Originally published May 31, 2019 at 6 a.m., updated May 31, 2019 at 10:30 a.m.
YOUNGSTOWN
The city is burning through wastewater money to pay for federally mandated improvement projects – unable to get state loans for the projects because it refuses to raise sewer rates.
“We are moving in the direction of going into the red with wastewater if we don’t get these loans,” Kyle Miasek, interim finance director, told city council members Thursday. “That is definitely a major red flag for us.”
The wastewater fund started the year with a surplus of $13,117,919. As of April 30, it was down to $9,321,369, a decline of $3,796,550 in just four months.
And it looks like it’s going to get worse because the city needs to spend about another $8 million this year on projects it’s committed to have done at its treatment plant on Poland Avenue.
The state Environmental Protection Agency decided earlier this year to delay the loans because Youngstown hasn’t agreed to raise sewer rates needed to repay that money.
If the city can obtain the money from the state EPA, which is repaid over 20 years, it would be able to replenish its shrinking wastewater fund, Miasek said.
“We have not been denied the loans,” he said. “We’ve been told by the EPA that until we show we have the ability to fund the projects, they’re holding off on loaning us more money.”
The city previously has borrowed about $60 million from the state for the improvements, with repayments starting next year.
Miasek described the situation as alarming and said the city is “burning cash dramatically in wastewater.”
Mayor Jamael Tito Brown has repeatedly said he won’t raise rates without an affordability study to see how much residents can pay as well as sit down with the federal and state EPAs to discuss a possible reduction of the $160 million commitment the city made five years ago to upgrade its sewer system.
Council members could act to raise water rates but haven’t done so even though an analysis by Arcadis, an international firm that specializes in water and sewer analysis, recommended in October 2018 that rates be increased 8 percent a year for five years, starting Jan. 1 of this year.
Councilwoman Basia Adamczak, D-7th, said, “I know the mayor doesn’t want to approve a rate increase, and we don’t, either. But we’re spending money, and we’ll have no money [in wastewater fund] at the end of the year.”
Earlier, the board of control – consisting of Brown, Miasek and Law Director Jeff Limbian – voted to hire Michael Abouserhal, a CPA and former Ohio Lottery Commission executive director, for up to $25,000 to evaluate the city’s wastewater and water funds, particularly focusing on the former.
That work is expected to take 90 to 120 days, Miasek said. That’s near August or September.
“The mayor wants a second opinion” to make sure Arcadis’ evaluation was “accurate,” Miasek said.
In January, the board hired Abouserhal for up to $25,000 to assess the city’s financial condition and other monetary issues, including evaluating the budget and long-term financial forecast.
Abouserhal was paid $25,000 last year to evaluate Youngstown’s finances. The city adopted only a few of his recommendations.
There are about 22,000 wastewater accounts in the city.
If Arcadis’ recommendation was approved, the monthly sewer rate would have gone from $98.91 per 1,000 cubic feet now to $106.82 this year; $115.37 in 2020; $124.60 in 2021; $134.57 in 2022; and $145.33 in 2023.
That rate increase would cover only about $75 million of the $160 million in improvements the city is required to make. That first phase of improvements is for work at the treatment plant.
The rest of the work is for a new facility near the plant to better control sewage in heavier rainfalls and for an intercepter sewer to keep wastewater from flowing into Mill Creek.
After close to a decade of negotiations with the federal EPA, the city and the agency settled in 2014 on about $160 million in sewer improvements over 20 years.