Water & Economic Development Nicholas Willis, Program Manager Environmental Finance Center at Wichita State University Presented: October 28, 2014 NADO.

Water & Economic Development

Nicholas Willis, Program ManagerEnvironmental Finance Center at Wichita State University

Presented: October 28, 2014NADO Research Foundation Conference on:

Linking Water Infrastructure to Community and Economic Development in Smaller Places

Headlines• “Water Main Break Cripples Business at 12

Tideflats Companies.” The News Tribune, Tacoma, WA. October 22, 2014

• “Amid California’s Drought, a Bruising Battle for Cheap Water” LA Times, October 21, 2014

• “Oklahoma’s Dwindling Water Supply Takes Economic Toll on State, Officials Say.” The Oklahoman, October 23, 2014

Why the focus on water? Unlike land prices, highways, airports, waterways,

labor pool, interest rates, existing business ecosystem, local leaders have a lot of control of the water supply.

Local leaders deal with water and sewer frequently, may overestimate its importance in others’ minds.

Most cities can – and many do – offer economic development incentive rates on utilities, including water.

Economic Development Rates• Hidden subsidy & almost certainly minor in

location selection• Vast majority of systems are underfunded – is

it wise to make them more so?• Someone has to pay• Eats up water & sewer capacity• Encourages inefficient operations– Water & Energy are linked

Car Wash Example• One of most water intensive businesses• Very little employment per gallon• 70 gallons is typical automatic car wash– Less than 70 cents in water and sewer charges

• If you incent – make sure it is beneficial to citizens. – Car washes, hotels, restaurants would all fail

But/For test.

Site Selection• Water needs are not

in top 15 list for selection factors

• Water is minor expense for almost any business compared to payroll & materials

Hays, KS

• Source: Wikimedia Foundation

Hays, KS Water• Two alluvial (streamfed) aquifers• Renewable• Drought Prone, neighboring Ellis & Victoria still ban

outside watering• 22 inches of rainfall on average.• 14 inches in 2012• 36 inches net evaporation• Most plants common in eastern Kansas grow well

with a lot of supplemental irrigation

Hays Historical PopulationCensus Pop. %±1870 320 —1880 850 165.6%1890 1,242 46.1%1900 1,136 −8.5%1910 1,961 72.6%1920 3,165 61.4%1930 4,618 45.9%1940 6,385 38.3%1950 8,625 35.1%1960 11,947 38.5%1970 15,396 28.9%1980 16,301 5.9%1990 17,767 9.0%2000 20,013 12.6%2010 20,510 2.5%

Est. 2013 21,038 2.6%U.S. Decennial Census

On ground experience• Hays decided to not pursue certain high water

using industries.• Hays had no problem meeting demands from

expansion of service industries.• Hays optimized existing resources• Hays has a diversified economy with two

major employers– Fort Hays State University– Hays Medical Center

Historical Water Efforts• Golf Course & Ballfields use 100% effluent• 3000 toilets replaced in early 1990’s• Time of use irrigation restrictions & runoff

prohibition• Tiered water rate structure• Most parks are not irrigated• Wellfield revamped to increase storage in drought• Federal appliance standards

Recent Water Efforts• Developed “all of the above” strategy• Examined existing uses– New houses using more water on per capita basis

than allowed by water rights– Determined new commercial buildings were being

designed with landscaping from eastern KS• Treat equally– No new out of town customers allowed because

laws do not apply to them.

More recent efforts• Charge more where excess use occurs– Irrigation rate doubled after a sensible amount

• Led by example– Converted part of park to irrigated native

Buffalograss– Replace city plumbing fixtures with most efficient

models• Regulate sensibly– Capped irrigated areas– Adopted IAPMO Green Plumbing Code

Water Conservation Program• 1 full time staff person• Education• Incentives– Toilets– Urinals– Showerheads & aerators– Soon lawns

• Expertise

Hays Growth Concentrated in Retail, Services and non-water

intensive manufacturing• Hays Med• Hess Services – oilfield manufacturing• Fort Hays State University• Glassman Corp – HVAC manufacturing &

service• Nextech Wireless

Think of water productivity• Hays bank branch moved to new location.• Went from minimal drip irrigation to greater

than 50,000 square feet in cool season grass.• What benefit to community?• Can Hays support growth when existing jobs

begin to use more water?• Massive water use completely unrelated to

work.

A Cautionary Tale• City of Russell, KS is east of Hays.• Mid 1990’s a gluten plant was built.• 2001 ethanol plant constructed• 70 full time jobs• Both reliant on city water• Russell long a water stressed community – Water supply is more than 20 miles away

Tale Continued• Outdoor water use prohibited from July 2012

to October 2014– Plant allowed to source from nearby Rural Water

District– Plant underwent significant, award winning water

conservation efforts• What kind of impact did this have on other

businesses, home building & eco devo efforts?

Russell Cont…• Company planning to capture CO2 from

ethanol plant and use for enhanced oil recovery

• Perfect example of what is desired in economic development – waste from one creates value added good in another

• But at what cost to the rest of the community?

Recipe in Hays• Be lucky with location– UPRR, I-70, Land Grant for FHSU, oilfield

• Do not pursue opportunities you cannot support – no ethanol, packing plants, etc.

• Allow for local businesses to thrive• Take advantage of assets/opportunities which

are available– Ag, oilfield, professional services for NW KS

Takeaways• Water is necessity, growth does not have to be

water-intensive• Hays did well with local entrepreneur growth• Hays has avoided water intensive industries• Focus on saving water & get rates right• Think several steps ahead regarding whatever

are your town’s limiting resources• Water use is everywhere– Sensible regulations & limits needed