Youngstown plans 4% sewer increases for next 5 years
Will pay for mandated improvements
By DAVID SKOLNICK
YOUNGSTOWN — The city administration is recommending 4 percent annual wastewater rate increases for the next five years, starting Jan. 1, to pay for federally mandated improvement work.
While city council members complained at a Wednesday meeting about the mandates, none spoke in opposition to the proposed increases. Council will consider the hikes at a meeting next Wednesday.
Sewer customers currently pay $98.91 per 1,000 cubic feet.
Under the proposal, it would go to $102.87 Jan. 1, then $106.98 in 2021, $111.26 in 2022, $115.71 in 2023 and $120.34 in 2024.
The city has been using its own wastewater money, about $6 million so far this year, for the projects. That’s because city officials have declined to raise the sewer rate. That resulted in the state Environmental Protection Agency refusing to loan any additional money to the city earlier this year as rate increases are to be used to repay that money.
Michael Abouserhal, the city’s financial consultant, said Youngstown officials have shared the proposed rate structure with the state EPA, seeking to convince the agency that the increase would cover about $15 million in loans needed to finish the first phase of a long-term wastewater improvement project.
The EPA “has to do due diligence,” he said. “We hope they will agree to our proposal.”
Mayor Jamael Tito Brown, who supports the 4 percent increases, added: “We’re talking with the EPA, emails and phone calls. It’s one question after another. When they ask us something, we answer. We hope it comes to an end with the EPA with this proposal.”
WHAT IT’S FOR
These rate increases would only cover about $77 million of the $160 million in improvements the city is required to make by the federal EPA. That work is for improvements to the wastewater treatment plant.
A 2014 settlement with the EPA also had the city agree to build a new facility near the wastewater treatment plant to better control sewage in heavier rainfalls and for an intercepter sewer to keep wastewater from flowing into Mill Creek.
Before the EPA cut off the city earlier this year, it loaned about $62 million to the municipality for the work, Kyle Miasek, interim finance director, said.
In addition to the $15 million being sought and the $62 million already borrowed, about $20 million in interest must be repaid to the EPA over 20 years, Miasek said.
Without a rate increase and approval from the EPA, the city will have a $3.4 million deficit in its wastewater fund by the end of next year, Abouserhal said. The deficit would be $16.5 million by 2024 if nothing is done, he said.
The city has seen its wastewater fund go from $17,323,000 in 2016 to $9,062,412 as of Sept. 30.
Arcadis, an international firm that specializes in water and sewer analysis, recommended in October 2018 that rates be increased 8 percent per year for five years, starting Jan. 1 of this year. But Brown refused to do so, saying it was too expensive for city sewer customers.
Abouserhal said his analysis to seek 4 percent annual increases for five years works because Arcadis estimated the city would spend $3 million more than it raised in 2018 when it actually exceeded it by $53,000. The city typically spends less than what is budgeted in its wastewater fund, he added.
With the 4 percent increases, the wastewater fund would have an $8 million surplus by the end of 2024, he said.
When asked about the rate increase impact of about $5 million given in the past decade from the wastewater fund to economic-development projects — a practice that was stopped with the state auditor’s office saying it was improper in August, Miasek said that amount would have covered one year of the 20 the city has to pay for the improvement work.
“But are people more inclined to come to a better downtown? Yes,” he said. “We believe it was money well spent.”
Abouserhal also recommended the city renegotiate sewer contracts with Mahoning and Trumbull counties. Brown said the Mahoning contract was signed in December 1988 and the Trumbull one in December 1989. Both are open-ended contracts.
Council President DeMaine Kitchen expressed pessimism that the counties would consider discussing the contracts to raise fees on its customers.
“If we go to the counties with a rate increase, they’re not going to be interested as their contracts have been open-ended,” he said.
Brown said, “We’ll sit down and negotiate.”
Kitchen said, “I don’t think its going to be that clear cut.”