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

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

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

Death, Taxes & Natural Monopolies

Every middle school teacher in America has stood in front of a group of students and delivered the old Benjamin Franklin adage that “the only things guaranteed in life are death and taxes.” Luckily for those of us in the water industry, we know that this middle school lesson is wrong, or at least incomplete – the only things guaranteed thus far throughout history have been death, taxes and natural infrastructure monopolies.

Natural monopolies, and the economics that define them, drive nearly every decision that is made in the municipal water sector, from the decision to construct a new treatment plant, to hiring a new wastewater operator, to adopting a novel technology. Natural monopolies are defined as industries in which long-run average cost continues to decline with increasing quantities of production…in which multiform production is costlier than production by a monopoly. In other words, the cost to a society is greater if there are more producers in the marketplace.

For the water and wastewater sectors, natural monopolies are why we never see two utilities build competing sets of water distribution pipelines in a city, at a cost of billions of dollars, when a single distribution system would be sufficient. The return on investment timeframe for this second utility would be nearly infinite, the capital costs extravagant, and the prices passed down to consumers completely untenable.

Nearly everyone in the industry has concluded, rightfully and with the full backing of modern economic theory, that natural monopolies exist precisely because their cost advantage is so great when compared to possible alternatives. And, while there are readily apparent downsides to any monopolistic supply system, well-regulated water monopolies (complete with public utility commission, rate payer advocates, and price justifications) have shown that they can provide a unique good to consumers. Or so says the last 100 years of infrastructure history in America.

But what if modern economic theory is wrong – or, like Ben Franklin’s old middle school adage, at least incomplete? What happens if the successes of past water monopolies in the United States have limited our thinking as to what success could look like in the future?

We happen to live in a time when many of the business worlds’ presuppositions about what is ‘possible’ have been completely upended. Our most valuable and influential companies don’t produce physical products – Facebook, Google, Twitter – and the sharing economy – Uber, Lyft, AirBnB – has completely upended stronghold tourism and transportation industries, to name a few. Think back twenty years and the eventual impact that these firms would have not just on businesses but society as a whole would be nearly impossible to imagine. Who could have guessed in 1999 that a platform for writing 142 characters could one day displace newspapers as the predominant means of reading daily events? And yet, while the tech industry has radically altered the makeup of our lives, the water industry has continued to rely upon traditional business models with regards to the treatment and distribution of both water and wastewater. The belief that the water industry is not constrained by natural monopoly theory, whether or not it seems impossible today, could be the necessary belief that leads to unprecedented market innovation.

Beginning with the first Roman aqueducts, Western society has always relied upon centralized treatment plants and pipeline systems for collection, treatment, and distribution. For nearly a century, this system was the predominate model of success in the water and wastewater industry, and no one dared, or was at least successful in his/her dare, to take a leap and state that we must implement the next generation solution to our water and wastewater needs. Today, however, the technology exists both for on-site wastewater reuse (as can be seen at water-pod.net), as well as on-site water generation (zeromasswater.com).

If the technology has been developed to safely and effectively produce and treat on-site, should we continue to be dependent upon monopolistic utilities to manage our water and wastewater? If nothing else, the threat of a competitive supply should force existing utilities to become more price competitive and quality cognizant in order to retain their existing customer base.

What if, rather than relying upon pH and DO meters located 10 miles away for ensuring water quality at one’s tap, every consumer had access to real-time water quality monitoring hardware informing them of exactly where their water came from and its quality? Rather than utilizing the grid as a primary means of supply and collection, then, what if said grid was merely an emergency backup to more localized resources and assets? As we’re moving towards more of a connected world, we have the incredible opportunity to completely modify the way we view the interconnectedness of infrastructure.

