Herald-Whig

Company pitches purchase of Quincy water/sewer system

By Herald-Whig
Posted: Sep. 6, 2018 6:15 pm Updated: Sep. 7, 2018 9:07 am

QUINCY -- Quincy might be able to sell its water and sewer systems for about $120 million, but a committee looking at options to help fix city finances is not ready to endorse the proposal.

Illinois American Water met with the city's Roadmap to Sustainability Committee on Aug. 28. The company hopes the city will put out requests for proposals this year on privatizing water and sewer operations.

Sustainability Committee Chairman Jeff VanCamp, an independent alderman from the 6th Ward, said a request could be sought if the Quincy City Council wishes, but the committee probably won't make a recommendation on that option when it releases findings in October.

"We invited American Water to come in and come up with some options to diversify the revenue stream and save the city some money. They did not give really hard numbers," VanCamp said.

But the numbers the firm shared were easy enough to follow.

Illinois American Water has paid about $3,500 per water connection and $3,500 per sewer connection in cities where it has recently privatized services. Quincy has about 17,000 water-sewer customers, for an estimated purchase price of $119 million.

Terry Mackin, director of communications for Illinois American Water, said it would be premature to talk about rates or a purchase price.

If the firm is one of several responding to a request for proposals, it would be at a competitive disadvantage if its exact bid was known. So presenters walked a fine line between touting the huge sale price and other benefits the company provides for the 132 communities it serves in Illinois, including Peoria, Alton and Belleville.

"Proceeds of the sale could be used for other needs in the community -- the riverfront, streets, sidewalks, whatever needs they have," Mackin said.

In addition, Mackin said a sale would eliminate any liabilities the city now bears on its own. American Water would be responsible for fixing any water leaks, upgrading water and sewer infrastructure and paying any penalties from sewage releases.

"We would offer continued employment for current employees ... comparable to current salary and benefits. We also would become a taxpaying business within the city of Quincy," Mackin said.

Alderman Paul Havermale, R-3, said city ratepayers also would pay the cost.

"We would lose control of the rate structure. They told us they have regular increases of 3 or 4 percent per year," Havermale said.

Utilities Director Jeffrey Conte said even before the annual increases, there would probably be a big jump in water/sewer bills.

"Their tariff rate is about twice what (Quincy's) rate is," Conte said.

The City Council approved in April a water fee increase of 32.2 percent. The average residential water bill rose from $83 per quarter to $110. A public safety fee of $12 per quarter brought total charges to $122.

Conte said those revenues will allow the water and sewer departments to make capital improvements to aging pipe, pump and purification systems. Quincy is borrowing more than $11 million for upgrades this year through a low-interest loan program. Under the current rate structure, Conte thinks the city can make improvements worth $50 million to $60 million over several years.

"This is not a one-shot thing," Conte said.

During public hearings with the City Council, Conte previously said the city needs to replace $230 million in infrastructure over about 20 years. He said some water line dates to 1872, and much of the water and sewer lines west of 24th are from the late 1880s to the 1920s.

"West of 24th Street ... we're going to be replacing water mains, the service lines, and repairing sewers," Conte said.

Water line replacements also should help the city fix water leaks that waste about 34 percent of the water the city produces, Conte said.

Attorney Chuck Scholz accompanied Illinois American Water speakers during its committee presentation.

"At some point (Quincy is) going to have to get an EPA plan for a combined sewer. They're looking at $200 million in Peoria for a combined sewer. They're bigger than Quincy, but you can see how expensive that gets," Scholz said.

Under the American Water proposal, those costs would be paid by the company, Scholz said.

Havermale doesn't think there's a lot of support for the sale of city infrastructure at this point.

"There's some positives and some negatives. It probably needs to be talked through by the full council, but I think things would have to be pretty dire to look at this," Havermale said.