As published in the April 1, 2017 Toledo Business Journal
Tim Brown, TMACOG
and Craig Stough, City of Sylvania
TMACOG members address regional water
The Toledo Metropolitan Area Council of Governments (TMACOG) has hosted a series of meetings with representatives from the Cities, Townships, and Villages around the Toledo area, and hopes to assist in furthering member evaluation of a possible regional water system. Toledo Business Journal (TBJ) met with TMACOG president Tim Brown and City of Sylvania Mayor Craig Stough about the goal of the meetings as well as other issues facing the region.
Toledo Business Journal: Can you provide an overview of TMACOG and the role it is playing in the issue of a regional water system?
Tim Brown: In some states, membership in a TMACOG, or membership in a council of governments is required by law, and Michigan is an example of that. In Ohio, it is entirely voluntary. So for almost 50 years now, the people at the table of TMACOG are paying membership and sitting at the table voluntarily because they have a vision for the region. Not just their own communities, but they’re thinking beyond their borders, and that is a core component of what we try to do here, is get people around the table who want to find ways to work together and cooperate. We’re doing that on a whole host of issues.
We were just talking about the transportation side, but on the water quality side, regional water distribution is just one small component of what’s being done in this area. We’re looking at the health of Lake Erie; we’re looking at ag runoff and its contribution to some of the problems we’ve encountered in Lake Erie; and some of the problems we have with combined sewer overflows in the region, when both Detroit and Toledo, many years ago, were major contributors to raw sewage going into our Lake. We have worked to try to mitigate that. We work to try to mitigate with smaller communities that are unsewered, that have septic systems.
Part of what drives the transportation side is a federal requirement on regional planning and then part of what drives our water quality side is the Federal Clean Water Act. That requires some mitigation in these areas, so there’s a plan called 208, where we work with some of the outlying communities to get sewers, to work with the proper maintenance and disposal from septic systems, to get those pumped out and not leached out into ditches and streams that ultimately impact Lake Erie. So it’s multifaceted what we do.
Five years ago, probably nobody thought that we would be talking about the regional water system again. It has come up many times in the past.
Because of the fluidity in issues that can rise and fall, we’re member-driven, and so this is one of the member-driven initiatives that the folks that want to be around the table have helped drive, and have helped move that ball along as far as we have on regional water discussions. That’s kind of how we operate here, and like I said, almost 50 years of success in doing so. We’re very proud of it.
The interview then turned to Sylvania Mayor Craig Stough to provide an update on issues concerning a regional water system.
TBJ: Can you discuss the current efforts involving a regional water system?
Craig Stough: We’ve been meeting for nearly a year with all the customers of Toledo’s water system and Toledo at the table. In early March there was a step forward in Toledo recognizing that the utilization of an ORC 6119 public utility might be the right option, and members are saying “Let’s find a facilitator to help us to that end,” so that’s a positive statement. It’s taken months to get there.
Discussions need to be held on governance and ownership. Lucas County Commissioner (Carol) Contrada, has done a lot of research on it, and shared it with the community. There is a lot of flexibility for an ORC 6119, both for ownership and for governance. “Governance” meaning who has how much of a say, and also who is the rate-setting agency, and who will respond to the public health agencies as well. It’s been done very effectively in Wood County, there’s a Wood County ORC 6119 involving their water district. There’s also one in Detroit for their water system. It’s not an ORC 6119 in Detroit, under Michigan law it’s different, but it’s been effective as well, so it’s a very good possibility to regionalize, for the future, a water system.
TBJ: Has the City of Toledo indicated anything different from their current policy of maintaining ownership of current assets?
CS: No. In fact, during the meeting, I challenged Mayor Paula Hicks-Hudson on that and she could not answer whether – in the future – the suburbs, through ORC 6119, could have partial ownership of the plan. She has told me that, according to their charter, she believes it takes a vote of the Toledo electorate to allow that to happen. But the other side is, the suburbs currently are paying about 50% of the improvements of the Collins Park Water Plant, and we’ve been paying for 50 years and have nothing to show for it. I cannot, in good conscience, do that for another 30 years and have nothing to show for it, and end up in a monopoly situation like we are right now. That’s not a realistic outcome.
There’s another issue that’s involved with this, and this is the issue between what bulk-water costs and what full-service water costs. The suburbs pay for water at the full service cost of the City of Toledo. “Full-service” means it’s not just the production of the water, it’s the shipment of that water down every street in Toledo, the metering of that water, the repair of the water lines, the sending of the bill, and all that. That’s included in our water rates, and we pay the highest rate in Toledo right now, plus a 70% surcharge on top of that. So we are not only subsidizing the Collins Park water operation, we’re subsidizing the entire Toledo Water Department – 50% of their operation – and the suburbs are looking at all their options to purchase water where we aren’t subsidizing half of Toledo’s operation. It’s expensive to build a water plant, but you can’t keep asking for more and not expect there to be a less-expensive option elsewhere.
TBJ: Are there fees in terms of economic development projects being paid to Toledo for access to water?
CS: There are shared revenues, that’s a requirement from Toledo. Those were promoted very strongly by the Finkbeiner Administration. We’re talking about eliminating those, and Toledo has, I think, agreed that they will be eliminated in the future. But if they continue to have a monopoly, they could require it.
