[et_pb_section fb_built=”1″ custom_padding_last_edited=”on|tablet” _builder_version=”4.16″ _module_preset=”default” positioning=”none” horizontal_offset_tablet=”” horizontal_offset_phone=”” horizontal_offset_last_edited=”on|tablet” custom_margin=”0px||||false|false” custom_margin_tablet=”” custom_margin_phone=”” custom_margin_last_edited=”on|desktop” custom_padding=”0px|||0px|false|false” custom_padding_tablet=”|||25px|false|false” custom_padding_phone=”” da_disable_devices=”off|off|off” global_colors_info=”{}” custom_padding__hover_enabled=”on|desktop” theme_builder_area=”post_content” da_is_popup=”off” da_exit_intent=”off” da_has_close=”on” da_alt_close=”off” da_dark_close=”off” da_not_modal=”on” da_is_singular=”off” da_with_loader=”off” da_has_shadow=”on” custom_padding__hover=”0px|||0px|false|false”][et_pb_row _builder_version=”4.16″ _module_preset=”default” width=”100%” global_colors_info=”{}” theme_builder_area=”post_content”][et_pb_column type=”4_4″ _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}” theme_builder_area=”post_content”][et_pb_text _builder_version=”4.27.6″ _module_preset=”default” hover_enabled=”0″ global_colors_info=”{}” theme_builder_area=”post_content” text_font_size=”16px” sticky_enabled=”0″]<\/p>\n
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As\u00a0<\/span><\/span>your utility<\/span>\u00a0<\/span>is developing a long-term funding plan,\u00a0<\/span><\/span>plan<\/span>\u00a0<\/span>for each phase of an\u00a0<\/span><\/span>asset\u2019s<\/span>\u00a0<\/span>life cycle. The table below outlines where those funds are likely to come from so that the system can think through each source as they are developing their plan.<\/span><\/span>\u00a0<\/span><\/p>\n [\/et_pb_text][dvmd_table_maker tbl_responsive_break_by=”row” tbl_icon_type=”N||divi||400″ tbl_icon_size=”3px” tbl_frame_type=”lines” tbl_frame_line_color=”#000000″ tbl_frame_line_width=”2px” tbl_stripes_active=”on” tbl_stripes_apply=”on|off|off|off|on” tbl_tcell_cell_padding=”10px|9px|10px|3px|true|false” tbl_chead_cell_color=”#2ea3f2″ tbl_chead_cell_padding=”|0px|||false|false” tbl_rhead_cell_color=”#2ea3f2″ tbl_rhead_cell_padding=”||||false|false” _builder_version=”4.27.6″ _module_preset=”default” tbl_chead_text_font=”|700|||||||” tbl_chead_text_text_color=”#ffffff” tbl_rhead_text_font=”|700|||||||” tbl_rhead_text_text_color=”#ffffff” background_color=”#000000″ custom_margin=”|0px|||false|false” hover_enabled=”0″ locked=”off” global_colors_info=”{}” theme_builder_area=”post_content” tbl_tcell_text_font_size=”16px” sticky_enabled=”0″][dvmd_table_maker_item col_label=”Phase” col_content=” Planning<\/span><\/b>\u00a0<\/span><\/p>\n When\u00a0planning for\u00a0a new project, a feasibility study may be needed. A feasibility study is an assessment of the practicality of a proposed project.\u00a0A feasibility study should be completed after a\u00a0<\/span>business case evaluation<\/span>\u00a0has been completed.\u00a0This study can help answer questions about the resources needed to complete the project and the possible return on investment.<\/span>\u00a0<\/span><\/p>\n The feasibility study can be especially important when considering infrastructure that is new to the system and\u00a0relatively new\u00a0to the\u00a0industry.\u00a0\u00a0In these cases, research the successes and failures of similar infrastructure used\u00a0in other locations consider testing the infrastructure in a pilot project.\u00a0Implementing a project as a \u201cdemonstration\u201d or \u201cpilot\u201d project may help in getting the project approved. In this way, not\u00a0all\u00a0the money is at risk if the project fails.