ZANESVILLE — The Pioneer Hill Reservoir is a squat steel cover perched over a leaky tub that holds 2 million gallons of water in inky darkness, speckled by holes in the roof and walls.
Built in the 1890s, it needs to be replaced. But it is just one of two dozen projects the City of Zanesville's water department needs to fund, and funds have been scarce.
That puts the city in a precarious position, said the city's Public Service Director Scott Brown. Without a rate increase, the department runs out of money. Without more money coming in, it becomes difficult, if not impossible, to get loans to pay for projects.
The department has outlined more than $26 million in projects it hopes to complete, including more than $10 million in water line replacement projects. "The system has been neglected for years," said Zanesville Mayor Don Mason.
"It costs more money to operate the system than we are bringing in," Brown said. "And we need to catch up on decades of deferred maintenance."
Mason said the system is paying for loans on costs formulated years ago, while the efficiencies of appliances and things like shower heads have increased, resulting in less consumption, and fewer dollars coming in.
To counter the problem, the city has raised water rates for the first time in almost 20 years.
Most residential customers will not see an increase until 2024. The last time the city raised the price of water per cubic foot was in 2005. The city's last price adjustment came in 2017, when it reduced the amount of water paid for by the minimum bill.
To formulate the rate increase, the city hired Verdantas LLC and Environmental Rate Consultants to conduct a study on the water department's revenue requirements to complete the various infrastructure projects the city needs to embark upon.
The rate increase was first considered in early 2020, but was put on hold because of the uncertainties of the looming COVID-19 pandemic. The study found that without a rate increase, the department will run out of money by the end of 2022. In addition, "if a water utility rate is not approved and implemented by the City of Zanesville, the City may not qualify for additional and required low-interest loans for capital projects," nor with the department be able to pay existing debt.
Rates vs expenses
Forty-four percent of the city's customers will not see an increase until 2024. Currently, the minimum bill for residential customers inside the city, which covers up to 200 cubic feet of water per month, is $11.70. In 2024, the minimum bill increases to $12.50, and in 2025 to $14.50.
Residential customers outside the city see similar increases, although the minimum bill starts at $17.55. In all, 65% of the city's customers will see a $5 increase. Most of the additional revenue generated by the rate increase will come from the city's largest customers.
To outline how serious the city's deferred maintenance has become, Brown points to the 170 water line breaks the city suffered last year. A similar sized system in an adjacent county suffered 30.
This year the cost to operate the city's water system will outstrip the system's income by more than $1 million, Brown said. This will eat up the carryover from last year, as well as contingency funds. The department's budget is $7,019,657 for 2022, its projected income from water billing and other fees is $5.8 million. A separate city fund, the water capital replacement fund, set up to pay for water projects, is budgeted for $231,777 this year. Much of the work the city hopes to do would be paid for by loans from the Ohio Water Development Authority. Those loans require debt payments.
Ken J. Heigel, executive director of the OWDA, said when the authority awards a loan, it looks at the revenue of the water system applying. "They would have to have rates in place to meet all the expenses of their system, including any existing debt, all their operation and maintenance expenses, and then the new debt. They have to have revenue coming into meet their expenses of the system." The authority has funded a project to replace a water line along Newark Road that is expected to begin this spring.
Prices continue to rise to do the work the city both needs to do and wants to do. Pipes and labor aren't getting any cheaper, Brown said. Last year the city bid out the replacement water tower for the Pioneer Hill Reservoir, but had to rebid the project when costs skyrocketed due to the COVID-19 pandemic, adding some $650,000 to the project's price tag. The project is now expected to cost about $2.4 million.
And while the consumer price index, an average of several costs borne by consumers has risen over the years, Brown said, the price of water in the city has remained the same. Over the years the city has not passed on cost increases to customers, Mason said, effectively robbing capital projects to pay expenses.
One of the largest projects on the city's radar is to replace every water meter on the system. A loan application for the $4 million project has been approved by city council, but funding has not yet been secured. The project would eventually save the city money by replacing the worn-out meters currently in service, and by reducing the cost to read the meters as they could be read from one central location. The city also needs to replace the filters at the water plant — a $500,000 project that should have been done several years ago, Brown said. Aging equipment at the city's well field needs to be replaced and maintained. Then there are the projects that occur every few years that are due, like rehabilitating the Fairview Road water tank. That project is scheduled for 2023 at a cost of $210,000.
Residents don't think about water infrastructure until they don't have water, Brown said, and that occurs with alarming frequency these days. The city's pipes are a patchwork of old and new, and often crews will find a break right next to a patch from an old one. To remedy that, Brown said the department has planned $2.6 million in water line replacements in 2023, 2024 and 2025.
Social media: @crookphoto
This article originally appeared on Zanesville Times Recorder: Funds drying up for water department