Cutting Red Tape: Building Better Water Infrastructure in New York —Faster
Co-written by Janet Meissner Pritchard
New York Governor Hochul called for ideas to cut administrative red tape to make it easier, faster, and more affordable to deliver infrastructure projects in the state. Improving how government works is core to EPIC’s mission, so we took the opportunity to weigh in.
One area where state reform could have a meaningful impact is water infrastructure. Water utilities rely on the Drinking Water State Revolving Fund (DWSRF) to finance infrastructure projects—including lead service line (LSL) replacement—but accessing these funds is often slow and difficult.
Funds Are Available, But Hard to Access
New York has access to significant federal and state funding for LSL replacement projects through the DWSRF. But in practice, many water utilities, especially smaller or under-resourced ones, face major barriers:
Lengthy and complex application processes
High upfront application costs
Burdensome procurement and compliance requirements
Limited flexibility in how projects are designed and delivered
The result is a frustrating paradox: funding is available, but projects can stall for years before they begin.
Four Ways New York Can Cut SRF Red Tape
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For many communities, the biggest barrier is accessing funding in the first place. Preparing an SRF application can take 4-8 weeks of staff time, pulling staff away from daily operations or requiring outside consultants.
Upfront costs add another hurdle. Requirements like engineering reports and financial audits can cost tens of thousands of dollars, with some cities reporting costs of up to $50,000. Utilities must assume these costs before funding is guaranteed, creating substantial financial risk, particularly for small and under-resourced communities.
Even after applying, projects can stall in the funding pipeline. Projects can sit on New York’s fundable list for 2–3 years while applicants work to meet “readiness-to-proceed” requirements to finalize funding agreements. During that time, some utilities withdraw their projects altogether.
New York can make this process faster and more accessible by:
✅ Simplifying SRF application and readiness-to-proceed requirements. Requirements designed for large-scale projects (like treatment plant upgrades) can unnecessarily burden more straightforward LSL projects. New York should streamline requirements like engineering reports and environmental permits and provide greater flexibility for small and under-resourced systems.
✅Offering technical assistance and planning loans. New York should offer technical assistance (funded through LSL set-asides) and planning loans to help utilities prepare applications and meet funding requirements.
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Federal Infrastructure Investment and Jobs Act (IIJA) requirements—such as prevailing wage, Build America, Buy America, and Disadvantaged Business Enterprise (DBE) rules— can strain the contractor workforce.
Water utilities often struggle to find qualified contractors able to meet these standards. One Western New York utility reported just 6% DBE participation, well below the state’s 20% goal, despite extensive outreach. As a result, many utilities must pursue waivers or document “good faith efforts”.
Smaller contractors often lack the capacity or expertise to manage reporting requirements, invoicing, and the waiver process, requiring utility staff to spend an additional 1-2 months supporting them. Unclear waiver processes, scattered guidance, and limited coordination among utility staff, city departments, and contractors create additional delays.
New York can cut red tape by:
✅ Setting more realistic DBE goals. New York should adjust participation targets based on water utilities’ experience and contractor availability to set ambitious but attainable goals. Starting with achievable targets can create more opportunities for DBEs to participate and grow over time, supporting progress toward higher statewide participation.
✅ Centralizing waiver documentation and guidance. New York should consolidate all waiver-related forms, guidance, and documentation in a single, easily accessible location and consider creating a user-friendly portal to streamline submissions.
✅ Improving interdepartmental coordination. State agencies should include all relevant departments in communications to reduce delays and prevent miscommunication and missed steps.
✅ Building contractor capacity. The state should use available DWSRF set-aside funds to train and expand the pool of qualified contractors that can meet procurement requirements.
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New York’s DWSRF program offers limited guidance on joint procurement approaches and alternative delivery models, restricting water utilities’ ability to lower costs and scale LSL replacement.
Current procurement and contract delivery models can limit competitive pricing and drive up costs—sometimes reaching up to up to $25,000 per line. Small utilities, in particular, struggle to attract contractors for smaller projects. Without the ability to bundle projects through cooperative purchasing, utilities miss opportunities to reduce costs through economies of scale.
