UTIA developing ability-to-pay framework for Tennessee communities

Researchers at the University of Tennessee Institute of Agriculture (UTIA) have received a $350,000 grant to develop the framework to determine the ability of communities to pay for infrastructure improvements that comply with federal and state water regulations.

While infrastructure upgrades mandated by federal and state water regulations are designed to protect the environment and public health, they can also pose an economic burden directly on local governments and indirectly on communities. In an effort to protect economically stressed communities, the Tennessee Department of Environment and Conservation has awarded UTIA researchers with a five-year grant to determine the ability of communities to pay for these infrastructure improvements.

Researchers will develop an integrated database of socioeconomic and financial data which will serve as the foundation for an index, identifying a community’s “ability to pay” for a loan based on debt burden, revenues, cost of depreciated assets or matching requirements for grants. In addition to determining realistic financial capabilities of communities, the index will be used in optimizing benefits and estimating fiscal burdens of communities in Tennessee.

The database and index will comprise a framework that will be used to help prioritize drinking water and wastewater infrastructure projects for funding and to identify policy options such as reduced interest rates, longer repayment schedules, and assignment of additional subsidy and benefit to communities that need it the most.

“Development and use of a consistent, transparent and annually updated ability-to-pay index will improve decision making in loan and grant administration by the Tennessee Department of Environment and Conservation and the Tennessee Department of Economic and Community Development and enhance interagency coordination within the state,” said lead investigator Sreedhar Upendram, assistant professor in UT’s Department of Agricultural and Resource Economics.

The grant also includes development of an open dashboard or calculator, allowing any entity to access the ability-to-pay index for a specific community in Tennessee.

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Other UTIA faculty involved in the project include Burt English, Chris Clark, Kim Jensen, David Hughes and John Buchanan. Jamey Menard, Brad Wilson and Hannah Wright will also provide project assistance.

Through its mission of research, teaching and Extension, the University of Tennessee Institute of Agriculture touches lives and provides Real. Life. Solutions. ag.tennessee.edu.