New Article Published in WQP Magazine: Where to Turn for Business Succession Planning

See the full article published here:https://www.wqpmag.com/educationtraining/where-turn-business-succession-planning

It is oftentimes said that in the water industry the only thing our coworkers and colleagues fail at is retirement. Every day, for months, years and decades on end, those of us privileged enough to work in this space come to work and ensure that clean water reaches the households and businesses that need it, and dirty water gets cleaned before being sent back into the environment. And yet, as we all know, 2020 and 2021 have reminded us that the only constant in life is change.

The water industry is in the midst of a giant shift — not just due to COVID, politics or technology — but due to demographic destiny. The “Silver Tsunami,” that humorous refrain we all speak about as we look around industry conferences and see a sea of grey hair, has only accelerated over the past year as individuals across the country have decided that now is as good a time as any to begin the process of retiring. And, while the potential lack of trained, certified water and wastewater operators tends to receive the most attention in this regard, it is clear that the retirements of small or medium-sized business owners potentially poses the greatest threat to the future health of this industry. Who is going to transport those chemicals when an owner retires? Who is going to replace those pumps when an owner exchanges his/her line card for golf clubs? If retirement is on the horizon or if a second generation is unable or unwilling to be around for transferring ownership, then now is the time to begin thinking about the future of the business.

According to the California Association of Business Brokers, retiring Baby Boomer business owners are expected to sell or bequeath $10 trillion worth of assets over the next two decades, currently held across 12 million private businesses. The numbers in the water industry correspond with this broad national trend. According to a 2010 report by the American Water Works Association (AWWA), 30 to 50% of water and wastewater utility workers will retire or quit within the next 10 years. Notably, the average age of an operator is 47 years old and the average age of a small business owner in the U.S. is slightly older at 50.

The 4 Categories of Potential Business Succession Planning
For those thinking about retirement, one fact that should provide comfort is that there are many available options to consider. As many owners can attest, investors across the country are looking to invest in water and environmental companies, with owners likely receiving an email or more per month requesting a conversation to discuss the company’s future. Prior to accepting that conversation (or deleting that email), it is important to understand who the individuals on the other end of the telephone are and what might be their motivations. Typically, individuals that approach business owners can be broadly categorized into four categories: private equity, strategics, employees and industry professionals.

Private equity firms, typically private groups of individuals that receive third-party investor money and use it to buy companies for a period of five to seven years and then re-sell, have begun to look more into water as they see how critical and steady this industry is through recession, pandemic and other issues.
Strategics, the large national or multi-national companies that many in this industry compete with, have also begun to more actively seek out and buy companies in the industry with the goal of “rolling up” certain capabilities, technologies, or regions to do business.
Third, an attractive option is for business owners to sell their business to their employees — either via a 100% buyout or a “seller’s note” where employees pay the owner over a number of years from the cash flows of the business.
The last option is to find a buyer with experience in the industry that is looking to become an “entrepreneur through acquisition” — an individual or group with committed capital looking to buy an existing water firm rather than start a new one (such as Sylmar Group).
How to Prepare for Retirement
Once an owner has decided that they want to retire and the most suitable path for doing so, it is equally if not more important to begin to think about how to prepare for this retirement and ensure the long-term success of the business and its employees. In doing so, there are two primary tasks to manage—the “financial” and the “operational.” Some owners choose to focus on one or the other, but it is important to take each into account, both for ensuring that an acquirer will provide a fair price for the legacy the owner has built, while also ensuring that as an owner transitions out of the business, the appropriate vendor relationships, customer relationships and treatment expertise can be passed along to the right parties to ensure uninterrupted service.

In an ideal scenario, it is time to begin thinking about an ownership/management transition 10 or more years prior to retirement and concurrently start to promote younger employees into management positions. As we all know, managing a sales pipeline or service network is different than managing a team. Building out this leadership team will also provide the owner with the opportunity to begin knowledge transfer (sales, water treatment, chemicals) to the next generation, think through potential growth plans and decide where one wants to leave the business for the next owner or owners. Five years out, owners should begin to transition sales and vendor relationships to other employees in order to help minimize transition risk. Importantly, at this point, it is also important to begin to get a company’s finances in order. Typically, investors will look through the previous three years of financials with a fine-tooth comb so make sure that customer relationships are in order, that the customer base is diversified so you are not overly reliant on any one partner, and potentially hire a part-time controller or CFO to help begin organizing your income statement, balance sheet, cash flow statement, etc.

Lastly, about one year out from an ideal retirement date, it is time to start reaching out to the capital partners you have spoken to over the past several years. Remember that selling is typically a six-month process (at the minimum), including several months to get a fair offer and then another several months for the investor to do his/her due diligence.

