here for the
Testimony of Mark Rounsavall
Director, Rural Community Assistance Program of the
Community Resource Group Inc.
Before the Subcommittee on Water Resources and the Environment
House Transportation and Infrastructure Committee
Meeting the Nation’s Wastewater Infrastructure Needs
March 19, 2003
Chairman Duncan, Ranking Member Costello, thank you for the
opportunity to testify before you today on the need for wastewater
infrastructure for rural communities. My name is Mark Rounsavall and I
am the Director of the Southern Rural Community Assistance Program (RCAP)
operated by the Community Resource Group Inc., (a private non-profit
organization with headquarters in Fayetteville, Arkansas). Our RCAP
operates in seven southern and southwestern states, including Tennessee,
Arkansas, Alabama, Louisiana, Mississippi, Oklahoma and Texas. I am
pleased to be here today in support of your efforts to secure more
assistance to communities throughout the country to help meet their
wastewater infrastructure needs.
The RCAP mission is to help rural Americans improve their quality of
life through ensuring the availability of safe and clean water. Since
its’ founding in 1969, RCAP has worked with the federal and state
agencies to help people living in small communities address their
drinking water and wastewater treatment problems. The RCAP network
includes field staff in all states and Puerto Rico, six regional offices
with multi-state service areas, and a national office located in
Communities in greatest need of assistance in meeting their
wastewater infrastructure needs are typically very small communities
with fewer than 3,500 people and found in very remote rural areas.
Several problems confront them, including being geographically remote
from easy access to equipment, lack of staff capacity to deal with
regulatory compliance issues, and lack of financial resources to install
and operate systems. The RCAP program works in every State to provide
technical assistance to small, rural communities to help them meet their
wastewater infrastructure needs.
Mr. Chairman, we applaud your efforts during the 107th Congress in
introducing HR 3930, Water Quality Financing Act of 2002 and including
in it a $75 million annual authorization for a comprehensive technical
assistance program to assist rural communities with their wastewater
infrastructure needs. This authorization would provide rural communities
greater access to the type of technical assistance RCAP and others
provide. Technical assistance is desperately needed by these communities
and is the key to solving the wastewater needs in rural areas. We hope
this provision is reintroduced in this year’s legislation.
RCAPs help small communities and small wastewater treatment utilities
in many ways. RCAP staff provides technical assistance to assess
wastewater treatment needs, we help them prioritize these needs, and
help develop and implement a plan of action including steps necessary
for compliance with the Clean Water Act. RCAP's on-site technical
assistance and training focuses on: facilities development, management
and finance, operations and maintenance, planning and development,
capacity building, education and training, source protection, and
funding for small and very small systems.
With funding from a range of public and private sources, RCAPs
delivered services to more than 2,100 rural communities last year.
Ninety percent of these communities had populations of 2,500 fewer.
Leveraging approximately $25 of additional funding for every $1 dollar
received by RCAP, the RCAPs direct public investments to produce lasting
During this past year in Tennessee, RCAP assisted over 12,000
households in 14 communities address their water and wastewater needs.
Wastewater Needs in Rural Communities Are Great
The need for greater federal assistance for wastewater infrastructure in
America’s small rural communities is indeed great. Consider these
• Nearly 1 million rural households do not have indoor plumbing
• More than 70% of our nation’s housing units that lack complete
plumbing are in small communities
• Water systems in communities serving fewer than 10,000 residents are
more than twice as likely to violate drinking water standards for
microbes and chemicals than systems serving more than 10,000.
The Environmental Protection Agency estimates that $13.8 billion is
required to meet clean water needs of small communities of 10,000 or
fewer nationwide. In 1996, the State of Tennessee and the EPA estimated
that in Tennessee alone $311 million will be needed through 2016 to just
meet the wastewater treatment needs of systems serving 10,000 people or
less. For systems serving fewer than 3,500 people, the estimated cost is
These numbers are indeed daunting. The numbers become even more
daunting when one considers the disproportional burden small communities
carry compared to larger systems: households in small communities bare
four times the costs of installing and maintaining water and wastewater
systems than do households located in larger communities. Small
communities simply do not have the taxpayer base to support the amount
of resources that will be required over the next twenty years.