Traditional contracting models can also create delays and cost overruns. Time-and-materials contracts risk paying for work regardless of outcomes, while design-bid-build approaches require separate contracts for engineering, construction, and outreach—adding strain to already limited staff capacity.
New York can help accelerate project delivery by:
✅ Incentivizing joint procurement and regional collaboration. The DWSRF program should assign additional priority points to projects that use regional partnerships or bundled procurement.
✅ Supporting regional coordination. New York should use available DWSRF set-aside funds to convene utilities, contractors, and local leaders to identify joint procurement opportunities and strengthen regional contractor capacity.
✅ Developing a statewide procurement platform. The state should create a regional procurement platform (similar to Pennsylvania and Texas) or a shared services model that allows utilities to bundle projects, reduce administrative burdens, and achieve cost savings.
✅ Enabling alternative contracting. New York should remove policy barriers to models like pay for success (PFS) to help control costs, shift financial risk away from water utilities and municipalities, and speed project delivery.
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New York is missing key opportunities to stretch federal DWSRF funding. States can set aside up to 26% of their IIJA LSL funds for activities like technical assistance, program administration, and inventories. However, New York has only used a portion of these allowable set-asides, leaving approximately $107 million in potential support unused in State Fiscal Years 2023 to 2026.
Set-asides can fund critical non-construction work such as— inventories and planning, freeing up grant dollars for replacements. Currently, only 49% of IIJA LSLR funds can be issued as grants, with the remainder provided as loans. Greater use of set-asides could reduce reliance on loans and improve the overall grant-to-loan ratio, potentially lowering the loan share closer to 25%. It could also free up additional loan relief through the Governor’s LIFT program, making projects more affordable for more communities.
Under-resourced utilities still face high upfront costs, long waits for funding agreements, and affordability concerns. These challenges disproportionately affect state-defined disadvantaged communities. In fact, their share of projects on the fundable list dropped sharply—from 96% in SFY23 to just 16% in SFY26.
New York can stretch federal funding by using set-aside funds to:
✅ Support inventories and planning. New York should cover LSL inventories through set-asides to preserve more grant dollars for replacement projects.
✅ Expand technical assistance to improve project readiness. The state should use available set-aside funds to help water systems —particularly small and under-resourced ones— meet readiness requirements and secure funding more quickly.
✅ Strengthen program capacity. New York should invest set-aside funds to build agency capacity to administer the DWSRF program and reduce the risk of losing federal funds as projects remain on fundable lists for multiple years.
✅ Support regional coordination. New York can use set-aside funding to convene utilities, contractors, and local leaders to facilitate joint procurement opportunities and strengthen regional contractor capacity.
✅ Plan ahead. Reserve and carry forward set-aside funds to maximize flexibility in future funding cycles.
How This Would Help New Yorkers
More affordable drinking water and expanded access to funds
Simplified requirements help small and under-resourced utilities secure funding and financing. Greateraccess to state and federal funds means utilities rely less on rate increases to cover costs, helping keep drinking water safe, reliable, and affordable for New Yorkers.
Faster project timelines
Streamlined applications, clearer guidance, and better use of set-asides would help utilities meet readiness requirements and secure funding more quickly, supporting the federal goal of replacing all LSLs by 2037.
Stronger support for small and under-resourced communities
Short-term planning loans and technical assistance can help communities complete funding prerequisites—like engineering plans and financial audits—and advance projects faster. Likewise, improved use of set-aside funds for non-construction activities would help improve SRF grant-to-loan ratios, freeing up grant dollars for replacement projects and closing funding gaps.
Lower costs through smarter procurement
A larger, more competitive contractor pool, joint procurement, and alternative contracting delivery models enable utilities to achieve economies of scale. Building contractor capacity through set-aside funds can expand the number of firms able to meet federal compliance requirements, improve timelines, and expand DBE participation.
Pay for success (PFS) models can further help utilities control costs by improving cost transparency and reducing overruns.
Together, these reforms would make water infrastructure investments faster, more affordable, and more accessible for communities across New York.
