Two months after we warned that Youngstown Mayor Jamael Tito Brown was rolling the dice by refusing to raise sewer rates, it’s clear snake eyes are the order of the day. In other words, Brown is on a losing streak, and it’s costing city government a ton of money.
“We are moving in the direction of going into the red with wastewater if we don’t get these loans,” Kyle Miasek, interim finance director, told city lawmakers not too long ago. “That is definitely a major red flag for us.”
The loans Miasek was talking about have been committed by the state to help pay for a federally mandated upgrade of the wastewater treatment system. The price tag is in the many millions of dollars.
However, the Ohio Environmental Protection Agency has told the city it is delaying about $12 million in financing because the mayor and city council have failed to raise sewer rates to generate the revenue needed to repay the loans.
In urging Brown to overcome his reluctance to implement an increase, we noted that there wasn’t enough money in the wastewater fund to cover the costs of improvements to be undertaken with the $12 million.
In March, with reality staring him in the face, the mayor made it clear he wasn’t about to pull the trigger.
“Am I ready to raise rates?” Brown asked. “My response at this time is no.”
But that political paralysis is costing the city a bundle.
In delivering his warning about the wastewater fund spewing dollars, the acting finance director provided these eyebrow-raising numbers: The fund started the year with a surplus of $13,117,919, and in three months the balance was down to $9,321,369 – a reduction of $3,796,550.
And if that news wasn’t shocking enough, Miasek pointed out the city must spend an additional $8 million this year on projects it has committed to undertake at its treatment plant on Poland Avenue.
“We have not been denied the [state] loans,” he told members of city council. “We’ve been told by the EPA that until we show we have the ability to fund the projects, they’re holding off on loaning us more money.”
The city already has borrowed $60 million from the state for the improvements, with repayments to begin in 2020.
We need to be clear about the seemingly intransigent position taken by Mayor Brown: We certainly understand his reluctance to burden Youngstown residents with even more financial obligations, but he must know that there aren’t many options.
He can study the issue to death, but the bottom line will remain unchanged: Five years ago, the city of Youngstown entered into an agreement with the U.S. and Ohio EPAs for a $160 million upgrade of its sewer system.
Nonetheless, the mayor is awaiting an affordability study to determine how much Youngstown residents can afford to pay. He also will be seeking a meeting with federal and state EPA officials to discuss a possible reduction of the $160 million in upgrades.
The problem with trying to renegotiate is that other communities have made the tough decisions.
For instance in Toledo, an aging treatment plant, which contributed to the drinking water crisis in the city, was found to have “significant deficiencies” with the possibility of “imminent failure.”
Toledo City Council approved 7 percent increases in water rates through 2020 to finance $300 million in upgrades to the plant.
It is, therefore, a long shot that the state and federal governments will give Youngstown a break.
Brown is grasping at straws when he says the previous administration used “in-house attorneys” to negotiate with the U.S. and Ohio EPAs. He believes a lawyer who specializes in such matters should be hired by the city to deal with Washington and Columbus.
We can’t help but recall acting finance director Miasek’s eye-popping financial assessment of the situation. He said Youngstown is “burning cash dramatically in wastewater.”
Last year, Arcadis, an international company that specializes in water and sewer analysis, reviewed Youngstown’s situation and recommended a rate increase of 8 percent a year for a period of five years. Had the city agreed, the increase would have gone into effect in January.
But nothing has been done.
As Councilwoman Basia Adamczak, D-7th, put it, “I know the mayor doesn’t want to approve a rate increase, and we don’t, either. But we’re spending money, and we’ll have no money [in the wastewater fund] at the end of the year.”