Government-owned utilities have a limited taxpayer and revenue base, which must service all the municipalities' needs, not just water and wastewater services. As a result, many municipalities, particularly medium to smaller systems, find themselves with significant constraints in their ability to obtain the capital to make infrastructure improvements. The EPA and U.S. Government Accountability Office estimate that the investment gap for necessary water and wastewater infrastructure upgrades over the next 20 years to be more than $500 billion.

Conversely, large investor-owned water utilities often have a greater ability to secure cost-effective capital to make major necessary investments. For example, last year American Water invested approximately $1 billion in capital improvements to ensure that the communities it serves continue to receive reliable, high-quality water services.

The private activity bond is one of the most useful tools the federal government can offer states and municipalities to help provide for long-term, capital-intensive infrastructure projects. But Congress controls the issuance of these bonds by limiting each state with an annual cap. In 2009, the state volume cap was equal to the greater amount of either $90 per state resident or $273.27 million.

This cap hinders the use of private activity bonds for water and wastewater infrastructure projects, which are generally multi-year projects, in favor of short-term, politically attractive projects such as housing and education.

In fact, in 2007, only 1.3 percent of all private activity bonds were issued to water and wastewater projects. Including H.R. 537, the Sustainable Water

The EPA projected that this simple change in the tax code could pump as much as $6 billion annually toward addressing our nation's infrastructure challenges. The cost to the federal government, however, would be small; the U.S. Department of Treasury estimates it to be $34 million over five years, or $214 million over the next decade.

The U.S. Conference of Mayors (USCM) and the Associated General Contractors of America have both estimated that $1 billion of investment in water/wastewater infrastructure supports or creates 28,500 jobs. Based on the water industry's estimate of at least $2 billion worth of private water investment slated for 2010, 57,000 jobs could be supported this year.

USCM also estimates that for every one dollar of water and sewer infrastructure investment, Gross Domestic Product increases by $6.35 in the long-term; and for each additional dollar spent on operating and maintaining the water and sewer industry, the increase of revenue or economic output for all industries is increased by $2.62 in that year.

This legislation will result in lower-cost financing and those savings can be passed on to customers. It will also spread the financial risk to the private sector and help relieve all levels of government from the burden of funding these needed investments. Exemptions from the volume cap are currently provided for other governmentally owned facilities, including airports, ports, high-speed intercity rail and solid waste disposal sites. It is time for water and wastewater to be added to this list, so that Americans can continue to rely on our water and wastewater systems to sustain us.

Donald Correll is president and CEO of American Water, the largest investor-owned U.S. water and wastewater utility company.