Kim Colson: 2016 Water Finance & Management Award Winner

The Master Planner

The Managerial Maestro Behind North Carolina’s Innovative Water Financing Model

By Andrew Farr


 

Kim Colson

Kim Colson, director of North Carolina’s Division of Water Infrastructure, is Water Finance & Management’s 2016 Award Winner

Kim Colson doesn’t ask for attention and he doesn’t want to be singled out. He’s at the center of a program that exemplifies innovation in water financing, yet he modestly maintains that for him and his colleagues, it’s always a total team effort.

In the water sector, where needed projects can often be reactive, Colson understands the importance of facilitating change though preventive, proactive approaches that encourage utilities to become more viable. Colson’s work in water financing at the state level in North Carolina reflects that mindset.

Like many areas of the United States, communities in North Carolina struggle with the typical assortment of water infrastructure challenges, from aging infrastructure to funding. Recently, the state has implemented a new method for allocating funds to municipalities in a way that better ensures money will be allotted for a greater number of projects, including to communities with noted financial struggles.

Since 2013 Colson has led this effort, describing the state’s program as a progressive approach in an industry that accurately identifies its challenges, but at times falls short in implementing the best solutions on the funding side of things.

“I think, very broadly, the industry has done a really good job of highlighting the challenges and the importance of water infrastructure,” he says. “You see that when you see things like WRDA going through Congress. I think the next challenge is just being able to take all of that from an expertise standpoint and communicate it in plain English to the ratepayers and to governing boards and utilize the resources that we have in a collaborative, partnership type of way.”

The new integrated funding program in North Carolina gives state government a more in-depth role in examining various communities and their water challenges so that funding can be directed appropriately. For his continuous leadership in the program, which includes the development of the state’s comprehensive water infrastructure master plan, Colson is this year’s Water Finance & Management Award winner.

Engineer to Administrator

Although he’s a Tennessee native, Colson has spent nearly his entire life in North Carolina, growing up in the Chapel Hill area. Recalling the origin of his interest in water, Colson says he would have to attribute it to his love of the outdoors as a kid.

“I guess my interest really came from growing up near a creek and spending every outdoor moment down at the creek playing,” he says. “Fishing and just being around water a lot is probably where a lot of that came from.”

Colson attended North Carolina State University, earning his degree in Biological and Agricultural Engineering.

“I was really looking for something that combined the natural sciences with my interest in math and engineering,” he says. “That program seemed to fit really well. When I got into that program, I always wanted to focus more on the water resources aspects of agricultural engineering more so than the mechanical aspects. I didn’t really have any interest in designing tractors or anything like that,” he jokes.

After graduating, Colson began his career in civil engineering, working in a regional office of the North Carolina Department of Environmental and Natural Resources, now called the Department of Environmental Quality (DEQ). It was there that he began working more in-depth with water infrastructure.

During this time in the early to mid-1990s, Colson focused his work on issues related to wastewater treatment facilities, biosolids, pre-treatment, nutrient management, wetlands permitting, reclaimed water and emerging federal rules on stormwater. He would eventually leave the state to work with a public utility for a short time before returning to the DEQ.

Colson says he gained experience through these various positions not only around the regulatory issues affecting the water sector, but also the technical aspects that go into managing and operating water systems, which presents a whole different set of challenges.

“I’ve been really fortunate to have been able to touch a lot of those different aspects,” he says. “Working with the operators [at the utility] changed my perspective from just working on the regulatory side. When I came back to work for the state, we helped develop the first collection system permitting program in the North Carolina. A big part of that was getting out, talking with operators and visiting a lot of our collections systems. We looked into a lot of manholes and looked into a lot of pump stations and it really gave us an appreciation for the state of wastewater infrastructure and a lot of pipes in the ground, the condition they were in and the challenges those operators were facing.”

Colson has now been involved in the water resources industry for more than 25 years. His career includes experience working in a variety of water-related programs in North Carolina, more recently in state-level funding.