Unique Challenges Faced By Small Communities
Small communities face several unique challenges in meeting water and
wastewater needs compared to larger communities. Small communities often
rely on government loan funds and grants as the sole revenue available
to meet infrastructure needs. As stated by the Small Town Task Force,
established by Congress in 1992 to advise EPA on how to work better with
small communities to improve environmental compliance, “Small towns are
different from large towns – not just smaller.”
The Small Town Task Force found that technical and administrative
capacity is severely limited in small towns:
• Small towns, as a general rule, have no full time officials and little
or no professional staff
• Small towns, as a general rule, cannot attract or support private
technical businesses, and
• There are few, if any, training opportunities for the staff or town
council members of small towns.
Financial resources are severely limited for small towns:
• Almost by definition, small towns have severely limited tax bases
• Because of limited opportunities for young people, small towns tend to
have disproportionately older populations and thus incur higher social
• Small towns tend to have fragile, heavily concentrated economic bases
• Infrastructure costs fall disproportionately on small towns because
entry-level costs must be distributed over a smaller base, and
• Limited tax bases mean limited budgets.
Finally, small communities often lack the political clout on the
state and national levels to leverage greater government focus on their
Small Communities Cannot Shoulder the Burden Alone
For all these reasons, small communities cannot be asked to shoulder the
burden alone in trying to raise the capital necessary to meet the
current and future drinking clean water needs of their communities.
While State Revolving Loan Funds (SRF), the United States Department of
Agriculture (USDA) Rural Utility Services Loan and Grant programs and
CDBG funds provide some support, the funding for them are inadequate.
A recent analysis conducted on behalf of the RCAPs indicates that
while most States distributed Clean Water SRF funds to very small
communities under 3,500 over the past five years in proportion to the
demonstrated need, nearly 30% do not. The study found that if those
States were to have distributed funds according to the demonstrated
need, very small communities would have received approximately $240
million more than they actually did to help them obtain adequate
wastewater infrastructure. The data was based on the 1996 EPA needs
assessment survey and many States that were assessed did not include
Separate State Estimates that track wastewater needs in non-sewered
communities. Many small rural communities are non-sewered and therefore
are not counted by many States, or by EPA.
The Rural Community Assistance Program does not dispute the numbers
that EPA has identified as to what small communities need to meet their
wastewater infrastructure needs. Our staff has countless of anecdotal
stories to back-up these statistics. It is clear, small community
wastewater treatment systems are in need of help.
HR 3930 went a long way toward recognizing the unique needs of small and
very small communities and RCAP applauds these efforts and continues to
support them. Both the technical assistance provision and the simplified
procedures provision would provide a great deal of assistance to rural
In addition to the provisions mentioned above, RCAP would like to
offer three measures that we believe would further strengthen the Clean
Water SRF program.
1. Revolving Fund Program for Small Systems: The first recommendation
addresses a very real financing gap that exists for small communities in
their efforts to secure adequate wastewater infrastructure. Small
communities often cannot afford costs associated with planning and
developing systems, such as engineering studies, feasibility studies,
environmental assessments, test wells, infiltration and inflow studies,
etc., which prevent them from submitting SRF applications in the first
instance. Pre-development items can cost a community upwards to $50,000
or more and for very small communities these figures are
cost-prohibitive. While under the SRF, reimbursement is available for
these expenses, communities do not have this cash on hand nor can they
wait several years for a project to be approved before being reimbursed.
Another financing gap exists for small communities that experience
emergency situations, such as a broken pump, a water line or sewer line
break, a tank rehabilitation and painting, or that need of a simple
line-extension or other small capital improvement. While large systems
typically have reserve accounts to address these situations, small
systems typically do not. The costs of these repairs or line extensions
are often no more than $50,000 or $70,000 dollars, however for small
communities the figure might as well be $1,000,000. The Clean Water SRF
does not provide financing in these situations: the average SRF loan is
larger than $3 million and the transaction costs of administering
several dozen small requests from rural areas are just too high.
RCAP recommends that a small revolving fund program be established as
part of the Clean Water SRF to assist communities with pre-development
costs and small system upgrades and critical capital improvements. The
revolving funds would be capitalized by an EPA administered grant
program and would provide up to $100,000 in financing for
pre-development costs and small system repairs to small communities at
below market rates and with a relatively short repayment term.
Non-profit intermediaries would administer these funds.