The constant upheaval that has occurred in various sectors of the global economy over the past 25 years requires one, then, to begin to rethink the ‘necessity’ of natural monopolies in the water and wastewater industry. We are living in a world in which the technology to dethrone these monopolies exists, but disrupting the status quo and deploying at scale is an extremely telling task likely to take years. Even so, we must think outside the box to continue to improve the industry while also ensuring that these novel solutions will protect public health and safety for the long-term. Unlike the tech industry, the public health and safety implications of this infrastructure transition loom large, yet also make the opportunity all the more enticing.

In the United States, there are approximately 42,000 independent water and wastewater utilities. Much has been written across a number of industry journals regarding the need to consolidate these utilities in order to gain the economics of scale. But what if that basic assumption lacks creativity? What if, instead of consolidating, we moved into a market where every neighborhood has multiple, competing utilities? We must stop promoting consolidation to maintain existing water infrastructure just like cell phone companies stopped buying up telephone lines in the age of the cell phone.

Today is an age of incredible innovation reaching across every industry throughout the world. The water industry has experienced its own innovations, yet in some ways seems stuck in the past. As we move into the end of the 2010s, we must begin to ‘take a step back’ and look at all of the technologies in front of us so as to decide what the water and wastewater industry of the future looks like. We should not rely upon the assumptions of the past the determine the future.

Disrupting the assumptions of natural monopolies, while seemingly impossible today, just may be the vision that we need.

Op-Ed: L.A.’s stormwater is so filthy it’s illegal. Measure W would clean it up

When rain comes to Los Angeles, a certain kind of relief sets in. The land springs to life. The dust and grit and oil slick, accumulated over a summer of dry weather, gets washed away down storm drains. Everything gleams anew.

But this relief comes at a heavy cost. The stormwater that streams down our streets and into our creeks and rivers is heavily polluted. Oil, gasoline, industrial runoff, heavy metals and many tons of trash are carried by the rain, untreated, straight to our waterways and ocean. This pollution destroys ecosystems, kills wildlife and dirties our beaches. Not to mention that billions of gallons of much-needed fresh water drain out to sea.

In a few weeks the voters of Los Angeles County will have the opportunity to address this problem by supporting Measure W, also known as the Safe Clean Water Program. It’s a parcel tax that, if passed, would begin to fund thousands of backlogged stormwater infrastructure projects that the county has had in the works for decades.

There are significant environmental, social and legal reasons for supporting Measure W. It also happens to be good for business.

L.A. County and the surrounding region has for decades been required to comply with the Clean Water Act, which makes it illegal to allow stormwater pollution to flow into the ocean and other waterways. For decades, the county and its 88 cities have largely ignored the law’s mandates, perhaps in hopes that the costs of compliance could be deferred.

As soon as 2020, L.A. County and its municipalities will face millions, if not billions, in fines for violating the Clean Water Act. These fines will be passed on to tax payers and businesses.

Measure W provides funding to help the county come into compliance.

Yes, it creates a new tax. But it’s far more sensible to pay this nominal tax now than it would be to send our money to regulators later. Moreover, the tax will pay for something we have to do anyway: clean our stormwater.

Thousands of businesses in L.A. County have already invested in stormwater treatment technologies to meet their obligations under the Clean Water Act, and their investments will be credited against the new tax. But three to four times as many businesses have done nothing, instead rolling the dice that non-enforcement will continue.

Measure W credits businesses that have made the right investments while finally bringing enforcement and fairness to a system that for too long has favored those who violate it.

Although the measure is concerned primarily with the control of stormwater pollution, many of the projects it would fund have the added benefits of improving stormwater capture and groundwater recharge. This would increase L.A. County’s sources of local water significantly, which in turn would reduce our pumping needs, thus lowering our electricity demands. The billions of gallons of rain that fall in L.A. County every year are one of our best untapped resources.

 

Opponents of the measure have three main concerns, but each one is unwarranted. They say the funding it would provide is a blank check to the government without independent oversight. In fact, the measure calls for independent oversight of both the funding and all projects it would support — oversight that would be carried out at the local level by municipal, scientific, environmental and business leaders.

