Friday, March 19, 2010

High water bills? Whose fault really?

Who's really overseeing Charlotte-Mecklenburg Utilities?

Obviously, City Manager Curt Walton is the top boss. And the Charlotte City Council is Walton's boss.

But if you've followed city government very long you've noticed the elected officials tend to let CMUD (technically it's CMU) have its own way. That's because CMU is an "enterprise fund" - like the airport - and runs off its own revenues. Because council members don't have to raise taxes for CMU, they haven't given it much scrutiny. (Yes, I know that fees come out of people's pockets, too. But trust me, fee increases don't raise nearly the political wars that tax increases do.)

So who scrutinizes CMU? I took at look at the CMUD Advisory Committee? That's a seven-member committee (3 members appointed by the city, 3 by the county, 1 by the mayor). They are to "review and make recommendations to City Council" concerning: all water/sewer capital improvement programs, changes in policies for extending water/sewer service as well as proposed changes in how fees are determined, and pretty much anything else.

Why is this important? Many cities have used utilities as a way to strategically manage growth. It's less expensive, in the long run, not to have to build and maintain water/sewer lines over every square foot of land. But Charlotte's powerful developers have never wanted any land set aside from development. Shrinking the supply of land would raise the price of their raw material - undeveloped land. What better way to ensure that no land got set aside than to control the CMUD Advisory Committee?

Another reason it's important: It's in the best interests of this whole urban region to encourage more water conservation. What sucks up a disproportionate amount of unnecessary water use?Expansive suburban lawns. But suburban subdivision developers have little interest in not offering suburban lawns.

So who's on this board? It's required to have a real estate developer, a water and/or sewer contractor, a civil engineer, a financial expert, a representative from the non-Charlotte towns in the county, and a neighborhood leader.

I took a look at the board. It's revealing.

The chairman is James Merrifield, a developer with Merrifield Partners, formerly with Crosland. Last year he replaced former chairman Charles Teal, an owner of Saussy Burbank, a developer.

The two engineers are Robert Linkner with HDR and Erica Van Tassel with Kimley-Horn. The contractor is Marco Varela of CITI-LLC, a systems design company. Varela was mentioned in an Observer article in several years back (before his 2008 appointment) as selling wastewater treatment equipment to the city.

So far it's rather predictable. You'd want some civil engineering expertise, for sure, as well as developer expertise. Yet it's worth noting that engineering firms are generally hired by developers so they'd have little business reason to tick off potential clients by, say, pushing for using your utility department as part of a growth strategy that might involve setting some areas aside from development. Even if that would probably have been a lot more fiscally sound than stretching water-sewer pipes all over Mecklenburg County and asking all the rate-payers to fund those capital and operating costs.

But what about the people who are presumably supposed to add the non-developer points of view - the neighborhood leader, the towns representative?

The "neighborhood leader" turns out to be a Charlotte Chamber executive, Keva Walton. I suppose he lives in a neighborhood, but you wouldn't exactly expect him to be a voice in opposition to any business-developer interests.

And that towns representative? It's David Jarrett, vice president at Rhein Medall Interests, a Charlotte-based developer.

The end.


mopier95056 said...

You're actually going to blame CMUD's problems on suburbanites?'re kidding, right?

Remember the drought and how WE used much LESS than CMUD's projections, which severely cut their revenues? The end result? A 16% water rate increase.

From the Catawba Riverkeeper as to WHO REALLY USES THE MOST WATER!!!!!!!!
Overview of Water Use Issues
The Catawba-Wateree basin has finite water resources, but most of us treat water as if there is an infinite supply of water available for our use.

The average Charlotte area resident uses 190 gallons of water from the Catawba River per day per person. However, this is not the biggest use of water. It is a surprise to most people that almost half of the net loss of water from the Catawba River is a result of evaporation from water used to cool powerplants. On average, each kilowatt-hour generated from coal requires 25 gallons of water according to a 2007 report by the federal Sandia National Laboratories. The average U.S. home uses about 8,900 kilowatt-hours of electricity each year. Thus, the average household requires 610 gallons of water per day per household for electricity generated from coal (in addition to the 190 gallons per person per day used directly by residents in Charlotte). We can significantly reduce the water lost from cooling powerplants by reducing the amount of electricity we use and by requiring powerplants to use more water-efficient cooling technology.

