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Mayors Discuss Public Private Partnerships, Water System Reinvestment

By Rich Anderson
January 28, 2013


The Mayors Water Council Co-Chairs, Baltimore Mayor Stephanie Rawlings-Blake and Indianapolis Mayor Gregory A. Ballard, welcomed mayors to the Mayors Water Council meeting on January 17 in conjunction with the 81st Winter Meeting of the Conference of Mayors. Rawlings-Blake started the meeting by inviting mayors to identify themselves and what their major water issue is.

Public-Private Partnership Project

Allentown Mayor Ed Pawlowski presented information concerning a long-term Public Private Partnership the city is planning, and is about to select an operator from among six bidders. The city is motivated by the need to address current and future municipal employee pension funding, and especially an unfunded pension liability of about $170 million. The mayor said pension fund payments are eating up so much of the general fund it is crippling the rest of city operations. Meeting the pension payments would require a dramatic increase of 100 to 150 percent in local revenues. Allentown already has the highest tax rate in the region and is competitively disadvantaged. Allentown has 20 percent of households at or below the poverty rate, and another 20 percent who are senior citizens on fixed income.

The mayor said Allentownís first step was to begin negotiating new labor agreements that bring employee benefits in line with the new fiscal reality. Second, the city decided to address the growing unfunded pension liability, but instead of raising property taxes and driving middle class homeowners and small businesses out of the city the mayor looked at leasing the public facilities. It was determined that leasing the local wastewater treatment plant could generate a concession fee that could reduce, if not eliminate, the unfunded pension liability. And, as a lease arrangement, the city never gives up title to the facility.

Pawlowski estimates the concession could raise $170 to $250 million. There would also be an annual royalty fee paid by the operator to the city that would be used to pay down existing wastewater system debt. The deal would also stabilize a good portion of the cityís finances for the next 30 years, reduce pension liabilities, pay off most existing water and sewer debt and avoid having to raise taxes in the city for a number of years. The mayor stated that the entire program can be viewed on the website Allentown.gov.

Investing in Our Nationís Water Infrastructure to Grow Jobs, Rebuild Regional Economies

San Francisco Mayor Ed Lee described how the city and county took the opportunity to make a $4.6 billion water system investment, and a 20 year $6.9 billion capital sewer investment to upgrade their public water infrastructure, create jobs, and include training to improve worker skills. Lee illustrated the link between public infrastructure investment and creating economic activity with multiple public benefits.

San Francisco Public Utilities Commission General Manager Harlan Kelly described the Water System Improvement Program as a $4.6 billion construction effort to expand capacity in the system and harden it to withstand seismic activity. The program involves 81 projects including: new dam; treatment plants; tunnels; and pipeline replacement. The system serves 2.5 million people in the city and Bay area.

Kelly said that the Commission negotiated a project labor agreement that requires no work stoppages, use of qualified workers through training, and paying prevailing wage. Projects under $5 million are not under labor agreement and gives flexibility to small businesses. The results, said Kelly, 33,000 jobs created, nine million craft hours, and innovative workforce inclusion strategies where about 50 percent of craft hours were done by workers in and around San Francisco. The program also includes a $300 million habitat restoration and watershed protection component.

Kelly then described the 20-year $6.9 billion capital investment in the Sewer System Improvement Program. Manage stormwater and catastrophes, adapt to climate change, and achieve economic and environmental sustainability and affordable consumer rates. Kelly stated that new digesters will be costly and are not mandated by law, but will solve local nuisance issues.

Lee pointed out that cities need a partnership with the federal government to create jobs, and the Conference of Mayors should support the Presidentís Infrastructure Bank.

Water Environment Federation Water for Jobs Campaign

Water Environment Federation (WEF) Executive Director Jeff Eger remarked that investment in water is not getting the attention it needs, so WEF and several partner organizations created the Water for Jobs partnership. The Partnership plans to hold an Infrastructure Summit this Spring to place the spotlight on water infrastructure. In conjunction with the American Water Works Association (AWWA), WEF members will make Capitol Hill visits to push for supporting water infrastructure investments and job creation.

Eger stated that water infrastructure language was successfully inserted into both the Democrat and Republican campaign platforms in the last Presidential Election cycle. WEF is hoping to have local dialogues with cities and work together on this issue.

Model Municipal Fertilizer Ordinance

Racine (WI) Mayor John Dickert and Barrington Lake (IL) Mayor Kevin Richardson updated the mayors on their work to translate a fertilizer application best practice policy adopted by the Conference of Mayors into a practical local ordinance in Racine. This effort builds on previous work Richardson has completed in Illinois where he was able to bring all of the parties together and work out a policy approach that is protective of water quality, protects vulnerable habitats, includes applicator training up to best practices levels, and provides for penalties for failure to comply.

Since there are many parties that contribute to non-point nutrient contamination of waterways, but are not held responsible, the process that Richardson and Dickert are developing helps to reconcile competing interests within the community, but also allows for non-jurisdictional non-point source emitters to engage in solution discussions.

The effort in Racine is near completion, and the mayors may be reached by e-mail at: John.Dickert@cityofracine.com or krichardson@lakebarrington.org.