They also say the measure lacks a sunset provision. But the parcel tax would not escalate over time. A few decades from now, the funding will dwindle to support merely the ongoing operations and maintenance of the stormwater projects.

Finally, critics complain that the measure doesn’t list the projects that would receive funding. But the county and each of the cities that would be affected have listed their priority stormwater projects publicly for decades.

Every time we pollute the ocean or our groundwater, we take out a loan that will be paid for by our children — not only with greater clean-up costs but greater health risks. For too many years, we have hoped against all evidence to the contrary that water scarcity, pollution and environmental decay will go away on its own. L.A. voters can turn this around by voting to support Measure W.

Demography is Destiny: The Looming Wave Of Retirements In The Water And Wastewater Industry

It’s a foregone conclusion that operators are on their way out at utilities across the country, yet the workload remains and could even intensify. When it comes to preserving talent, institutional knowledge, and the future of the industry, the solution may be closer than you think.

The forces of inevitability have finally settled on the U.S. water and wastewater industry; in the very near future, the sector will say goodbye to our most valuable resource: our senior water and wastewater operators. Regulators predict that nearly half of the top-level water and wastewater operators — the professionals who keep our water clean and our environmental systems healthy — will begin their well-earned retirement over the next 12 to 18 months. The rest of us are left wondering, how do we keep our water and wastewater systems online and operating safely?

Water and wastewater operators are the unsung third pillar of public safety, behind firefighters and police officers. These are the men and women who make sure our water supplies meet drinking water standards and our rivers, streams, groundwater basins, and coastal waterways remain healthy, vibrant habitats for plant and animal species. These operators are the final line of defense between a major public health or environmental disaster, and we in the water industry haven’t quite figured out how to make up for their absence.

A confluence of forces has dealt us this hand. The Clean Water and Safe Drinking Water Acts (whose regulations prompted a hiring spree) have reached their 40-year anniversary, and the operators who began their careers with the new regulations are ready to retire. Add to that the fact that the 2008 economic crisis led many senior operators to delay their retirement; these operators have now reached a level of economic security that allows them to retire comfortably at the same time that the next generation of operators has reached retirement age, leading to a tidal wave of retirements all at once.

waterTALENT stands ready as one part of the overall solution to the workforce challenges facing the water and wastewater industry.

A Matter Of Timing
Just as the major water and wastewater regulations turned 40 years old, so too has the capital infrastructure they spawned America is facing $1 trillion in deferred water and wastewater infrastructure investments, which in and of itself would be a challenge, but is all the more challenging given the greater source water quality challenges we face as we discover more and more contaminants of emerging concern in our drinking water. These forces — demographic, financial, regulatory, and technical — create a perfect storm of challenges for the leaders of water and wastewater facilities.

Fortunately, water and wastewater utilities are facing these challenges head-on. Utility leaders have been working to address this demographic crisis for years through a number of successful strategies, including: apprenticeship programs, workforce development organizations, succession planning, internships, and job fairs, among other initiatives. These efforts should give us all comfort for the long-term health of the industry.

But even this new generation of water and wastewater leaders will still leave the sector 20 years behind filling the senior positions that require a career’s worth of experience to successfully execute. How do we replace the experience of our senior operators in the near term as they leave the workforce?

A Path Forward
At waterTALENT, we believe one part of the overall solution is creating an on-call, nationwide team of licensed, experienced operators who can fill any temporary role left by an unexpected vacancy in a water or wastewater utility. As the pool of experienced operators shrinks, the industry needs a solution that can help utilities and districts flex through staff transitions, while maintaining uninterrupted compliance and avoiding any costly downtime. waterTALENT’s pool of over 500 top-tier, licensed, and vetted water and wastewater operators spread across 36 states are ready to be deployed at a moment’s notice. These operators come equipped with a wide array of the skills and experience from decades of hands-on work inside plants and on field crews, from shift supervisor to chief plant operator to public works director.

