The Morning Journal (Lorain, OH)
City opposes proposed legislation
Avon Lake is fighting back against a bill proposed in the Ohio House which would jeopardize the city’s capacity to invest water and sewer infrastructure.
House Bill 602 sponsored by state Rep. Mike Duffey (R-Worthington) could have steep and unintended consequences for Avon Lake and local water utility Avon Lake Regional Water with respect to water and wastewater rates.
According to the legislation currently before the House Finance Committee, municipalities charging outside customers higher rates could face a 20 percent reduction in local government funding and would no longer be eligible for state water and sewer funds.
Avon Lake city officials were made aware of the legislation June 25 following an email alert from the Ohio Municipal League, which is opposing the bill.
At an Avon Lake City Council meeting June 25, Mayor Greg Zilka said he was made aware of the situation from an email alert from the Ohio Municipal League that same afternoon and outlined the administration’s strong opposition to the proposal.
“Basically, it’s a penalty for communities like Avon Lake with Avon Lake Regional Water,” Zilka said. “We do charge people 10 percent more than what it costs residents of Avon Lake.
“And there are reasons for that in helping fund the operation and helping pump water all the way to Polk Township in Ashland County and Medina County and similar areas. So, this would create a really different financial environment for Avon Lake and Avon Lake Regional Water.”
In a follow-up email to state Rep. Nathan Manning (R-North Ridgeville), Zilka said Avon Lake’s 90year commitment is to provide inexpensive potable water to thousands of customers in Lorain County and beyond.
“At a time when we need to improve our infrastructure, it makes no sense to discourage that commitment to the future,” Zilka wrote.
Ward 2 Councilwoman Jennifer Fenderbosch, who serves as chair of the Sewer Committee, reiterated passage of this bill would threaten local economic stability with the elimination of funding sources.
“If we are surviving and doing it the right way, we shouldn’t be penalized,” Fenderbosch said. “This bill is not going to benefit all of the citizens who purchase water from Ashland, Medina and Lorain counties where Avon Lake Regional Water services all of these communities.”
The utility services customers in Lorain, Medina and Ashland counties send approximately 85 percent of water and wastewater outside of Avon Lake, said Todd Danielson, chief utilities executive for Avon Lake Regional Water.
The utility has committed over $1 million to the nationally recognized Lateral Loan Program through funding from the Ohio EPA, along with an additional $100 million in state loans for recent and ongoing infrastructure projects.
Danielson said the loss of state funding mechanisms would be hugely devastating, threatening the utility’s ability to borrow money at competitive rates.
“Certainly as an organization, we have concerns about HB 602,” Danielson said. “The way it’s written, I believe it could put a chilling effect on regionalization of water systems.
“And essentially, Ohio EPA has been pushing regionalization for a while, primarily because they experienced problems with some utilities just not having either the technical, managerial or financial expertise to run a system. So they would like more regionalization of those competent utilities that are able to do it.”
With 65 years under its belt, Danielson noted the utility has modeled itself under stipulations in the Ohio Revised Code that allows it to charge more if an entity other than the utility pays for constructing the facilities outside the municipality.
Danielson, who also chairs the Water Utility Council in the Ohio Section of the American Water Works Association, added over the next 20-25 years, it is estimated there will be a need for anywhere between
$600 billion and $1 trillion in infrastructure investments for underground water systems across the country.
“There’s this huge requirement out there, and a lot of the less capable utilities realize that they’ve got the brick wall coming, and they’re not able to slow down,” he said. “Utilities, in general, we don’t want black eyes.
“When you look at some of the lead and copper regulations and other regulations that are out there, Ohio EPA is responding to some inappropriate actions in the past. And we don’t want inappropriate actions by some to affect all of us. As a utility sector, we want to make sure we’re helping other utilities.”
In an email statement to The Morning Journal, Duffey clarified HB 602 does not prohibit cities from charging outside residents higher rates to recoup costs incurred, but instead prohibits charging higher rates to outside communities for discriminatory reasons that do not relate to actual costs.
“The systems across the state of Ohio, including Avon Lake, utilize state taxpayer funding paid by residents in outside communities,” Duffey wrote. “I cannot think of a moral reason for the state to allow its funding to be used to charge non-voters in nearby communities higher prices.
“If a city decides to subsidize its own residents rates in another fashion, such as paying part of their bill with city taxes, that is also allowed. The only thing that isn’t allowed is bullying a nearby city but accepting state funding.”