For many years, the water industry has chuckled to itself about the Silver Tsunami, without providing those with grey hairs a clear-eyed vision of what this trend means for them. At this point in time, it is important for owners to remember that they are not alone. This industry is full of people who took their first job doing well service or cleaning tanks in the 70s and 80s that now, all of a sudden, are tasked with figuring out not if they should retire, but how.

While undeniably a stressful process, owners have a variety of resources at their disposal as they think about the best way to spend more time with the grandkids or more time on the golf course. Speak with other owners that have sold in the past, talk with investors that seem to know a bit about your business/industry well in advance of deciding to sell, and read online about the do’s and don’ts of a sale process. In the end, an owner’s business is his/her baby, and ensuring that it is treated well as it grows into its next stage of development is what everyone in this process deserves.

Sylmar President Michael Warady Presents on P3 Financing for Water Projects

The annual P3 Water Summit examines how alternative project delivery methods are being used to advance critical water projects of all sizes across the country. This Summit explores innovative approaches in project design, build, risk, financing, and O&M that offer communities new ways to meet complex water, wastewater, and stormwater challenges.

Sylmar President Michael Warady was invited to share how Sylmar’s unique structure allows it to innovate in the world of P3s along with Carlos Riva, CEO of Poseidon Water, and John Joyner, Managing Partner at Capital Water Partners.

Watch the video here: https://www.youtube.com/watch?v=t6VNPx8cNfY

Sylmar Co-Founder on Water Quality Products Videocast Episode #29: Workforce transitions and Business Succession Planning

In this episode of Checking In: A Series With WQP, WQP Managing Editor Lauren Del Ciello checks in with Michael Warady, president for Sylmar Group. The conversation covers workforce transitions and business succession planning. Warady explains the options business owners looking to retire or transition in career have and highlights why it is important to start succession planning early on.

Explore WQP’s website here: www.wqpmag.com

Sylmar Group CEO Peter Brooks Writes on The Hidden Workforce Transition Underway

As water system owners contemplate retirement, they should also ponder the fate of their businesses and the options available for the transition of assets.

We are in the middle of the greatest transition of wealth, power, and leadership in the history of humanity. The retirement of the Baby Boomer generation is upending industries globally and the water and wastewater industry is no exception. In fact, it’s hitting our industry more than others. The water industry has a greater demographic challenge facing it than many other industries due to the nature of our regulatory history; the Clean Water Act and Safe Drinking Water Act have passed their 40-year anniversaries and the generation of water and wastewater professionals ushered into the industry by these momentous acts have reached retirement age. While there are tremendous efforts underway to support this transition for utilities from groups such as Baywork in the San Francisco Bay Area and the inclusion of water workforce funding support in the America’s Water Infrastructure Act of 2018, there is a whole other segment of this industry that often falls under the radar: the thousands of small businesses that supply, manufacture, service, and maintain our industrial, commercial, and municipal water infrastructure.

Across the U.S. economy, Boomers are expected to bequeath $10 trillion worth of assets over the next decade or two and across 12 million private businesses. These small businesses are spread throughout all industries, but many thousands provide mission-critical services to the water and wastewater industries. These services are often unsung or underappreciated until the service provider on the other end of the phone doesn’t answer.

Impacts Of The Transition
The results of this demographic shift are already rippling across the industry. The reality is that, for many water utilities or industrial water users, the local, reliable, 30-year-old company that you call to provide you treatment equipment, repair your valves and pumps, troubleshoot your SCADA, repair your distribution system, or supply you with critical consumables might not be around in a few years, leaving utility and facility managers scrambling for alternatives.

Competitive market theory says that other companies will step in to meet any customer need, but some amount of dislocation is bound to happen, and dislocation, service interruption, and operational downtime is not an option when you’re talking about delivering clean water or treating wastewater. Moreover, there’s no guarantee that the next-best firm will provide the same quality, responsive service, and, in any event, this will require utilities and industrials to rebid or even rebuild systems to adapt to new suppliers.

Succession Planning — For Your Whole Supply Chain
We’ve known about this transition for a while; the thing about demographics is that you can see them coming a few decades in advance. But knowing that it will happen and planning for the reality are two different things.

If you are a facility owner or utility manager, now is the time to start the succession planning — not just for your staff, but also for your suppliers and service providers. What happens if your biosolids hauler or GIS-system provider or coagulant supplier goes away? What is your product obsolescence strategy after the warranty on your new system expires and if the replacement parts aren’t available anymore? Who would you call if your go-to subject matter expert retires?

None of these is an insurmountable challenge in and of itself, but the compounding impact of multiple retirements internally and externally could leave facility owners and operators in a tough spot. The response still requires diligence, scenario planning, and rehearsing as much as any internal succession plan or emergency response plan would.

If you are the owner of one of these businesses, the questions are even more existential: How do you want to define your legacy? What dreams do you have for the future of the business after you retire and for the team and brand and reputation you’ve developed? How do you maintain the decades-long relationships with customers even after you leave?

