by supply chain spending.”

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