<\/span>\u00a0<\/span><\/p>\n During the planning phase, it is\u00a0very important\u00a0to consider the operation and maintenance needs of\u00a0the future\u00a0infrastructure. These costs will be on-going and must be paid by the\u00a0utility\u00a0after the project is completed. If the system is\u00a0going\u00a0to require a\u00a0higher-level\u00a0operator or expensive maintenance, it is\u00a0very important\u00a0that these considerations occur\u00a0before the project begins.<\/span>\u00a0<\/span><\/p>\n The long-term funding plan needs to consider incremental investment in the assets. Part of this\u00a0incremental investment is the amount of money needed for\u00a0day-to-day\u00a0operation and\u00a0maintenance,\u00a0but another part is the average annual incremental investment needed to replace assets at the end of their useful lives without creating a backlog of deferred replacements or allowing catastrophic failures to occur.\u00a0To\u00a0determine\u00a0if\u00a0your utility\u00a0is investing\u00a0enough\u00a0consider the\u00a0following\u00a0questions:<\/span>\u00a0<\/span><\/p>\n [\/et_pb_text][et_pb_testimonial _builder_version=”4.27.6″ _module_preset=”default” theme_builder_area=”post_content” body_font_size=”19px” hover_enabled=”0″ sticky_enabled=”0″ border_radii=”on|35px|35px|35px|35px” quote_icon=”off”]<\/p>\n [\/et_pb_testimonial][et_pb_text _builder_version=”4.27.6″ _module_preset=”default” theme_builder_area=”post_content” text_font_size=”16px” hover_enabled=”0″ sticky_enabled=”0″]<\/p>\n This information is necessary to calculate the \u201creplacement cycle\u201d of the utility or the number of years it would take to fully replace the system at the given average annual investment rate. It can be calculated by taking the total cost of replacement divided by the annual amount of\u00a0<\/span><\/span>expenditures<\/span>\u00a0<\/span>per year on replacement.\u00a0<\/span><\/span>\u00a0<\/span><\/p>\n [\/et_pb_text][et_pb_testimonial portrait_url=”https:\/\/swefc.unm.edu\/iamf\/wp-content\/uploads\/2026\/02\/Long-Term-Funding.png” _builder_version=”4.27.6″ _module_preset=”default” theme_builder_area=”post_content” quote_icon=”off” title_text=”Long Term Funding” body_font_size=”17px” portrait_width=”150px” portrait_height=”150px” hover_enabled=”0″ sticky_enabled=”0″ border_radii=”on|35px|35px|35px|35px”]<\/p>\n <\/span>Consider the following example:<\/span><\/span>\u00a0<\/span><\/p>\n Total replacement cost for a wastewater system\u00a0=\u00a0$500,000,000<\/span>\u00a0<\/span><\/em><\/strong><\/p>\n Utility\u00a0invests\u00a0$2.5 Million per year on average for replacement.\u00a0<\/em><\/strong><\/p>\n $500,000,000\u00a0\u00f7\u00a0$2,500,000\u00a0annually<\/span> = 200-year replacement cycle\u00a0<\/span><\/em><\/strong><\/p>\n If\u00a0this\u00a0utility\u2019s\u00a0entire system\u00a0is expected to last fewer years than 200 (a\u00a0likely scenario), they are\u00a0not investing sufficient\u00a0funds,\u00a0and the utility is likely to have significant issues going forward\u00a0due to delayed replacements.\u00a0<\/span>\u00a0<\/span><\/p>\n Alternatively, if the utility invested\u00a0$7.5 Million per year, the replacement cycle would be 67 years.\u00a0<\/span>\u00a0<\/span><\/p>\n $500,000,000\u00a0\u00f7\u00a0$7,500,000 annually<\/span> <\/strong>=\u00a067 years<\/span><\/span>\u00a0<\/span><\/p>\n This length of time is closer to how long the system\u00a0might be expected to\u00a0last.\u00a0<\/span>\u00a0<\/span><\/p>\n [\/et_pb_testimonial][et_pb_text _builder_version=”4.27.6″ _module_preset=”default” theme_builder_area=”post_content” text_font_size=”16px” hover_enabled=”0″ sticky_enabled=”0″]<\/p>\n If\u00a0the utility\u00a0determined\u00a0that it was necessary to move from the\u00a0200-year\u00a0cycle to a cycle closer to 67 years, a significant increase in replacement\u00a0budgeting\u00a0($5\u00a0million) would be necessary each year. It is unlikely that a system could move quickly from $2.5 Million to $7.5 Million in investments because internal and external capacity to manage these\u00a0additional\u00a0expenditures\u00a0must\u00a0be expanded in addition to the funding increases. It may take 5 to 15 years to ramp up slowly to the\u00a0level required.