Innovation through Integration

Colson joined the DEQ’s funding program in 2008, first working with the Clean Water State Revolving Fund (CWSRF). It was here that he applied his experience dealing with regulations affecting collection systems. Colson says because he was aware of the challenges that existed on the utility management side, such as scheduling for cleaning lines and addressing inflow and infiltration, his team was able to begin addressing funding challenges that various communities were having. By 2011, he was managing the CWSRF program.Kim Colson

According to Colson, there was opportunity for change within the CWSRF funding program, the biggest being in prioritization.

“We started emphasizing things like asset management, operating ratios and making sure revenue was meeting the expenses and debt service at utilities,” he says. “These were things that prioritize proactive management at the utility, [rather than] prioritizing funding to non-compliant facilities. We really wanted to encourage people to do the proactive things – not just funding the problem situations, but funding situations that would prevent those problems.”

A short time after this, the North Carolina General Assembly was looking for ways to improve the overall process of state water infrastructure funding programs. Around this time, a report was also released that expressed concern over the methods for allocating funding to utilities across the state. It was discovered that municipalities were having to apply to multiple agencies and organizations to piece together funding for getting water projects off the ground. For each agency or funding program, utilities would have to go through multiple application processes, submit different applications with different review times and different priority systems. The report recommended to the General Assembly that consolidating the programs could offer a more effective mode of allocating state funding.

In 2013, the state General Assembly made the decision to consolidate its five major water infrastructure funding programs into one division of government, called the Division of Water Infrastructure. Colson was hired as its first director.

The five funding programs that were consolidated under the division include: the federal-state Clean Water State Revolving Fund (CWSRF loan program), the federal-state Drinking Water State Revolving Fund (DWSRF loan program), the federal Community Development Block Grant-Infrastructure (CDBG-I) grant program, the State Wastewater Reserve program (grants and loans) and the State Drinking Water Reserve program (grants and loans).

The Division brings together these funding programs within one department of state government. Under the program, water projects that previously did not meet the criteria for state grants can now be offered low-interest SRF loans without time delay or new application.

Projects that qualify for more than one program can now leverage funding availability across different programs in a seamless manner. Colson says the system essentially creates one funding process with similar funding timeframes and priority systems.

“It’s easy to apply and we can offer people the best available funding for their projects all seamlessly,” he says. “If we run out of grant money or if [utilities] don’t qualify for a grant we can ship them over to a loan right away. If they want to re-apply for a grant, they can. And if they want to move forward with their project with that loan funding, they can do that right away.”

In addition to the Division, the state General Assembly also created a State Water Infrastructure Authority (SWIA) in January 2014, which gives final approval to all project funding.


“I think, very broadly, the industry has done a really good job of highlighting the challenges and the importance of water infrastructure. I think the next challenge is just being able to take all of that from an expertise standpoint and communicate it in plain English to the ratepayers and to governing boards and utilize the resources that we have in a collaborative, partnership type of way.”


Colson has two primary roles – one as the director of the Division and the other as the chair of the nine-member SWIA board, making Colson’s role unique as being part of the division staff as well as heading up the approval board.

“It’s both innovative and revolutionary,” says J.D. Solomon, vice president and area manager with CH2M, who serves on the SWIA board. “I work throughout the eastern U.S., and I’m not aware of anything else quite like it. And I believe it’s the only way we’re going to even come close to solving the infrastructure crisis we have is for other states to adopt a similar way of master planning, giving out grants and loans and really pulling everything under one umbrella.

“Kim has personally done an excellent job at balancing being the director of the Division of Water Infrastructure and the chairman of the State Water Infrastructure Authority. On one hand, he’s trying to manage staff and keep the staff happy. On another hand, he’s having to lead a group of primarily political appointees. He’s done an excellent job of being effective and balancing the different needs of both groups. At the same time, he really lets his staff and the board go in the direction that we think is a positive direction to go in.”

Program Initiatives

Shortly after its formation, the SWIA was assigned a list of 12 mandatory action items by the General Assembly to address future water infrastructure goals. To consolidate the planning and general thinking by the Division and by SWIA, the 12 were grouped into four main categories:

  • Distribution of loan and grant funds;
  • Define water infrastructure needs and funding, and develop a State Water Infrastructure Master Plan;
  • Assess emerging practices in utility planning and funding; and
  • Assess the need for “troubled systems” protocol.