The Southern RCAP has operated a loan fund for these purposes since
1992 and has had a great deal of success. We saw that there existed a
“credit gap” for smaller dollar needs in small utilities. It appeared to
us that it might well be easier for a utility to get a million dollars,
than it would be to find a loan of $75,000. Community Resource Group
borrowed the money to capitalize a small loan fund, with a $2 million
loan from the Ford Foundation (which we are about to begin to repay),
and a $1 million dollar loan from the USDA/Rural Development
Intermediary Re-lending Program. Since the loan fund began, CRG has
provided over small 140 loans to utilities and small communities- the
average size is $57,000 – and cover everything from engineering design
cost, lines extensions, test wells and smoke testing, to replacing pumps
and lift stations. We can get a loan approved and money out the door in
as little as two weeks. This is very advantageous, particularly in the
case of an emergency. Last year we were fortunate enough to be certified
by the Treasury Department as a Community Development Financial
Institution, and we were lucky enough to be a awarded a $1 million
dollar equity grant to obtain additional capitalization for this fund.
We’ve had only 1 community default in the ten years since we began
operating the loan fund. Three other RCAPs operate similar funds with
the same degree of success.
An example of the type of situation a small systems loan fund could
address is illustrated by a recent loan we made in Tennessee. We made a
loan for $125,000 to the North Rhea County Utility District in Tennessee
in October of 2000. There were about twenty-five homes near the Rhea
County system that were on private wells. During the summer, most of
those homes had their wells go dry. At others, the private wells serving
some of the homes were found to contain dangerous levels of heavy metals
in the water. With the $120,000 loan from CRG and RCAP, the Rhea County
Utility District was able to extend their water lines to each of these
homes and provide them with first-time public water service. While this
example illustrates and drinking water project, situations arise with
wastewater systems that require similar small infusions of cash.
In 2002, we provided the Town of Lake Providence $575,000 in interim
financing to begin preliminary work including engineering, surveying and
television inspection of the sewer system in preparation for a major
wastewater project. This system provides water and wastewater services
to approximately 2300 very low and moderate income families in the Lake
Providence and East Carrol Parishes.
2. Definition of system sizes: The second recommendation is that
statutory definitions be established for small and very small systems.
We recommend that a size definition for small systems is established for
systems serving 10,000 or fewer population, and that a definition for
very small systems is established for systems serving 3,500 or fewer
population. We believe that establishing statutorily defined size
definitions provide policy makers greater clarity when setting policy
for these systems and would minimize confusion that exists when
discussing the needs of a particular size of system.
3. State SRF distribution formula: Require that States demonstrate
that 5 years from date of enactment of legislation and every five years
thereafter States distribute funding to small community systems in
proportion to the need documented in the latest needs assessment survey
required under sec. 516, with a minimum of 15% set aside for small and
very small communities. Currently there are no requirements, however
States receive SRF allocations based on needs assessment formula.
Based on 1996 needs assessment data, CW SRF programs fell short of
meeting the need for very small rural communities in 14 States during
the course of the past five years. This shortfall amounts to nearly $240
million in additional dollars that very small communities should have
received had State allocations been distributed to them according to
their need. The needs assessments form the basis by which States receive
SRF capitalization grants. Small systems serving populations of less
than 10,000 account for 85% of all public systems and carry four times
the household ratepayer burden for operating and maintaining their
wastewater treatment systems.
It is clear that small communities serving fewer than 10,000 people have
critical water and wastewater needs that must be met. Communities in
greatest need for water and wastewater assistance are typically very
small communities with fewer than 3,500 people and found in very remote
rural areas. Several problems confront them, including geographical
remoteness from easy access to equipment, lack of staff capacity to deal
with regulatory compliance issues, and lack of financial resources to
install and operate systems.
These communities cannot meet their wastewater needs alone. We must
take advantage of the current focus on our nation’s water supply to
provide sufficient resources to small communities to ensure that their
water supplies are clean, safe and affordable.
But money is not enough. Small communities need technical assistance
and other mechanisms to work through the myriad of financial, technical
and regulatory issues they must deal with in order to address their
wastewater infrastructure needs. We hope that Rural Community Assistance
Programs and other similar technical assistance programs can be a part
of the solution Congress enacts to deal with these issues.