There are a number of options available to water industry businesses with owners approaching retirement who lack a clear succession plan, some more desirable than others. Among them: liquidating and closing down, selling to a competitor or a large strategic, or selling to a financial investor. Each of these strategies has its drawbacks. Liquidation is unlikely to have a good outcome for anyone besides the buyer if the business is of high quality. Selling to a competitor or a large strategic in the industry gives owners little assurance of any respect for company culture, staff job security, or brand stewardship. And selling to pure financial investors may still require owners to stay on the job to meet lofty financial projections, but suddenly as an employee for the first time in decades. As an alternative, we at Sylmar Group offer a different path for great water and wastewater services businesses that we hope becomes the norm: We combine patient capital and water industry experience to cement the legacy of the founders of great water and wastewater service businesses, while providing management for the future growth of the business.

Whatever the path for the thousands of Baby Boomer small business owners in the water and wastewater industry at or approaching the challenge of the transition, now is the time to start planning and communicating this plan to customers who might be concerned about your firm’s longevity.

Conclusion
Demography is destiny, and we are living through the reality of this demographic fate right now. The speed of retirements of senior water and wastewater subject matter experts is only accelerating due to, among other things, COVID-19, a volatile economy, and the growing challenges of managing a modern, digital workforce. This transition shows no sign of slowing down. Our industry has faced such challenges before, but never to this extent and so suddenly. The risks of water and wastewater service dislocation, interruption, and downtime are growing, and it is the responsibility of water and wastewater utility leaders, industrial manufacturers, facility operators, and small-business owners to plan ahead and work collaboratively to make sure we don’t fall short of our duty to protect public health and the environment through the stable, reliable management of critical water resources and infrastructure.

As seen at: https://www.wateronline.com/doc/the-hidden-workforce-transition-underway-0001

The Greatest Water Transfer in History

Our country is currently in the midst of the greatest transfer of wealth in the history of mankind – not in 10 or 20 years – but today. Much has been written about the Silver Tsunami, roughly defined as the wave of water and wastewater operator retirements across the country. And yet, while every industry conference (virtual or not) reminds us about the latest operator to hang up his or her hat, relatively little attention has been paid to the challenges we face as similar retirement trends plague private businesses servicing the industry across the country.

These businesses – from membrane suppliers, to pipeline leak detection, to SCADA programmers – provide invaluable service to the water industry, yet many do not currently have a transition plan or a ‘second generation’ of ownership in place once they retire. Who is going to supply the membranes, the replacement parts, the pumps, the treatment skids when these owners close their doors?

According to the California Association of Business Brokers, retiring Baby Boomer business owners are expected to sell or bequeath $10 trillion worth of assets over the next two decades, currently held across 12 million private businesses. The numbers in our industry correspond with this broad national trend. According to a 2010 report by the American Water Works Association (AWWA), between 30 to 50 percent of water and wastewater utility workers will retire or quit within the next 10 years. Notably, the average age of an operator is 47 years old, and the average age of a small business owner in the United States is slightly older, at 50.

When people ask me my thoughts as to the greatest threat to American water and wastewater infrastructure, then, I don’t default to a lack of public financing, or decaying infrastructure, or the relatively slow rate of technology adoption, or even the repercussions of new and emerging contaminants. Instead, in my mind the greatest challenge currently facing water and wastewater utilities, industrial treatment firms, and wastewater service companies is the accelerating trend of retiring Baby Boomers. Many of these individuals, with 20-plus years of operational experience, long-standing customer relationships and mature vendor supply chains, are retiring prior to being able to pass their knowledge along to the next generation. These small, regional businesses may be known only to the most astute water industry observer, with solutions that are not headline-grabbing. Their technical expertise lies outside the realms of the latest R&D poster or paper, and yet their experience solving customer problems through operational insights have been the means by which utilities, industrials and commercial/residential owners have successfully operated their treatment systems for decades.

The solution to this issue is an industry-wide push to provide owners with an understanding on how to properly transition their business to the right industry partner, not the first capital provider, in order to help them accomplish this goal. With an industry-wide, continuing education focus not only on technical membrane and chemical treatment processes – but also on raising capital, establishing seller financing mechanisms, and shifting management – the industry can actively begin to manage this generational shift on its own terms. There are plenty of aspiring entrepreneurs within the water sector that are excited about the potential to manage and lead teams yet may not currently have the understanding of how they can compete for these acquisition opportunities with traditional acquirers such as private equity, venture capital, or strategics.

While the macro trends above clearly describe a problematic situation, discussing industry-wide retirement trends with owners doesn’t help them with how they should plan their transition. Specifically, while in the process of selling, owners have a few priorities to consider:

Ensuring that they receive a fair market price;
Knowing that whoever operates the business in their place is going to treat existing customers well;
Protecting existing staff that, for many, are second only to family; and
Maintaining the legacy of what they have built over the past several decades.