As an industry, the water sector needs to embrace the fact that, while our best operators may have retired, their careers are far from over. The next mission for these experienced operators is to devote their time and energies to training the next generation of operators and ensuring that the systems they helped build are able to continue protecting the communities where they live. This service can come in a number of different forms: mentorship programs, training, knowledge transfer, standard operating procedure updates, and transitional leadership to help utilities plan for the next generation of successful operations.

The vast majority of senior, professional, experienced operators we have worked with are eager to continue to serve the community and are concerned that they’re leaving the helm of a ship not set for fairer seas. Every one of our operators is concerned with the next generation of operators, their professional development, and their ability to operate and maintain the infrastructure that took decades to build. Perhaps most importantly, the senior operators in the water and wastewater community still believe in the mission to protect public health and the environment and know what it takes to do so.

With each passing day, cities, districts, agencies, and companies are feeling the demographic pressures as their senior operators look towards retirement. Nothing will prevent these departures from happening; demography is destiny, and trying to reverse the trend of retirements is a fruitless effort. What we can do is be proactive, be flexible, plan for the long term, and have support of the short-term transition we’re facing right now.

A Distributed Water Revolution

It is a common missive in today’s water industry that we have let our water infrastructure decay to a point of imminent failure. Nearly every article in industry magazines today features some allusion to the $250 billion to $1 trillion investment needed to maintain our access to clean, safe water for future generations. The explanations for this are many, ranging from historical under-investment, to a shift in funding streams, to a lack of adequate maintenance.

And yet, the solutions to our current problem of infrastructure failure cannot possibly be as simple as: spend more money. Why should we replace decades of mismanaged assets built by our grandparents’ generation with technology that could have been invented during our grandparents’ lifetimes? Has there ever been a time in modern history when rebuilding anything using the basic logic of 100 years previous has led to the best possible outcome for future generations? I can’t think of an adequate example.

Instead, what we in the water industry must begin to more actively develop is the most productive and resilient means to generate and distribute our water supplies. Like the fight that has been waged within the energy industry for the past two decades, the water industry is in desperate need of a ‘distributed revolution.’ This is not a call to strand trillions of dollars of water pipeline and treatment plant assets – it is a simple nudge to remember that just because we are doing something today does not mean that it can’t be evolved and modified to better fit our needs in the future. This will require innovative thinking within the highest reaches of government and private enterprise, and undoubtedly it comes with great risk to those who manage these assets. But it is also foolish to spend billions of taxpayer dollars on a metaphorical Band Aid for a problem that requires a far more profound transformation.

Rather than building centralized plants to generate and distribute our water resources, consumers must begin actively taking control of their water supplies. Rather than relying on a team of under-appreciated and overworked municipal water staff, we must develop localized and automated treatment systems that these individuals can tend to on an ‘as-needed’ basis. The technology to perform such a transition already exists, from modernized SCADA control systems, to point-source wastewater treatment for irrigation purposes, to atmospheric water generators that produce all of the drinking water families would ever need.

For those out there who claim the water industry is a generation away from the innovative technology needed to implement this distributed paradigm shift, I recommend you spend time at next year’s WEFTEC show walking the aisles and talking to the startups and early commercial products that will amaze even the most cynical amongst us. Transitioning to this model will provide greater assurance that our money is being spent with an eye towards becoming more resilient as we look around and see city upon city, from New Orleans to San Juan, with centralized water infrastructure in varying stages of disrepair.

There remains much yet to study in order to ensure that this distributed water transition is performed efficiently and economically. Many interests and concerns must, rightly, be included in this discussion if we look to follow certain assets and invest elsewhere. The point here is not to take resources or finances away from municipalities or municipal employees. Instead, the goal must be to work with water managers, communities and water entrepreneurs in order to ensure that we are using resources and existing expertise to best prepare for the future. Decreased flows to treatment plants will lead to decreased revenues and further stretching of maintenance budgets. But this is not a zero-sum game. If traditional revenues decrease as individuals invest on a distributed basis, municipalities must work to provide operations and maintenance services for these new resources. If budgets for water and wastewater operators are decreased, communities should be tasked with helping find opportunities to utilize the knowledge and expertise of these unsung heroes.

