Cleveland City Council secures financial future of the Cleveland - 19 Action News|Cleveland, OH|News, Weather, Sports

Cleveland City Council secures financial future of the Cleveland Division of Water

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At the request of Mayor Frank Jackson, Cleveland City Council approved a water rate increase of $11 per quarter for the average Cleveland resident to secure the financial future of one of the best water systems in the world, the Cleveland Division of Water (CWD), at their Monday, May 23 meeting.

The vote, (10 yes, 8 no, 1 absent) on Ord. 462-11 approves a series of water rate increases that would generate an extra $220 million over five years to ensure the CWD has adequate reserves and to maintain its bond rating.  A rate increase is needed to cover:

  • A decrease in overall consumption of water.  Estimates show a drop in consumption of nearly 14 percent between now and 2015;
  • Investment in the aging infrastructure to keep water flowing;
  • Cost of financing for the system and to pay off bonds

Sharon Dumas, director of finance for the city of Cleveland, stated the bond counsel advised the city that two successive years of failing to maintain the debt-revenue ratio would constitute an event of default under the bond documents.

The rate increase, which extends through 2015, would raise rates for Cleveland and suburban customers.  This means:

  • The increase will raise the current $7 quarterly fee for Cleveland residents to $18 starting July 1, 2011.  It will increase $3 annually starting in 2013.
  • The average Cleveland customer (16,000 gallons) would see their quarterly bill over four years go from $46.48 to $84.39 in 2015.
  • Water customers in the farthest zone outside of Cleveland will see their quarterly bill over four years go from $88.33 to $133.17 in 2015.

In agreement for passing this rate increase, Cleveland City Council requested the following:

  • Reports from the oversight committee (bi-weekly reports when the committee meets weekly and bimonthly reports when the committee meets monthly).
  • Report from the hired turnaround firm twice in the fall of 2011 and once in the spring of 2012.
  • Homestead exemption (seniors and low income residents) 50 percent discount of the fixed rate increases.

Council's Public Utilities Committee actively engaged CWD in resolving the customer relations issues and other associated problems in the division. The committee worked with Mayor Jackson's administration to identify the specific problems and to address those issues including the purchase of new automatic meter reading systems and hiring of an outside management firm.

 

To date, Council has:

  • Held more than 8 meetings to address customer service issues including billing, call wait times and out of order meters.  Call wait times are now under 4 minutes; billing backlog is under 5,000 and the number of out of order meters is below 5,000
  • Passed three pieces of legislation to address the customer service and operational improvement issues since March 10, 2010:

Ord. 513-10 – Authorizing Public Utilities to enter into a contract for a project administration for the Division of Water's "Automatic Meter Reading System."

Ord. 261-10 – Authorizing the issuance of $50,000,000 in bonds to acquire infrastructure for an "Automatic Meter Reading System."

Ord. 138-11 – Authorizing the director of public utilities to employ one or more consultants to assess and develop management strategies and implement accepted recommendations including making recommendations regarding the management of the Division of Water.

  • Met with CWD and their consultants this spring to carefully review water usage figures, financials of the division and the impact on the utility, and the city, if rates are not increased.

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