The question then, if these previous prognostications are correct, becomes how the industry should shape the response to this needed ownership transfer. When a next generation of family is not available, selling to a strategic, who will likely dramatically change the culture of the legacy firm, or a Wall Street private equity fund, with little to no operating water experience, should not be the only remaining options other than just closing the doors and walking away; instead, the default should be to find a Main Street water entrepreneur, someone with experience in the broader water industry, who will care for the business as one’s own, will have it become their going concern, and will seek to operate the company for the next several decades.

There are several options to accomplish this feat, all of which the water industry and industry associations should actively promote and educate under the umbrella of “Entrepreneurship through Acquisition,” or ETA. ETA is a business model in which entrepreneurs choose to forgo the traditional model of starting a business from nothing and instead focus on acquiring and operating an already established successful business, according to resources from Carnegie Mellon University. This ETA model manifests itself from the water industry business owner’s point-of-view in three ways. The first option, referred to as seller financing, is where an owner sells the company to trusted employees for some portion of the business’s value upfront, with the employees paying the remainder out of business profits over a set number of years. Industry associations can help owners and employees work together to determine relatively standardized timeframes, interest rates, and other terms to ensure that all parties involved are comfortable with this structure.

Another option is for owners to grant/sell employee stock ownership plans (ESOPs), where owners allow employees to buy shares, over a period of time, in order to create gradual liquidity for an owner, while respecting employee cash restraints. In this situation, owners can realistically stay on board as majority owner for a number of years even after starting an ESOP, training employees to take over, and only sell control or ownership when all parties are ready. Plenty of information is available on ESOPs online from advocacy groups such as esopassociation.org.

A third option is to find long-term and like-minded water and wastewater operators from outside the owner’s business, of which Sylmar Group (sylmargrp.com) is one, that have committed capital and the ability to acquire businesses in the sector and run them forever, building off of the legacy of founders. Focusing on these initial three levers, rather than traditional options such as private equity or strategic acquisition, will lead to a strong retention of ‘water people’ in ownership positions, while also helping increase the number of young people that want to stay in the industry as they see an opportunity to own companies without the need to start a new company from scratch. In many respects, this industry needs management and operational expertise right now far more than it needs new widgets.

For too long, the water industry has ignored the impending retirement wave of many of its best and brightest. The future of the individuals and companies that serve as the linchpins of the municipal and industrial water sector has for too long been ignored, assuming that traditional solutions and investors will inevitably fill these gaps. Yet these gaps remain wide open and we need a concerted, industry-wide effort to solve this problem in the near future. The private sector, and the water industry broadly, must begin thinking of ways to transition their businesses to their employees and to professionals with a history and experience operating within the industry. Doing so will not only ensure that clients and staff are treated fairly but will also lead to a more seamless transition to the next generation of water owners.

The water industry is unique in many ways – we’ve been around for 100-plus years and we’ll be around for the next 100-plus. But we must do much more in order to manage the backfilling of these impending wave of retirements, while ensuring that our industry continues to operate seamlessly – delivering clean water where needed, treating industrial water to maintain uninterrupted operations, and flushing away dirty waste quickly and efficiently.

Without an industry push to ensure that this happens, we risk not just a capital investment deficit, but also an existential risk that we lose the people, and knowledge, that we need to lead us into the next generation of water infrastructure.

Sylmar Group President Michael Warady on Scaling Up! H2O Podcast Discussing Workforce Transition in the Water Treatment Industry

https://scalinguph2o.com/2020/12/18/173-the-one-with-the-exit-plan/

Have you lost sleep wondering what will happen to your water treatment business when it is time for you to retire? If you don’t have an overall plan for your exit strategy, it’s time to get one. Even if you don’t plan to exit for a long time.

In this episode, Michael, President and Co-Founder of the Sylmar Group, speaks with host Trace Blackmore, industry expert and President of Blackmore Enterprises. Trace Blackmore, CWT, LEED AP, is one of the water treatment industry’s leading experts and the host of “Scaling Up!,” a podcast for water treatment experts and novices alike that is quickly becoming the go-to resource in the industry. It’s the podcast for water treaters, by water treaters.

Trace is CEO and founder of Blackmore Enterprises, an industry leader providing outstanding water treatment consultation and services to industrial and commercial customers in Metro Atlanta. He calls on his more than 25 years experience and role as a trainer with the Association of Water Technologies for an evolving list of podcast topics and industry information.

Trace is a past president of the Association of Water Technologies and currently serves as chair of AWT’s Education Committee. He credits his father, the late Ray Blackmore, for instilling in him a great respect of the water industry, and a thirst for knowledge about it.