EuroCat said...

Mopier95056, I think you're missing the point...overall water draw from the Catawba system is one problem, and the proliferation of water lines - and the inefficient and over-wide distribution of finished water through them - is another.

Mary isn't blaming CMUD's problems on suburbanites, and Duke Energy has virtually no direct relationship with the operation of the Water Utility. The problem is - unsurprisingly - the toxic, pernicious, ubiquitous, corrosive effect of developers on everything in the Charlotte region.

It is truly a disgrace to have at least six members of a seven-member water and sewer utility be from the real estate development and utility construction food chain (including the Chamber). No surprise that water and sewer lines have been extended...and extended...and extended...resulting in shortages, pressure problems, and rate increases.

Those willy-nilly extensions have also resulted in intolerable and unsustainable sprawl. People who complain bitterly about the lack of lanes on the southern leg of I-485 need to be reminded of one very important fact: WHEN NCDOT DESIGNED THE ROAD, THE DESIGN WAS BASED ON CMUD NOT EXTENDING LINES BEYOND THE OUTERBELT. Imagine that. But, of course, there was no way developers would let that happen...and, coincidentally, some of the biggest direct beneficiaries of that unplanned utility extension? Why, Crosland (Merrifield), Saussy-Burbank, HDR, Rhein-Medall, and CITI-LLC.

And they just keep stayin' in charge, and the gift just keeps on givin'.

While the average Charlotte-area taxpayer and ratepayer, as usual, pays to line the pockets of these profiteers.

An entire den of foxes is guarding the CMUD henhouse. And the Foxx-in-Chief, the one in the mayor's office, wants to make sure we just give these developers a little more "flexibility".

mopier95056 said...

--->What sucks up a disproportionate amount of unnecessary water use? Expansive suburban lawns. But suburban subdivision developers have little interest in not offering suburban lawns.<----

Define "unnecessary".

The Charlotte Business Journal seems to do a better job of explaining the "growth" issue and it isn't just lawn watering...
High water-bill study criticizes Utilities
Monday, March 15, 2010, 2:11pm EDT

The culprit behind recent water and sewer rate hikes isn’t conservation, but Charlotte’s own growth policies. That’s the conclusion of a city review of the Charlotte-Mecklenburg Utilities obtained by the Charlotte Business Journal.

City Council has long counted on growth to deliver prosperity, but the planning for increased development failed to factor in a powerful and uncontrollable variable.

The weather.

“We are at the mercy of Mother Nature to some extent,” says Charlotte City Council member Anthony Foxx. “We’re looking at our operating budget. We’re looking at ways to model our future needs differently.”

At issue: The long-held assumption that growth essentially pays for itself as the city adds more households to fund building projects such as water lines and services such as fire and police protection.

The internal review found no proof that growth is a zero-sum game.

No analysis exists to determine any return on the investment spent on expanding water and sewer capacity, it says.

The report recommends council take another look at its annexation policy, the size and scheduling of the water and sewer utility expansion, and consideration of other ways to structure rates.

One council member is also suggesting hiring a consultant to revamp the way the city projects growth.

“I think there’s an overall question that needs to be asked: Are we relying on growth estimates and projections based on a 2007 reality? Or do we need to reassess and have a 2008 and beyond reality?” council member John Lassiter says.

Review requested
In April, council grudgingly agreed to a 14% water and sewer rate increase after drought restrictions directly resulted in an estimated $20 million shortfall for the department.

Figuring something might be amiss at Charlotte-Mecklenburg Utilities under the leadership of director Doug Bean, council members ordered a review of operations.

“I have criticized Mr. Bean off and on since I came on council four and a half years ago because I felt like our communication with that organization has been less than transparent and have always tried to ask questions to understand it better,” said Lassiter at the April meeting. “And now I think we have kind of reached a point where it has all kind of come to roost.”

But the internal review couldn’t find fault with utility management. Instead it pointed to the debt the department incurs as a result of the city’s annexation policy that was adopted in 2003. That debt currently sucks up 62 cents of every dollar paid in a residential or commercial water bill.

