Funds are running out for the water service

ZANESVILLE — The Pioneer Hill Reservoir is a chunky steel lid perched on top of a leaky tub that holds 2 million gallons of water in inky darkness, speckled with holes in the roof and walls.

Built in the 1890s, it needs to be replaced. But this is just one of two dozen projects the City of Zanesville Water Department must fund, and funds are scarce.

That puts the city in a precarious position, said city civil service director Scott Brown. Without a rate increase, the department is running out of money. Without more money coming in, it becomes difficult, if not impossible, to get loans to fund projects.

The ministry has outlined more than $26 million in projects it hopes to complete, including more than $10 million in water main replacement projects. “The system has been neglected for years,” Zanesville Mayor Don Mason said.

“It costs more money to operate the system than we report,” Brown said. “And we have to catch up on decades of deferred maintenance.”

Mason said the system was repaying loans on costs formulated years ago, while the efficiency of appliances and things like showerheads had increased, leading to less consumption and fewer dollars.

To counter the problem, the city raised water rates for the first time in nearly 20 years.

Most residential customers won’t 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 was in 2017, when it reduced the amount of water paid for by the minimum bill. .

To formulate the rate increase, the city engaged Verdantas LLC and Environmental Rate Consultants to conduct a study of the water utility’s revenue requirements to complete the various infrastructure projects the city needs to undertake.

The rate increase was first considered in early 2020, but was put on hold due to uncertainties related to 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. Additionally, “if a water service rate is not approved and implemented by the City of Zanesville, the city may not qualify for additional fees and need low-interest loans for capital projects, nor may the department be able to repay existing debt.

Rates vs Expenses

Forty-four percent of the city’s customers won’t 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.

Out-of-town residential customers are seeing similar increases, though the minimum bill starts at $17.55. A total of 65% of City customers will see a $5 increase. Most of the additional revenue generated by the rate hike will come from the city’s largest customers.

To highlight how serious the city’s deferred maintenance has become, Brown points to the 170 water main breaks the city suffered last year. A similarly sized system in an adjacent county suffered 30.

This year, the cost of operating the city’s water system will exceed system revenues by more than $1 million, Brown said. This will eat into last year’s carry forward, as well as provident funds. The department’s budget is $7,019,657 for 2022, its projected revenue from water billing and other charges is $5.8 million. A separate municipal fund, the Water Capital Replacement Fund, set up to pay for water projects, has a budget of $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. These loans require debt repayments.

The Pioneer Hill Reservoir was built in the late 1800s and holds over 2 million gallons of water.  The Zanesville Water Department hopes to replace the structure with a water tower.

Ken J. Heigel, executive director of the OWDA, said when the authority makes a loan, it looks at the revenue of the water system that applies. “They should have tariffs in place to cover all of their system expenses, including any existing debt, all of their operation and maintenance expenses, and then new debt. They must have revenue coming in to cover their system expenses. The authority has funded a water main replacement project along Newark Road which is due to start this spring.

Prices continue to rise to do the work the city needs and wants to do. Pipes and labor don’t get any cheaper, Brown said. The city last year bid for the replacement water tower for the Pioneer Hill Reservoir but had to restart the project when costs soared due to the COVID-19 pandemic, adding some $650,000 at the cost of the project. The project is now expected to cost around $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 hasn’t passed on cost increases to customers, Mason said, starving capital projects to pay for expenses.

One of the biggest projects on the city’s radar is replacing every water meter in the system. A loan application for the $4 million project has been approved by city council, but funding has yet to be secured. The project would potentially save the city money by replacing worn-out meters currently in service and reducing the cost of meter readings because they could be read from a central location. The city also needs to replace the water plant filters — a $500,000 project that should have been done several years ago, Brown said. Aging wellfield equipment in the city needs to be replaced and maintained. Then there are the projects that happen every few years and are due, like the rehabilitation of the Fairview Road water reservoir. This project is scheduled for 2023 at a cost of $210,000.

Residents don’t think about water infrastructure until they have water, Brown said, and it’s happening with alarming frequency these days. City pipes are a patchwork of old and new, and often Crews will find a break right next to a patch of an old one. To address that, Brown said the department has planned $2.6 million in water main replacements in 2023, 2024 and 2025.

ccrook@gannett.com

740-868-3708

Social media: @crookphoto