In this episode, we talk about some different options for exiting your business when that time comes. It’s so important to be comfortable and confident in your long-term plan, and in today’s episode, we talk about how to make that happen. Enjoy!

https://scalinguph2o.com/2020/12/18/173-the-one-with-the-exit-plan/

Time Stamps

Introducing Michael Warady [10:30]
Starting The Sylmar Group [17:25]
How to plan for your business after your retirement [22:54]
What are some of the ways to valuate a business? [29:15]
Transitioning to a more formal balance sheet and income statement [33:39]
What to do when someone reaches out to you about buying your company? [37:24]
Top concerns when it comes to selling your business [40:51]
What is the first priority if you want to exit your business soon [46:41]
A real life example of one of The Sylmar Group’s customers [51:45]

Quotes

“Water is the one irreplaceable thing on earth.” -Michael Warady
“What is the type of business I want to pass onto the next owner?” -Michael Warady
“A typical sales process is a six to nine-month process.” -Michael Warady

Different Flavors for Different Uses: A One Water Framework for American Infrastructure

With drought in the southwest, flooding in the southeast and Midwest, and climate change related disasters threatening the east coast, America’s water supply today feels uncertain, if not explicitly in danger. Improving our water management plans to better sustain our current water supply needs is a necessity. One way to accomplish this is by enabling a One Water framework. The idea of One Water is not new, and yet implementing such a water management policy across the US has become increasingly difficult, due to both permitting and regulatory concerns but also due to our inability to rethink the way we utilize and deal with the natural water cycle. According to the Water Research Foundation, “One Water is an integrated planning and implementation approach to managing finite water resources for long-term resilience and reliability, meeting both community and ecosystem needs.” One water is all about managing water holistically; it is about reusing water in creative and intuitive ways and using various water supplies of varying qualities for their most appropriate uses. Working towards the innovative collection and reuse of our most essential resource is critical to ensuring that we build and maintain a human water cycle built for the future. We must not foolishly assume that we will be able to use drinking water for flushing toilets, irrigating grass, or operating cooling towers in the future. But understanding how we implement such a framework is equally as important as the framework itself.

Today, One Water is just an idea – one that utilities and cities and consulting engineers have spent millions of dollars developing reports about but have never actually implemented. And the timing between planning development and implementation is vital as we consider how technology will continue to improve over the next several decades. Los Angeles, for one, finished its planning stage in 2018 and is not projected to be fully implemented until 2040. In Carson, California, a 500,000-gallon-per-day demonstration facility to recycle Los Angeles’ wastewater has been constructed and is now being tested, potentially to pave the way for a full-fledged facility treating and reusing 1.5 billion gallons of water daily for reuse across Los Angeles. While such large-scale infrastructure lends itself to powerful headlines and political slogans, regional-scale infrastructure will likely be an impediment to, rather than a catalyst for, a truly One Water infrastructure system. Instead of building a Carson project that would require sixty miles of purple pipe to be laid through streets such as Westwood Blvd and disrupting one of the most gridlocked cities in the world to transport the purified water, it would make far more sense to deploy a series of decentralized systems across the city to supply water locally. Instead of building 10-million-gallon capacity tanks across the city to capture rainwater during the five days a year that it rains in Los Angeles, perhaps it would be wiser for the city to spend its money in ways tailored to local realities – enabling green infrastructure to more efficiently capture rainwater or financing desalination facilities to supply a drought-proof supply. Sylmar understands the merits of a One Water system yet believes that cities from Los Angeles to New York City need to better design their infrastructure to be geared towards action – focusing on near term implementation, adoption of new technologies, and adaptation to the realities of tomorrow.

More resilient, more sustainable, and more tailored water use will create a more appropriate form of infrastructure that maximizes the value of our limited water supply. The idea of One Water may seem obvious, yet its most efficient implementation feels incredibly distant. Just like there is no reason that we should be flushing potable water down the toilet, we should also not be spending on facilities that won’t be built for the next 25 years or on tanks that will have a less than five percent utilization rate. Sylmar believes in One Water’s principles and views it as an excellent framework for assessing water issues, but believes current proposals are too slow and too staid. Now is the time to make progress and to be creative as we plan a One Water system – there is too much at stake to continue to operate as we do today.