The water and sewer department operates independent of property taxes. It runs on rates that are largely used to pay down debt on $1.4 billion worth of pipes and plants under way.

The utility currently manages 168 infrastructure projects, most of which are in anticipation of 340,000 new residents over the next 25 years.

That breaks down into $19.5 million a month to be spent through 2014 for new water and sewer infrastructure, according to the report from the city’s budget and evaluation department.

Council member Susan Burgess stresses that existing citizens and companies aren’t carrying the burden alone.

“The way it’s bonded, we will be paying for 20 years,” Burgess says, “so it’s not just the current rate payer.”

In 2009, the city plans to annex an area near Lake Norman, a pocket of property south of Westinghouse Boulevard and a swath of land in southeast Charlotte next to Interstate 485. State law says water and sewer service must be in place within two years of an annexation.

Theo Tiefwald said...

This region (and the entire southeast in general) needs to embark upon a major plan of building/digging out dozens of new small to medium-sized regional reservoirs. In our area, for instance, we could dig/build at least a dozen or more localized freshwater reservoirs strategically placed in the metro area to supply potable water as well as water for agriculture, industrial uses, and recreation too.

It is obvious that many counties in our area, notably Union, Cabarrus, Gaston, and others, need one or more reservoirs of their own. This would create many thousands of jobs for years to come.

I'm surprised that after the extremely horrible drought of 2007-08 the southeastern states didn't start work on this supremely important project immediately.

Sam said...
This comment has been removed by a blog administrator.
whitsmom said...

From Thursday's lead Observer editorial "When Mecklenburg County's residents suck up millions of gallons a day to keep suburban lawns needlessly green, there's no other word for it but greedy."

We all know that there are millions of gallons of water also being sucked up by large lots north of Fairview, in areas known as Southpark, Myers Park, and Eastover. Also many public and private buildings keep their lawns looking pristine through regular watering, come rain or shine. Last summer we were run off a corporate lawn across from Southpark during a pops concert when the sprinklers came on--and it had already rained that day!
I don't mind a scolding to remind the public in general that summer watering is often wasteful. I certainly don't mind a discussion of the cozy arrangements this city has with developers. But Mary, why are you deliberately singling out suburbanites, describing them as greedy and ignoring the rest of the culprits?

EuroCat said...

When the choice is between using a gallon of water to live on or using that same gallon to make a lawn unnaturally green in the summer, I'd say dumping it on the grass is "unnecessary". Grass itself is unnecessary.

However, the article mopier95056 posted (could you PLEASE pick selected quotes and link to the article instead of cutting and pasting the whole thing?) makes my point:

"But the internal review couldn’t find fault with utility management. Instead it pointed to the debt the department incurs as a result of the city’s annexation policy that was adopted in 2003. That debt currently sucks up 62 cents of every dollar paid in a residential or commercial water bill.

...rates that are largely used to pay down debt on $1.4 billion worth of pipes and plants under way.

The utility currently manages 168 infrastructure projects, most of which are in anticipation of 340,000 new residents over the next 25 years.

That breaks down into $19.5 million a month to be spent through 2014 for new water and sewer infrastructure..."

Do you think any of that $1.4 billion is going to the engineers and utility contractors who sit on the CMUD advisory board, directing projects to themselves?

Do you think those water lines are "lining" the pockets of those developers who sit on the CMUD advisory board, directing those pipes - and the resultant profits - to themselves?

When, oh when will the corrupt local officials get the developers and developer-ancillaries OUT OF GOVERNMENT and set policy based on what's good for the citizens instead of what's most likely to pump billions of dollars into their fatcat developer cronies' pockets?

consultant said...

Sounds like the deck is stacked.

Lana said...

>> Grass itself is unnecessary.

What are the alternatives to grass?

1. Dirt. Erodes when it rains.

2. Hard surface. Impervious - runoff problems when it rains.

3. Weeds. Aesthetically unpleasing, and a cause of discomfort for allergy sufferers.

4. Landscaping and/or "natural" flowerbeds. Expensive to install, trim and maintain, and needs water just like grass.

Face it Mary, you are REALLY stretching this one - CMUD's problem is that it was run by a corrupt and entrenched six-figure bureaucrat who exploited his government-protected monopoly to gouge a captive customer base.

