Experts: Raise Steubenville Water Rates by More Than 29 Percent
STEUBENVILLE — Water system consultants recommended Tuesday evening to City Council a more than 29 percent rate increase in the city’s water rates to begin fixing a system that is nearing the end of its projected service life.
The report from Arcadis, a state-required asset management plan, was close to the rates projected in July in a study by the city’s Finance Director David Lewis and Water and Wastewater Superintendent Chuck Murphy.
Council had balked at the recommendation for a water and sewer increase this fall that would have totaled $23.70 for a total minimum bill of $92.52.
The Arcadis report recommends an increase of 29.9 percent, bringing the water minimum bill alone to $41.45. That does not including sewer and refuse.
The city has been projecting about $29 million worth of major projects for the next decade. Arcadis went further, saying water line failure rates will be on the rise as the system ages.
“Your system is so far past its useful life and it’s having so many breaks,” said Kevin Slavin, Arcadis associate vice president.
He said to reach the bottom quartile of acceptable waterline breaks would require an investment of about $2.4 million annually. However, he said, that increase would be far too great for the city to handle.
Instead, Arcadis recommends a 1 percent per year reinvestment, based on a city water system worth about $120 million total. That led to the increase recommendation.
Slavin said the city is experiencing about 80 breaks per 100 miles of pipe per year for the past eight years.
The average in the Midwest is about 26.5 breaks per 100 miles of pipe.
He said failing to invest would lead the city to a system failure, or more than one break per mile per year in 20 years. Under the current rates of reinvestment, the water fund would go into the red and would experience breaks annually along every mile of pipe.
The city is in line for a $7 million state loan, with half of that to be forgiven for repayment, to begin replacing critical valves throughout the system. The state also is negotiating with the city on other parts of the system and operation, including a valve exercising program to prevent issues in the future like what happened downtown in January.
In January, the city faced a break it could not locate and could not isolate, which lead to the entire downtown area to be without water for 12 days.
Fifth Ward Councilman Willie Paul renewed his call to split the initial year’s rate increase in two. That would bring it to about $12 at first with an additional $11 to follow in six months. Slaven said the issue will be that the city will be facing major capital needs as it begins to perform the work next year. Murphy said the city’s reserve of about $475,000 could disappear quickly as valves are shut and the need to replace lines associated with the valves are identified.
“Cash needs to be available for when you start those large projects,” Slaven said. “There will be a lot of need at the start of next year because when you do the valve replacements, you will identify other issues.”
The city has about 71 percent of its waterlines made out of cast iron pipe, but more than a third of that was installed before 1920. Ductile iron, which can have a much shorter expected service life, was used in pipes installed in the 1950s and 1960s, Slaven said. The Arcadis asset management plan identified about 30 percent of the city’s system as in poor condition, or about a $30 million backlog of projects.
Brian C. Bass, Arcadis senior financial services consultant, said the city’s bonds for the 2007 water plant upgrade drop off in 2027 and the city would then be able to spend more cash and seek fewer loans to pay for upgrades if the rate increases are implemented.
Beyond the 2018 increase, Arcadis is recommending increases of 12.8 percent in 2019, 8.3 percent in 2020 and keeping the rates flat in 2021 and 2022. The increases in 2019 amount to $5.30 and $3.90 in 2020 added to the minimum bill. The initial increase in 2018 amounts to $9.55.
The rates do not include sewer or sanitation increases that are needed.
Sixth Ward Councilman Bob Villamagna asked Slaven if a proposal Villamagna said will raise $1.4 million a year was reviewed. Slaven said Villamagna’s plan included sewer and sanitation, where the Arcadis plan calls for $1.2 million to be invested in water alone.
Councilwoman at large Kimberly Hahn asked about setting different infrastructure fund rates for commercial customers. Tom Hartwig, Arcadis vice president, said that can be considered after more planning in the future. He said the city would need to classify its customers so everyone in a given class was billed equally.
Slaven told council there was no factoring in of grants beyond what is projected currently, either.
Hahn said the online classes council members were required by the state to take as managers of a municipal utility said making a household pay more than 2.5 percent of their income for utilities is too much.
“We looked at what the infrastructure need is, and you are well past that,” Slaven said. “Your infrastructure is in much worse condition than other communities. If you were at 30 breaks per 100 miles, 2.5 percent may be appropriate, otherwise you have to capture capital or you will go up to that 100 break per 100 miles rate and you will keep having more issues. The numbers are what is driving my analysis. Here is what has to be invested.”
Second Ward Councilman Craig Petrella said council needs to be concerned about losing commercial accounts and residential customers.
“I am not looking for a mass exodus,” he said. “We need to raise the rates, but we also have to start thinking out of the box to get some more funding coming in.”
Petrella recommended every resident email state and federal legislators to try to push for grants and assistance for the city.
Slaven said the asset management plan report can be used as the city asks for grants. He said the Ohio EPA is looking for the data.
Hartwig responded to Petrella’s fears of customers leaving or new businesses not coming in because of higher water rates.
“You are in a very difficult position, as everybody here has stated,” he said. “You’re concerned about losing customers because of the rates and not being able to attract new businesses, but if you continue with failing infrastructure, it will have just as great an impact on attracting new residents and new businesses as the rate structure to the city. You will not attract a new restaurant if there is a chance they will have to close for two weeks because there is no safe drinking water.”
With councilmen Gerald DiLoreto, Eric Timmons and Scott Dressel unable to attend Tuesdsay’s meeting, council took no further action on the water study.
Hahn said she wants council members to attend a session of the Ohio Small Communities Environmental Infrastructure Group in October, along with Arcadis representatives. All major infrastructure funding sources are represented.