TBJ: Explain the alternative options for providing water to communities in the region and the economic impact of these options?
CS: The first option is to continue to purchase most of the water from the Collins Park Water Plant. That is a very good facility, it was built in 1941, and even with the $500 million worth of improvements, it’s still a fairly economical water source. The problem is with the surcharges and the other subsidies Toledo wants to put on top of it.
The other option, that the prices are starting to look realistic for, is to build separate water plants. Sylvania has a right-of-way in Monroe County, out into the Lake, and across southern Monroe County toward Sylvania, to build a separate water plant. Depending on the size of the plant, it could be anywhere from $250-$400 million. And it will cost more initially, but after 20-30 years, our water price will be less than Toledo’s, based on the inflation that they tack on all the time.
TBJ: What are key issues that will lead to the success or failure of implementing a regional water system?
CS: There are so many, it’s hard to say. Old distrust, the heavy-handedness of Toledo in the past to charge or require revenue-sharing – that is an issue of which all the customers are cognizant. This question of ownership is a very difficult one. How can I justify to my ratepayers in Sylvania that they’re going to put another $25 million into the Toledo Collins Park Water Plant and have nothing to show for it in the end, and that they’ll be subject to a monopoly like we’re being treated now. We should invest that money in our own water plant.
Waterville has already made this step, they’re buying water from Bowling Green. They’re not going to own the Bowling Green Water System but they’re not going to be subject to the City of Toledo’s monopoly situation any longer. Those are the two biggest hurdles.
The personalities in the room are actually not doing too badly. I think most of the leadership from the difficult years is behind us. We’re onto new leadership, trying to find new solutions.
This is a perfect role for TMACOG, to try and plan a new regional water system. It’s difficult to stay above the politics, but it has to be a political solution.
TBJ: What are some of the key benefits that will happen if this group comes together to create a regional water system?
CS: That’s what’s drawing everybody to stay at the table, and there are two big issues involved: first is safety and redundancy. If we have a regional water system with interconnectivity to other systems, say, in Oregon or Bowling Green, or the City of Monroe, if there is a catastrophe like there was 2.5 years ago, we don’t have to put half a million people on bottled water because one plant shuts down. That’s the number one concern – that if one plant shuts down, you can open up a valve, and another plant can help supply water to your community. We do not ever want to have the water shut down again. The bigger and broader the system is, the more redundancy that you have.
The second one is economies of scale. The more we can work together and not isolate the system, not build separate little water systems, the lower the cost. Toledo stated at the meeting that there’s at least double capacity in the Collins Park plant to serve customers already, because the EPA is building redundancy into their plant. So they’re going to have twice as much as they need. If we build other plants, that’s more expense. So to keep the price as low as possible, both for the consumers but also for economic development, the better off we are. And if these doubts about the cost of water and the tax requirements can be removed from the table, we will appear much friendlier as a region for economic development. Where other areas of the country are parched and water is very expensive, water can be less expensive here and not politicized. That’s the goal.
TBJ: What is the possibility for significant investment in a second intake?
CS: There are three possibilities out there right now. One is just for the Toledo Water Plant with its internal redundancies as planned. The numbers that were proposed were $37 per small customer per month. If you add a second water intake onto the Toledo plant, that’s about another $100 million, or about $5 per customer per month. If a second water plant is built with its own intake, that’s $200-$300 million and that’s another $10-$15 per month per customer, for a typical, small residential customer. So to buy that safety and redundancy is an issue that needs to be discussed because there is a cost to doing it.
My position is I’d rather have a second water plant because having all our eggs in one basket is a dangerous situation. If there’s a natural catastrophe, an earthquake that shuts that plant down, if there’s an explosion, if there’s contamination, if there’s terrorism at the site, half a million people go on bottled water for who knows how long. All businesses, all hospitals shut down. We can’t do that. We have to have redundancy in the system. That has to be a learning episode from 2014. We have to be interconnected with other systems, we need to get along and have a contingency. If there’s a problem with that plant, we should have other plants to back it up.
TBJ: Do you have any comments about the potential impact on either a regional water facility or Lake Erie based on some significant possible federal cuts that may affect EPA and other initiatives?
CS: I think it’s important. The quality of the water in Lake Erie would be affected by those cutbacks from the EPA. And the quality of the water – how much it needs to be cleaned up – is going to determine how many chemicals, how many filters, have to be used, so it has definite impact into the cost of drinking water for people.
I’m not aware that it would affect our grant-writing abilities, nobody’s talked about that yet, because we will certainly go for State and federal grants from Ohio and/or Michigan or from the federal government to help with the improvements. But I don’t think Toledo’s getting much grant help with their half a billion dollar improvements of the Collin Park Water Plant. I don’t know if those funds are available now. There are rural water system grants that are out there that other, smaller systems are taking advantage of. Whiteford Township, just north of Sylvania, is building its own new small-scale water system, and they’re getting a significant grant from the State of Michigan to build this water system. It doesn’t pay for it all, but it’s paying half or more and making it possible. Whether we’ll be able to tap into those funds or not, we have not got that far.