Paradigmatic shifts are never easy, but when stakeholders are engaged and encouraged to adopt new and innovative ways of thinking, they tend to do so readily. In turn, there is no doubt we can develop a new generation of water infrastructure and resources that are in line with our current capabilities as a society. That is the distributed generation that we need.

Water Incubators & The Entrepreneurial Valley of Death

The water industry has long been considered one of the least innovative, most lethargic industries in the world. The reasons given for this particular reputation vary based upon who you are speaking with, but range from: a lack of innovative thinking by water managers, the necessity for deliberative action in an industry that is so critical to broader public health, to the belief that an industry led by ‘natural monopolies’ has no reason to take risks to improve customer service.

Regardless of the chosen answer, it is clear that in the United States, the water industry is in need of new technologies and processes to tackle the water quality and quantity concerns of today. From extreme droughts in the Southwest US, to historic floods in the SE, to emerging contaminants such as pharmaceuticals, our next generation of water professionals is going to need 21st century technology to tackle 21st century problems.

This is why water technology incubators must play a pivotal role in water innovations of the coming decades. Incubators are, today, popping up all over the world. From WaterStart’s pilot fund in Las Vegas, to Accelerate H2O’s role in Hurricane Harvey relief efforts, to Hutchison Kinrot’s seed fund in Israel, water incubators are fast becoming a network of water Meccas – drawing together water entrepreneurs from all over the world and providing them with financial assistance, office space, and the opportunity to quickly deploy their technologies to solve real world problems.

These vectors of water ingenuity accelerate an entrepreneur’s ability to validate a technology, develop proof or concept, create marketing channels to local municipalities, and do so in just 18-24 months. If a novel drip irrigation technology finds itself incubated at the WET Center in Fresno, Calif., builds a pilot, tests this pilot with local farmers, and proves that it is able to reduce water costs by 20 percent in the first year, the firm has suddenly gone from a start-up without any track record to a validated, de-risked, company with huge growth potential. Water investors need only speak to the customer ‘guinea pigs’ to determine the first steps in understanding the technology’s future growth potential.

Every day I have the opportunity to speak with water entrepreneurs from all over the world. These individuals, in response to current industry areas of interest – THMs, HABs, desalination, real-time monitoring – have developed hundreds, if not thousands, of solutions. But investors, rightly, are not willing to simply throw their money at any new technology that emerges as a cure-all. Venture capital and private equity aren’t ‘chomping at the bit’ to take on these technologies and deploy them to a multi-billion-dollar market because the risk is too high and the adoption timeframe is too long. Thus, the entrepreneurial valley of death has taken on a reputation of almost mythical proportions in the water industry, as thousands of entrepreneurs take their great ideas and eventually simply run out of cash as they wait for market adoption.

Increasing adoption and decreasing the ‘valley of death’ across the broader industry is going to require a concerted effort by several groups of industry players, and incubators have begun to fill the most important gap. Governments, in turn, must seek to increase regulatory enforcement and implement new regulations as needed.

Large water utilities must actively seek out opportunities to pilot newer technologies through slip streams and pilot sites in order to remain on the cutting edge of water treatment. And incubators must continue to grow and de-risk technologies through funding of pilots and outreach to potential customers. Financiers, then, must rid themselves of presuppositions related to ‘blue’ technology of decades past and begin investing into this sector at rates similar to the ‘green’ revolution.

When these industry players begin to work together, rather than in overlapping yet oftentimes contradicting platforms, it is clear that the industry will be able to take an immediate step forward in solving our current water quality and quantity issues.