CMUD doesn't impact what gets built where - such zoning decisions are made directly by City Council (as are the annexation decisions which, as one can see from the CBJ article, are the REAL root of the problem).

Of course, we know who is on which side of the annexation issue: liberal big-government types want cities to gobble up suburbanites in order to siphon up more tax money for boondoggles like the arena and transit system, while libertarians and conservatives respect private property rights and the CHOICE of individuals to live in an unincorporated area.

Without abusive annexation, CMU wouldn't be running up that billion dollars in debt because they wouldn't be obligated to build out that infrastructure.

So as usual, it is the government-is-infallible crowd, led by Mary and her ilk, who has created a huge problem that anyone with half a brain could have (and actually DID) see coming.

consultant said...

There are native, drought tolerant plants that would work fine in North Carolina yards:

What's happened has been happening for a long time in this country. Grass became the plant of choice for homes regardless of its water needs and location in our country (see many homes in Phoenix and Palm Springs, Ca.).

Individuals, but mostly builders and their landscaping buddies, expanded on the grass scape with a pallet of plants and flowers, most of which are not native to local areas, and the result is we have the water sucking yards that we have. And today, most people see that as how my yard should look.

If homeowners reclaimed half of their yard space with native and usually drought tolerant plants, we'd greatly reduce our water consumption and reduce the amount of chemicals that eventually wind up in our streams and rivers (and our drinking water).

toddjames said...

Good post, however I would definitely say that the system is at fault in terms of high water/electric bills. My client, low cost power strives to lower america's high Electric bill and cut costs at the consumer level.

consultant said...

What is happening to the Republican Party and its minions?

What will come out of their mouths next?

Typical Republican of today: "Let's abolish the water dept. and its high water rates. Everyone should be responsible for getting their own water. That's what freedom means. "I" shouldn't have to pay to help "you" get your water. If you can't find water, then you don't deserve it. A real American knows how to find water."

I expect to hear something like this any day now. You say what? You say it sounds like Republicans debating the merits of health care reform? You know, you're right.

What a bunch of loony losers. Scary too.

Jumper said...

I wouldn't call it greed for people in the suburbs who don't understand the issues, they are just doing what they are used to and living the lifestyle implicit for what they were sold. Which includes the price of the water. Water in the pipes is public property, not private, until it's delivered by pipe to the customer.

It is a good idea to be conservative in planning, considering the finite nature of the supply.

Drought resistant grass varieties are available. It requires reseeding. I'm sure the fine folks at Making It Grow could advise those interested.

Jumper said...

Making It Grow:

nodakevin said...

A simple solution to the debt issue would be to have a developer who wants to build in an area that does not have existing infrastrucure such as water, sewer, school space finance those improvements themselves through the private sector. The city and county could refund a portion of the tax revenue that is actually generated by the development to help pay off the debt. That way the developer is on the hook for the risk and not the taxpayer. I bet it would also encourage developers to find land that already has extra infrastructure capacity which would in the long term save everyone money by using what we have already paid for rather than causing us to go into debt for new.

Anonymous said...

Consultant - you can't compare health care and water. While health care is important, it is not required to stay alive. Water is. So sensible Republicans aren't going to use their health care argument on the water issues.

What Republicans want more than anything is small, efficient government. We want to see government functions like CMU run efficiently, as opposed to the current setup (get developer lackeys in the top leadership positions to bloat the system and award contracts to themselves).

CMU, like every other government function or department, has gross levels of bureaucracy and inefficiency, and every city and county function should FIRST look to make their departments more efficient before screaming for more taxes. CMU is particularly egregious by raising rates for conserving, then raising rates again when usage goes up.

And the citizens have a responsibility to use the precious resource of water prudently. Just because all the lawns on TV and your neighbors' all look a certain way doesn't mean you have to do what they do. Check out the other posters' links and use those products that require less water and still look good. Don't imprision yourself by worrying what other people think of you.


consultant said...

Loony losers. Scary too.

J said:
"While health care is important, it is not required to stay alive."


"So sensible Republicans.."


"What Republicans want more than anything is small, efficient government."

I rest my case.

Although I totally agree with you on the water sprinklers. Totally.