<\/span>\u00a0<\/span><\/p>\n Additionally, consider\u00a0the investment\u00a0in\u00a0operation\u00a0and maintenance activities. The operation and maintenance program investment should be looked at as a percentage of the cost to replace the entire system. If the maintenance budget does not seem\u00a0appropriate when\u00a0making that comparison, the system must\u00a0determine\u00a0what is reasonable.<\/span><\/p>\n [\/et_pb_text][et_pb_text _builder_version=”4.27.6″ _module_preset=”default” hover_enabled=”0″ locked=”off” global_colors_info=”{}” theme_builder_area=”post_content” sticky_enabled=”0″ text_font_size=”16px”]<\/p>\n For drinking water systems, the SW EFCSouthwest Environmental Finance Center<\/span><\/span><\/span> developed a replacement valuation tool to help answer the question of what it would cost to replace the system today. It is meant to provide an order of magnitude estimate, not a construction type estimate. It can be found here<\/a>.<\/p>\n Listed below are some additional Replacement Budget Resources<\/p>\n
\nPlanning
\nDesign
\nConstruction
\nOperations
\nMaintenance
\nRepair
\nRehabilitation
\nReplacement
\nDisposal” col_column_min_width=”110px” col_icon_type=”E||divi||400″ col_tcell_cell_color=”#ffffff” _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}” theme_builder_area=”post_content”][\/dvmd_table_maker_item][dvmd_table_maker_item col_label=”Rates” col_content=”Rates
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\n” col_column_min_width=”100px” col_icon_type=”N||divi||400″ col_icon_size=”33px” col_icon_color=”#7cda24″ col_tcell_cell_align_horz=”center” _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}” theme_builder_area=”post_content”][\/dvmd_table_maker_item][dvmd_table_maker_item col_label=”Incentives” col_content=”Incentives<\/p>\n
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\n” col_column_min_width=”70px” col_icon_type=”N||divi||400″ col_icon_size=”33px” col_icon_color=”#7cda24″ col_tcell_cell_align_horz=”center” _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}” theme_builder_area=”post_content”][\/dvmd_table_maker_item][dvmd_table_maker_item col_label=”Loans” col_content=”Loans<\/p>\n
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\n” col_column_min_width=”70px” col_icon_type=”N||divi||400″ col_icon_size=”33px” col_icon_color=”#7cda24″ col_tcell_cell_align_horz=”center” _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}” theme_builder_area=”post_content”][\/dvmd_table_maker_item][dvmd_table_maker_item col_label=”Bonds” col_content=”Bonds<\/p>\n
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\n” col_column_min_width=”70px” col_icon_type=”N||divi||400″ col_icon_size=”33px” col_icon_color=”#7cda24″ col_tcell_cell_align_horz=”center” _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}” theme_builder_area=”post_content”][\/dvmd_table_maker_item][\/dvmd_table_maker][et_pb_text _builder_version=”4.27.6″ _module_preset=”default” theme_builder_area=”post_content” text_font_size=”16px” hover_enabled=”0″ sticky_enabled=”0″]<\/p>\n\u201cBased on current investments, what is the current replacement cycle?\u201d<\/span><\/span>\u00a0<\/span><\/h4>\n
\u201cHow many years will it take to replace the entire system?\u201d\u00a0<\/h4>\n
\u201cWhat would it cost to replace the entire system today?\u201d\u00a0\u00a0<\/span><\/h4>\n
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