https://watereuse.org/wp-content/uploads/2018/05/SESSIO1.pdf
http://uswateralliance.org/one-water/one-water-leadership-insights-0
http://www.uswateralliance.org/one-water/one-water-leadership-insights-2
http://uswateralliance.org/sites/uswateralliance.org/files/publications/Roadmap%20Executive%20Summary.pdf
https://www.lacitysan.org/san/faces/home/portal/s-lsh-es/s-lsh-es-owla;jsessionid=zZhefphOFqYHYDpQBU-laJlbytFZrXf4gJ9u9RKiQJ7cv7bQdMzk!1385581480!-1554529358?_afrLoop=1440919166696633&_afrWindowMode=0&_afrWindowId=null&_adf.ctrl-state=iiba9maxz_1#!%40%40%3F_afrWindowId%3Dnull%26_afrLoop%3D1440919166696633%26_afrWindowMode%3D0%26_adf.ctrl-state%3Diiba9maxz_5
https://www.lacitysan.org/cs/groups/sg_owla/documents/document/y250/mdmx/~edisp/cnt031540.pdf
https://www.waterworld.com/wastewater/reuse-recycling/article/14068614/metropolitan-sanitation-districts-launch-new-water-recycling-demo-plant

The Next Frontier: Digitization of US Water and Wastewater Infrastructure

When we think about how to design, build, and operate the next generation of more resilient United States’ water infrastructure, one of the key opportunities, that will differentiate a modern infrastructure buildout as compared to the version built 100 years ago, is adoption of new digital capabilities that have already been adopted in many other industries – from telecom to energy. These digital monitoring and operational capabilities, known referred to as digital water, represent one of the greatest opportunities for US utilities to modernize their operations in the last one hundred years – providing the greatest ‘bang for the utility’s buck’.

While many water and wastewater utilities collect large volumes of data on their procedures, only 20% of these utilities believe they are able to use it effectively. But what data is being collected and why can’t it be used? Everyday water quality and quantity parameters are a stable of good utility operations, but over the past several years new digital monitoring solutions – from digital twinning to real time water quality – have emerged as new, untapped opportunities for operational improvements. And yet, as firms like Innovyze and Hach begin to build out improved digital monitoring ‘inside the fence’, a critical piece of the puzzle remains overlooked. In addition to improving digital capabilities within plants, utilities need to begin implementing digital monitoring solutions downstream, where their water is being consumed, and upstream, where water is sourced.

As water utilities begin to experience, and implement, more decentralized water systems, there is inevitability a need to begin to implement for digital solutions to monitor water after it has left the plant. At the individual residence level, homeowners now have the capability to monitor their water usage and routinely check systems for leaks behind the meter. A case study of installed systems by South East Water in Australia found leaks in greater than 10% of homes with some homes leaking as much as 51% of its daily used water. Another key technology that remains the holy grail of downstream water monitoring yet is not widely available today, is one that allows homeowners to quickly and easily test their water quality. As we think about the next ten years, there is clear evidence that a greater number of residential customers will have these technologies at their fingertips; the trick will be for utilities not to view this forced transparency as a threat, but an opportunity. Similar to decentralized systems across commercial and industrial properties, widespread monitoring at the residential level will provide utilities with unprecedented level of insight into variables such as demand, non-revenue water, and even prevalence of disinfection byproducts (DBPs). Rather than fighting the proliferation of this data amongst consumers, utilities should in fact be actively funding these monitoring systems and constantly improving utility systems based on this new information.

On the other end of the water industry value chain lies another digital water opportunity, upstream of water treatment plants and municipal supplies. New York City, as many throughout the industry know, has one of the most advanced monitoring and management programs for the Catskill-Delaware watershed, allowing the New York Department of Environmental Protection to maintain a filtration waiver on its water supply for up to 90% of flows to the taps of New York City residents. Water quality in New York’s upstream reservoirs, streams, and rivers (also known as the WOH Watershed) is tested millions of times per year (and growing) by both human and in-stream monitoring. This information collected upstream provides New York with the information to influence the behavior of nearby farmers and homeowners to protect downstream water quality – buying out homes in danger of flooding and planting trees along the edges of farms to soak up excess nutrients from agricultural operations prior to floating downstream. While many of the 42,000 water utilities across the country rightfully claim that New York’s infrastructure investment budget is larger than their own, it is equally true that mitigation is cheaper than emergency response. New York’s upstream investment in monitoring and best management practices has offset 10x greater cost in building a new filtration plant and ongoing O&M work. Utilities across the country would be wise to learn not only from New York’s example, but on upstream monitoring in general, that will allow them to integrate this additional information into a proactive water purification system that can predict and optimize water treatment based on water flowing from upstream. Spending to upgrade digital water monitoring systems upstream will reap huge benefits both for utility cost savings as well as customer water quality satisfaction.

It is undeniable that utilities over the next many years will need to begin monitoring water quality outside of their plants, in order to both inform decisions at the plant level as well as make more informed decisions about future infrastructure upgrades. Sylmar is working to support utilities, companies, and homeowners as we digitize their water systems.

