Reliable, high-quality, affordable and readily-available water is the lifeblood of a city. Peoria has grown and prospered over its 323-year history due in large measure to our location on the Illinois River and access to a plentiful water supply. How a city manages its water resources is a critical public policy issue, as witnessed by our discussions on purchasing the private water company.
Our original franchise agreement dates back to 1889, and every five years, the City Council and administration research, review and discuss what is best in the long run: “How can we make water work for us?”
The Council has consistently turned down the “siren song” of some that purchasing the water company will do untold wonders for the city. In fact, our most recent discussion last November demonstrated that nearly three-quarters of the public were against city ownership, and the Council voted in resounding fashion (8-3 against the purchase) to follow the current practice of granting the water franchise to Illinois American Water. But on November 26th, the Council also suggested that talks should ensue between the city and water company to craft a more sensible, long-term agreement. A revision of the current franchise buyout option cycle might be extended to ten or even 20 years.
That has brought us to the present direction to pursue a 20-year franchise cycle. And the advantages are persuasive from the financial, management, developmental and policy perspectives.
The financial details have been spelled out recently in public meetings. Essentially, a 20-year cycle in which the city would not be able to purchase the water company rests on some impressive numbers. The agreement includes a three-percent franchise fee that will generate about $1 million each year. (Impact on typical households would be about $1.30 a month; commercial water users vary greatly depending on volume, but would see a median of $2.90 per month.) In addition, the water company would pay the city $1.45 million per year as a work permit for excavation and pavement degradation. This is significant, reflecting on the current permit fee of about $300,000 a year.
The net-positive revenue impact is projected to be $2.2 million per year. This “new” revenue is critical from a management and planning point of view for both the city and the water company.
The certainty for the water company—that it won’t be bought over a two-decade period—directly assists in long-term capital improvements to the present system. While the brutal temperatures and weather conditions this winter contributed to historic levels of water main breaks and related problems for households and businesses alike, the water company hasn’t been permitted a longer-term capital cycle that contributes to reinvestment and upgrades. This new agreement changes that.
For the city, a longer cycle and additional revenues will let us begin in earnest to invest in roads and residential pavement restoration and preservation. I need not remind anyone—although I will because I am constantly reminded—what terrible shape our roads are in… even before this rugged winter. Our Public Works team has done a commendable job of snow management and pothole repair, but that’s like putting a band-aid on a gaping wound! A direct benefit—an observable and transparent result—for the household investment of $1.30 a month will be safer, smoother, more accessible and sustainable transportation infrastructure.
From an economic development vantage point, this new agreement cycle and revenue impact will generate direct and indirect advantages for the city. From a direct standpoint, potential developers will see firsthand a city that is investing in itself. Nothing detracts attention from our other assets more than a devastated road system with surface degradation, curb and gutter and sidewalk dilapidation, and a patchwork, temporary repair approach. Sure, Peoria is not alone in the challenge of improving our road system, but the new franchise agreement gives us a distinct advantage to aggressively implement robust capital improvements now. The indirect result is that we will have more to offer and eventually realize from the additional economic activity and investment.
Public policy is what the City Council is all about. Our job is to set the agenda for the affairs of the municipal corporation, periodically review the results, and balance the competing forces of demand for services and ability to pay for them. The new agreement includes a provision that the city and water company will meet quarterly to review improvements and keep the Council fully informed of issues impacting our constituency: the taxpayers of the City of Peoria. A 20-year cycle permits us to focus more on long-term policy: for example, how to pay for a $200- to $300-million mandate on clean water from the U.S. EPA as relates to our combined sewer outflows. The longer cycle will save untold time and money required every five years to once again review and debate purchase of the water company. I’m all for open and robust debate, but going over the same subject—actually every four years when you consider the ramp-up required—is not the best use of the public’s time.
The new franchise agreement is a huge plus for all concerned. It’s time we truly make our water work for us! I am convinced this will take us in that direction. iBi