At $1.3 million per mile, it costs a pretty penny to fix and replace old and broken water mains and upgrade infrastructure lying beneath Williamsport's streets and the municipalities served by the Williamsport Municipal Water and Sanitary Authority.
After a meeting Wednesday, the authority officials said it looks as though some rate adjustment - meaning a hike - is likely this winter for customers.
The authority approved annual budgets for customers receiving water and sanitary treatment and authorized borrowing $15 million over three years to pay for advancement of capital projects, including replacing aging water mains.
"We don't know for sure if there will be a rate increase at this time," said John Baker, authority director of finance. "So much in our budget is tied to our borrowing and depending on if there are grant funds and depending on interest rates we get that will change our borrowing significantly. Obviously, we're looking for cheap money first."
But he made it clear costs are going up.
"When we borrow $15 million, it will inevitably have impact on user rates," Baker said.
The operating revenue budget is $8.4 million and expenses are $7.8 million. Baker said the comparison is to this fiscal year's operating revenues of $8.6 million and expenses of $6.7 million.
The authority authorized the borrowing and reviewed a proposed budget that indicates a $325,000 revenue shortfall that will have to be made up by adjusting the fee structure and reviewing the rates customers pay as well as looking for grants, according to Douglas Keith, authority executive director.
"The management staff of the authority continues to seek grant opportunities to reduce the financial impact on rate payers," Keith said. "However, grant opportunities are limited, and the majority of the funding necessary to fast-track the capital program will likely be borrowed.
"The resulting increase in principal and interest payments will require the authority to raise rates over and above what would be needed for inflationary costs of treatment and distribution," Keith said.
The authority passed a sanitary budget as well, with revenues projected to be $13.7 million and total expenses of $12.8 million.
Asked what the borrowing was about, Baker said the authority is trying to advance its capital plan after prioritizing projects, including those in Newberry.
"We're constantly prioritizing and want to get as much of the plan advanced as we can," he said.
Any rate changes will be approved in September and go into effect Jan. 1, 2014.
The fiscal 2014 budget reflects the concerns many have over aging infrastructure, according to Keith.
"Among the many difficult decisions made during this budget process was to fast-track several years of infrastructure projects in order to jump start upgrades and provide as quickly as possible improved water pressure and fire flow in the areas identified as the most critical in the distribution system," he said.
To accomplish the task of funding projects, the authority will seek money from the state PennWorks grant program as well as natural gas impact fee funding to provide assistance in the capital financing needs. In addition, Pennvest, which is a state-run agency that provides low interest loans for infrastructure upgrades, also will be tapped.
As the final dollar value of loans are realized and anticipated debt service is better known, the authority will need to adjust user rates to match the anticipated payment schedules.
Main breaks and repairs
The authority regularly updates and prioritizes its multi-year capital plan as new information concerning main breaks, fire flows and pressure issues are obtained, according to Keith, who said the Arch Street bridge main replacement project and upgrades in the Newberry section of the distribution system as recently completed and identified highest priority projects.
Infrastructure upgrades come at a cost in excess of $1.3 million per mile of main, an amount that increases each year due to contractor and raw material costs, Keith said.
"The authority is responsible for more than 285 miles of main, much of which was constructed years ago with inferior material compared to today's standards, and not sized for today's usage," he said.
The city is not unlike many across the U.S. that have older water mains, he said, reviewing a report by the American Society for Civil Engineers.
"Maintaining the highest water quality is the top priority," he said.
The staff plans to review all options before presenting a plan in September to the board for its approval.
The authority is responding to the need for a number of main improvement projects,including several miles of main in South Williamsport and DuBoistown.
These projects are estimated at $6.5 million, and the authority is seeking to borrowing 75 percent of that from Pennworks and find additional funding streams for the remainder of the cost.
In addition to old water lines being upgraded, the authority will install a new tank and pump station to serve customers on that side of the river.
Last year's budget did not include a rate increase.