California’s drought and the lead contamination crisis in Flint, Mich., helped put water infrastructure high on the agenda at the sixth annual JPMorgan Transportation and Utility Investor Forum in New York.
“Water continues to be a big issue – even away from the drought in California – and has been magnified by what’s going on in Flint right now,” Jamison Feheley, managing director and head of public finance banking for JPMorgan, said on the phone last week prior to the start of the forum. “Much of the infrastructure is in a state of disrepair and systems face increasing costs from [Environmental Protection Agency] consent decrees. We have now started to see the federal government taking proactive steps to add more tools into the water finance spectrum.
“The new [Water Infrastructure Finance and Innovation Act] program can be a valuable tool," he added, referring to a 2014 law that provides low interest rate financing for the construction of water and wastewater infrastructure.
The Texas Water Development Board was one of seven issuers giving presentations on their preparations for future problem scenarios.
After Texas suffered the most severe drought in the state’s history from 1954-1956, the TWDB was created in 1957 by legislative act and constitutional amendment. The constitutional amendment, approved by Texas voters, authorized the TWDB to issue $200 million in State of Texas General Obligation Water Development Bonds for the conservation and development of Texas' water resources through loans to political subdivisions.
“Texas is accustomed to drought, and we have a comprehensive statewide planning process to ensure we are equipped for future droughts,” said Bech Bruun, chairman of the TWDB. “The recently released Draft 2017 State Water Plan spells out more water supply strategies than ever before, many of which can be attributed to the lessons learned from our recent drought.”
The TWDB has a comprehensive 50 year water plan, as the state projects a 73% increase in population by 2070. The current 2017 state water plan, which accounts for a worst-case scenario, includes 5,500 strategies with a total capital cost of $62.6 billion.
Since its inception, the TWDB has committed over $19.1 billion in loans and grants and has never defaulted on any debt.
“In the future, we think that there will be more [public private partnership] activity on the water-side. It is an important topic and we wanted to bring in different water systems to tell their stories,” Feheley said.
The two day event on March 16 and 17 has grown steadily over the years and is nearly at scheduling capacity for one-on-one meetings and presentations, unless JPM add a third day to the event, which the firm said it isn't planning to do at this time.
“Our main goal for participating in investor meetings is to tell the important story about the many successful financial programs the Texas Water Development Board manages and offers,” said Bruun.
Attendance this year was over 450 total attendees, including 137 investor attendees representing more than 80 companies. 65 different issuers and keynote speakers presented and participated in one-on-one meetings with investors. There were also approximately 350 one-on-one meetings.
“We are trying to accommodate issuers with large capital programs who take meaningful interest in, and realize the value of, investor outreach. Some issuers integrate our investor forum into their live deal roadshow for an upcoming deal,” Feheley said.
Feheley also said that other issuers have deals that are public, but are not yet close to issuing, so they use the forum to generally introduce a future offering.
“The positive feedback that we consistently receive is that attendees join us from all across the country because everyone they want to meet and engage with is here,” he said. “We are pleased to be able to continue to facilitate this valuable and direct interaction between issuers and investors."