US utilities to intensify digital water programmes – here’s why


https://www.xylem.com/en-us/making-waves/water-utilities-news/the-rise-of-digital-twins-and-decision-intelligence-in-water-utilities/
https://vertassets.blob.core.windows.net/download/0453177b/0453177b-9d9a-4cb2-abe0-779df046938f/iwa_2019_digital_water_final_web.pdf
https://www.waterworld.com/technologies/amr-ami/article/16192432/advanced-metering-infrastructure-drivers-and-benefits-in-the-water-industry#:~:text=AMR%2C%20or%20Automatic%20Meter%20Reading,numbers%2C%20and%20writing%20them%20down.&text=Conversely%2C%20AMI%20enables%20two%2Dway,system%20and%20the%20metering%20endpoints.
https://www.buoy.ai/
https://meetflo.com/
https://southeastwater.com.au/SiteCollectionDocuments/CurrentProjects/Projects/CASE%20STUDY%20-%20DIGITAL%20WATER%20METER_BELGRAVE%20SOUTH.pdf
https://www.sciencedirect.com/science/article/abs/pii/S095717871400097
https://www.smart-energy.com/industry-sectors/digitalisation/
https://www.nytimes.com/2018/01/18/nyregion/new-york-city-water-filtration
https://www.innovyze.com/en-us/products/infowater

The Next Bacterial Concern: Legionella and Premise Plumbing

Life in 2020 has been upended by a series of turbulent events – most notably the COVID-19 pandemic and widespread social protests spreading across America – leading to widespread lockdowns and temporary abandonments of office and public infrastructure. As states across the country begin to slowly reopen amidst these once-in-a-generation circumstances, their populations may unknowingly be walking into yet another disruptive, bacterial concern within their offices, restaurants, and buildings.

Empty buildings and unattended HVAC systems, while seemingly nondescript, oftentimes unintentionally promote the unwanted consequence of harmful bacteria growth in stagnant plumbing systems running overhead. Legionella pneumophila, commonly known as legionella, is a bacterium that, when aerosolized, can be inhaled by humans and cause outbreaks of Legionnaire’s Disease within populations with weakened or compromised immune systems such as hospitals and nursing homes1. Warm stagnant water, rust, scale, and the presence of other microorganisms all correlate strongly with the rise of legionella populations, and also happen to be predominant characteristics of unattended premise plumbing fixtures and cooling towers. Legionnaire’s disease causes severe pneumonia, fever, muscle aches, and shortness of breath in individuals and populations with compromised immune systems. The disease infects 52,000 people annually in the US, resulting in the death of one in ten of those afflicted4, rendering it nearly one hundred times as deadly as typical influenza5. How has this bacterial infection, yet another unseen threat in our lives, managed to escape attention for so long?

As the US broadly begins to phase in state reopenings, the water industry, unsurprisingly, will once again play a role in making sure the US population does not forget about other threats such as legionella as they return to work. In much of the past, following outbreaks or situations that give rise to Legionnaire’s, water utilities have recommended flushing out cooling towers and plumbing systems to eliminate the risk of bacterial buildup and then, prior to allowing reentry, perform readily available legionella testing through a local or regional water quality analytical lab. Yet it is unlikely that we will see much of the US building infrastructure flush their systems as the entire nation goes back to work. In a time of increasing concern surrounding water quality and quantity throughout the country, simply flushing a system, wasting thousands of gallons of water, and starting again seems at best, inefficient, and, at worst, wasteful.

The Sylmar team works with clients to implement new premise plumbing treatment systems as a solution both for short-term, post-COVID boot-up scenarios as well as long-term mitigation of the legionella threat in buildings. Building operators and treatment system integrators work with Sylmar and established technologies to set up systems within their own buildings to prevent harmful bacteria from ever forming in the first place. These solutions are not necessarily new – companies like Nalco have been installing systems to chlorinate, disinfect, and extend the life of cooling tower and HVAC equipment for decades9. And yet, novel ionization and filtration technologies have proliferated and decreased in costs over the past decade – leading to more efficient and cost-effective methods to provide individuals living and working in these buildings with a safe working environment. This new preventative method for legionella treatment – decentralized, resilient, sustainable – is the future of premise plumbing and legionella mitigation. For far too long our buildings have believed that the far away, centralized treatment plant will solve their water quality concerns. In many cases that may be true; with legionella, the new, decentralized way is the best way.