A number of issues and concerns regarding water and wastewater infrastructure in North Carolina were also identified and ultimately helped shape the implementation of the program. These included:

  • Ensuring that grant funds are being awarded to the most economically distressed communities by considering the relative affordability of a project for that community compared to other communities in the state.
  • Stretching the use of limited grant funds by pairing grants with loans when financially feasible for a community.
  • Broadening the use of grant funds to encourage water and wastewater utilities to become more proactive in the management and financing of their systems.
  • Focusing on aging and critical infrastructure through the use of risk-based analysis methods to define, prioritize and fund projects.
  • Enabling utilities to attain long-term viability by establishing organizational excellence and operating with a business mindset.
  • Establishing utility revenues to provide appropriate infrastructure funding by putting in place strategies to generate the revenue needed to address not only predictable problems through short-term preventative operations and maintenance but also long-term capital improvement projects.

 


The Water Finance & Management Award

The Water Finance & Management Award was created in 2012 to recognize public sector individuals who are on the forefront of driving innovation and who have had a lasting and meaningful impact within their utility and/or the water/wastewater field. You can help participate in recognizing such leaders by nominating worthy candidates for the 2017 Award.

The awards are presented at Water Finance & Management’s annual Water Asset Management Conference in the fall. For more information or to submit a nomination for 2017, please contact associate editor Andrew Farr.

Water Finance & Management Award Past Recipients:

2012 – Steve Allbee, U.S. EPA
2013 – Kevin Shafer, Milwaukee Metropolitan Sewerage District
2014 – Ben Grumbles, State of Maryland
2015 – Julius Ciaccia, Northeast Ohio Regional Sewer District
2016 – Kim Colson, North Carolina Division of Water Infrastructure


 

Proactive Management Incentives

One of the benefits of the Division’s approach is continuing to promote proactive utility management initiatives as opposed to simply awarding funding to utilities that qualify for grants. For example, the program incentivizes utility asset management based on a points system for allocating state funding.

Following the identification of the 12 mandatory charges set forth by the state legislature, the SWIA approached the General Assembly about offering grants to utilities to inventory and assess their water and wastewater systems. The General Assembly agreed and passed legislation based on SWIA’s recommendation, offering grants  for both merger and regionalization assessments and for development of asset management programs. The priority system awards points for asset and inventory assessment and for merger and regionalization feasibility funding.

Colson says this is seen as progressive rather than the historical reactive approach of only providing technical assistance grants for systems that have already fallen into severe non-compliance.

“We’ve been very hesitant to require asset management plans because we want it to be something that comes from within the utility as opposed to them doing it just to meet a mandate,” he says.

To implement the asset and inventory assessment grants, Colson, along with his staff and board knew they had to be very well versed in asset management.

“We had a relationship with BAMI-I (Buried Asset Management Institute-International) and knew they were a potential resource and they were willing to come to us to do the training,” he says. “It was really a collaborative effort.”

Members of the staff and board participated in asset management training from BAMI-I and completed all four levels of its Certification of Training in Asset Management program (CTAM). The CTAM program was originally developed through EPA funding.

State Water Infrastructure Authority (SWIA)

Colson (far left) meets with members of the Buried Asset Management Institute-International (BAMI-I) to discuss asset management training for the SWIA and Division’s staff.

“We hoped that by getting our staff trained in asset management, that they’d understand the benefits of our priority system and why we emphasize asset management as being proactive,” Colson says. “Also, as we’re working with our utilities that do receive these grants, we wanted to make sure our staff could evaluate their proposals really well and understand the key concepts of asset management so that the grants were going to be as meaningful as they could be.”

The Division received 182 applications for the grant, reflecting considerable interest in asset management, in the first funding round in spring 2016. The SWIA and Division were able to help many utilities move toward better asset management by funding 42 of those applications, for just over $5 million.

Master Planning

One of the major components of the SWIA’s 12 charges was defining future water funding and utility planning needs across North Carolina and drafting a statewide water infrastructure master plan. The draft version of the master plan, titled “North Carolina’s Statewide Water and Wastewater Infrastructure Master Plan: The Road to Viability,” was recently completed. It presents the state’s outline for viable water and wastewater utilities that safeguard public health, protect the environment, support vibrant communities and encourage economic development.


