City Administration’s Response to the W&S Commission’s Recommendations as Outlined in the State of the
Water / Sewer System FY15
August 1, 2016
On February 1, 2016, the HdG Water/Sewer Commission presented their Annual Report on the State of the Fund with Executive summaries and Recommendations for Fiscal Year 2017 (FY 17) as per City Codes Chapter 25 Article XI, Section 25-69B. This report is filed to address those recommendations and are presented in the order in which the recommendations were outlined. The responses are a result of and echo the cohesive and integral efforts of the several departments within our organization, most notably Director Whittie and his Public Works team as well as Director DeHority and his Finance team.
- The 20 / 80 method of collecting Capital Costs Recovery Fees (CCRF) should be discontinued.
Response – The 20 / 80 method of collecting CCRF stopped on June 30th, 2016 as a result of the recommendation by the Commission and the “sunset clause” incorporated into the fee schedule at the time it was originally adopted.
- Continue the collection of the Debt Service Fee (DSF) beyond FY17.
Response – The DSF was created as a revenue stream to supplement the current CCRF. The DSF provides less than 25% of the necessary revenue to satisfy the annual payment. This recommendation was made prior to the Administration’s announcement of its’ plans to aggressively pursue improvements at our Fund 9 facilities and their respective supporting infrastructure. Additional work is currently underway involving an engineering study of the Water Treatment Plant to develop and implement cost reducing systems while increasing production. A second study is currently underway and is focused on the financial and administrative side of operating the Fund 9 enterprises. Both projects will have an impact on the DSF and the Administration will withhold action on the initial request until the impact(s) are known. It is important to note, that all information (impacts) are shared jointly with the Water and Sewer Commission as well as the Council to provide all stake holders as much information as possible when making decisions.
- Examine the reasons for the recent drop in water consumption by commercial and industrial consumers.
Response – Consumption has declined for two major reasons, the loss of businesses from our commercial and industrial sector but more importantly, the strategic and effective measures those patrons are taking to reduce water consumption and thereby lowering their expenses while improving their impact on our natural resources. (I.e. typically, if less water enters a production facility less water leaves a production facility for treatment as waste water. For example cooling towers and apparatus are now recirculating water as opposed to disposing of it after one cooling cycle.)
- Reconsider the annual budgetary revenue estimates used for CCRF (number of connections necessary to balance Fund 9).
Response – The Administration has taken that approach and made it a practice as illustrated in the FY17 Budget whereby proposed connections are projected to be a realistic 59 connections as opposed to adjusting the number of connections to satisfy (balance) the budget.
- Emphasis on a reduction in operating expenses, using best practices in:
- Allocation of employee capital
- Capital investments in automated monitoring and response systems
- Review of current policies and procedures
Response – All three areas noted are ongoing and part of the “agenda” of this Administration. Investment and allocation of employee capital, automated systems as well as processes and procedures are incorporated in the two studies previously mentioned. Additionally the Administration in concert with the Benefits and Compensation Commission has had a positive effect in the reduction of employee expenses. Thus far the City has reduced employee capital by $197,000.00 and chemical expense by $62,000.00 (39%).
- The Director of Public Works needs to perform an in-depth study of the current Capital Improvement Projects Plan and create a tiered priority list based on critical infrastructure and component needs.
Response – A preliminary tiered priority has been performed. In addition, Mr. Whittie has recently engaged the services of an engineering firm as previously mentioned. One of the task outlined to them is the prioritizing of projects so as to facilitate the proper timing for each project and its impact to upgrading the entire system. This catalogue of work being recommended by the engineering firm will then be “dove-tailed” into other projects which are outlined for Fund 9 areas of responsibility.
- Explore alternative revenue sources to meet current debt, operations and capital needs.
Response – The Administration is doing just that through expediting the end of our current obligation with the County while exploring alternative customers for our most precious resource.
- Consideration of a rate increase of 10% for FY17.
Response – The City Council approved a rate increase of 10% for the water and sewer charges for FY17.
- Explore and if needed develop an Employee Succession Plan for both the Water Plant and Waste Water Plant. Possibly create an apprenticeship program and cross training for both facilities.
Response – A training and succession plan is currently in the development stage at the present time. Director Whittie has assured the Administration that at this juncture the City has redundancy in all positions for both the WTP and WWTP facilities.
- Implementation of a fats, oil and grease (FOG) program.
Response – The City routinely sends fliers to all commercial restaurants requesting that they refrain from putting grease, fats and oils into our sewer system. The Harford County Health Department is tasked with periodic inspections of grease traps which are a required component in restaurant facilities. The City monitors its infrastructure and when issues arise involving FOG components, takes immediate and decisive action to bring about a permanent remedy. Director Whittie oversees this process and has authority to enforce compliance.
- Solicit State officials to assist in debt restructuring and/or assistance.
Response – The Director of Finance periodically solicits State officials for restructuring and assistance to offset loan expenses. One facet which has hampered our efforts in the past has been the reluctance of City Council to raise the utility rates to coincide with the increased costs realized in Fund 9. With the approved rate increase coupled with the approved bond bill to borrow money for much needed improvements in the Water Treatment plant our collective efforts to improve our financials in this area are greatly improved. Annually the City petitions our Annapolis representatives for relief from and /or restructuring of our State debt.
The Commission concluded with stating that a “Blue Ribbon Commission” be established and led by the Director of Public Works to consider:
- Alternative water customers
- Aggressively market new businesses that require high water volume
- Review the Harford County / Havre de Grace Water agreement
- Annexation of areas contiguous to our boundaries
- Evaluate current water and waste water capacity allocations and place time tables on developers
- Investigate the availability of participating in a Waste Water Capacity Credit Sharing Program
- Perform a critical review of the current Water / Sewer Fee Structure, including the Debt Service Repayment logic.
Response – Given the breadth and scope of the items to be addressed and the involvement of the Public Works Director in matters directly impacting the department it is recommended that the Director of Administration in concert with the Administration, staff and the Admin. Committee lead the effort to answer the action items set forth above.