As COVID-19 opens our eyes as to how microorganisms can impact our lives in previously unforeseen ways, it is time that the water industry similarly begin to take seriously the potential for legionella to cause an outbreak of another kind. Sylmar works with technologies, companies, and utilities that seek to deploy proven, effective, and environmentally friendly systems to replace the inefficiency and wastefulness of simply trying to flush this problem away. Sylmar is here to help make 2020 not just a year of viral infection, but one in which we begin to think more holistically about the future of our relationship with our water and protecting our most vulnerable populations from the dangers of legionella is one step in that direction.

https://www.cdc.gov/coronavirus/2019-ncov/php/building-water-system.html
AWWA Webinar: “Return to Service: Addressing Water Quality in Buildings with Low or No Use”
https://www.cdc.gov/legionella/wmp/overview/growth-and-spread.html

https://www.cdc.gov/flu/about/burden/index.html
https://www.beckershospitalreview.com/infection-control/illinois-to-pay-6-5m-to-families-of-legionnaires-victims.html
https://www.nprillinois.org/post/illinois-legionnaires-disease-more-prevalent-coronavirus#stream/0

NYC outbreak, this one on Lower East Side


https://www.ecolab.com/nalco-water/expertise-and-innovation/water-safety
https://www.ecolab.com/nalco-water/expertise-and-innovation/water-safety/legionella-control-strategies
https://www.liquitech.com/products/
https://www.liquitech.com/products/copper-silver-ionization/

COVID-19, Epidemiology, and the Wastewater Industry

Over the last several months, the rise and spread of COVID-19 has simultaneously overrun health care systems, taken lives, and shut down the world’s most robust national economies. In the United States, many have come to realize that COVID-19 is not going to disappear anytime soon. As states begin to lift stay-at-home restrictions we’re still confronted with a daunting challenge: we still don’t know how far the virus has spread. The United States has tested just over twenty million people for COVID-19, or a little over six percent of the population. And, while epidemiologists don’t fully agree on how many tests per day are needed to adequately contact trace and begin to return to normal society, there is consensus that current levels of testing are insufficient. But there is one atypical place that presents a unique opportunity to help fill the hole that current testing has failed to address: sewage.

Those of us in the wastewater industry have known for years that you can understand a lot about a population by analyzing what comes through the municipal sewage plant. Wastewater analysis, a perhaps surprising epidemiological tool, has been used to detect influenza outbreaks and even the prevalence and types of narcotics use in a city. The field of wastewater-based epidemiology (WBE) has been at the forefront of epidemiological research for years, with experiments and technologies being developed in labs across the nation such as at Arizona State and Yale Universities.

Indeed, recent research has shown that what we flush down the toilet can be a vital tool in helping to analyze the relative prevalence of SARS-COV-2, the virus that causes COVID-19 in a population. By measuring ribonucleic acid (RNA) stemming from coronavirus infections in wastewater, epidemiologists can glean broad population-level conclusions about the outbreak in ways the six percent of testing never could provide. And just like that, this previously niche epidemiological tool with little mass value, has quickly become an invaluable resource in fighting the outbreak.

The process is relatively simple; sludge pellets formed from concentrated wastewater can be scanned for SARS-COV-2 RNA, which is itself amplified using reverse transcriptase polymerase chain reactions (PCR). In addition to simply confirming the presence of the virus within a given location, which itself won’t come as much of a surprise, this testing can also reveal relative volumes of the virus and thus, over time, can be correlated with active infections in the greater population. Most significantly, whereas coronavirus carriers may not become symptomatic for up to two weeks after contraction of the virus, these individuals will quickly begin excreting SARS-COV-2 RNA. In fact, we’re seeing that wastewater may even serve as a leading indicator of future symptomatic outbreaks and hospitalizations, giving us as much as a one week head start.

Data collected from wastewater, in combination with more traditional metrics, can help public health officials create a more comprehensive picture of population health well in advance of a major outbreak. As wastewater utilities and cities begin to realize the incredible power stemming from ongoing data collection and real-time water quality analysis, utilizing RNA to track population health over time represents an opportunity for the wastewater industry to provide yet another value-add to the population it serves. WBE for COVID-19 is a practice that has the potential to save countless lives by allowing public health officials plan for, respond to, and recover from pandemics and do so in a way that can save communities both time and money.

At Sylmar Group, we’re helping some of the leading firms and utilities put advanced WBE tools to work to protect public health. In the water and wastewater industry, we take pride in protecting human health and the natural environment and surprisingly, the 2020 COVID-19 Pandemic has given us another reason to value the stuff that flows through our pipes and, just as importantly, the people, organizations, and technologies that look after it.

https://covid.cdc.gov/covid-data-tracker/?CDC_AA_refVal=https%3A%2F%2Fwww.cdc.gov%2Fcoronavirus%2F2019-ncov%2Fcases-updates%2Fcases-in-us.html#cases_casesper100klast7days
https://www.newyorker.com/news/news-desk/how-much-coronavirus-testing-does-the-united-states-need-to-reopen
https://www.google.com/publicdata/explore?ds=kf7tgg1uo9ude_&met_y=population&idim=country:US&hl=en&dl=en
https://www.cnbc.com/2020/04/21/coronavirus-tests-rockefeller-plan-would-screen-millions-for-covid-19.html
https://www.sciencedaily.com/releases/2020/04/200423144056.htm
https://www.nhregister.com/news/coronavirus/article/Yale-research-Sewage-may-predict-coronavirus-15297365.php