“We’ve been very hesitant to require asset management plans because we want it to be something that comes from within the utility as opposed to them doing it just to meet a mandate.”


Unique from a national perspective, the master plan is intended to apply broadly to owners and operators of water and wastewater utilities and systems, local elected officials, town and county managers, utility governing boards, customers and stakeholders and the general public – all groups that play key roles in achieving viable utilities. The master plan defines the state’s role as fostering long-term viability in three integrated focus areas: Infrastructure Management; Organizational Management; and Financial Management.

“Since Kim has taken over leadership, North Carolina has had a lot of exciting best practices that have garnered national attention,” says Jeffrey Hughes, director of the Environmental Finance Center at the University of North Carolina School of Government. “A lot of people are talking about the need for consolidation and integration. It’s been great to see that a lot of those ideas have been developed in legislation, and really under Kim’s leadership, they’ve actually been implemented in a really effective way.”

Recently, Hughes’ group has been providing research support for the state’s water master plan. The Environmental Finance Center has assisted the SWIA to identify future water/wastewater needs by developing a methodology to mine existing water and wastewater needs and historic needs and try to apply that to the state’s current circumstances.

States are responsible for supporting general needs surveys that are done in water and wastewater for the EPA, but Hughes says those studies are not necessarily done in a way that is conducive to project-level state planning.

“The state water plan now uses our estimates for state water needs,” he says. “That’s really driving how their programs are going to address those needs.

The Environmental Finance Center also manages statewide financial benchmarking systems for several states across the country, including North Carolina. The center collects detailed information on water and wastewater pricing and financial health of individual utilities.

“We’ve been working quite a bit with Kim over the years to incorporate that analysis into their thinking on affordability criteria,” says Hughes. “One of the things [Kim and the SWIA] have been interested in is redesigning their programs to better target limited resources to communities with demonstrated financial needs, so we’ve worked with Kim a lot on that.”

As utilities better understand their infrastructure and quantify needs, the SWIA will look to develop a more comprehensive master plan to meet the state’s needs. The Division will also acquire more complete information on which to base input to EPA’s CWSRF and DWSRF needs surveys, which could then result in higher federal allocations to these programs in North Carolina.

“I think Kim’s leadership and style is perfectly suited for this kind of organization. I work a lot across the country and this is a really unique model that we have in North Carolina,” says Hughes. “To tap into someone with a long history of really solid technical leadership and for him to be comfortable in that phase but also equally comfortable in a stakeholder management [capacity], his style is very inclusive and participatory.”

Collaborative Solutions

So, what will be the lasting impact of the Division and the SWIA in North Carolina? Colson says that remains to be seen, but he does know what the immediate impact is, and that’s valuable collaboration. Colson describes it as the benefit in disguise, noting that the implementation of the integrated funding program has naturally facilitated communication and partnerships between the state and multiple water industry groups that, when working together, can foster real progress in water infrastructure and financial stability.

“I think from a funding program standpoint, we’ve been able to do a lot in just a few years,” he says. “The Division just started in 2013 and the Authority’s first meeting was January 2014. We’ve been able to accomplish a lot. We’ve been able to do a lot of work from a collaborative standpoint between staff and the Authority, between our division and other organizations across the state.”

Colson notes the state’s working relationships with groups like the North Carolina Rural Water Association, the state chapter of AWWA, WEF, BAMI-I and consultants across the state, among others. He says organizations working more collaboratively is really how the industry will take the next step in solving water infrastructure challenges.

“I think the big takeaway for me is really facilitating more partnerships and more collaboration across organizations and programs,” he says. “I see that as a microcosm within the funding program and having these programs working more in concert with each other.

“I’m always amazed at how many people in North Carolina are trying to do really good work, with respect to water infrastructure, to help people. Whether it’s an organization like the Rural Water Association, or the consultants, or the public works directors or the operators out there every day. It’s really neat to be a part of that and just help those people out.

“The focus really is on helping those customers of those water systems and to protect the environment. That’s just a really neat thing to be able to work with every day.”

 


Andrew Farr is the associate editor of Water Finance & Management. Andrew covers the water sector for Benjamin Media and is also a contributing editor to Trenchless Technology magazine.

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