Miller Canfield attorney Steven Mann (left) and Robert Bendzinski, registered municipal advisor, explain the city’s options to replace 30 miles of water mains over seven years, with pay-as-you-go not recommended, leaving revenue bonds and the recommended option, unlimited tax general obligation bonds.
By SUE SUCHYTA
Sunday Times Newspapers
LINCOLN PARK – Replacing 30 miles of water main pipes over the next seven years at an estimated $35 million cost was discussed at the Oct. 17 City Council study session.
Mayor Thomas Karnes said the 35 percent systemwide water loss is one of the driving factors, and for the past year attempts have been made to determine where the leakage is occurring.
“In the end we determined that our aging water system is not up to the task,” he said. “There was a plan in the early ’90s in which a section of Lincoln Park had been redone, and wouldn’t you know it – that is the place where we have the fewest number of water main breaks.”
The city, which recently celebrated its centennial, has water mains that are just as old, which have outlived the expected 75- to 100-year lifespan. As more mains break, repair costs are approximately $1 million per year.
City Manager James Krizan said the city’s critical infrastructure is at significant risk.
“The water system is at a crisis point,” he said. “The city needs to act swiftly and decisively over the next few years. Continued inadequate investment will result in future failures that might even hinge on catastrophic.”
Krizan said that as the existing cast-iron pipes age, they corrode and become brittle and susceptible to breakage due to ground shifting during freeze and thaw cycle and change in water pressure, also known as water hammers, a phenomenon that occurs when valves are used to control the flow of liquids.
He said water main breaks are expensive to repair because of labor and material cost, as well as landscaping and pavement restoration and the resultant water loss. An average water main break costs the city $4,480, excluding the cost of the lost water.
Krizan said there were 80 water main breaks in 2020, 120 breaks in 2021, and 141 breaks through August of this year.
Lincoln Park’s proposed water main replacement plan for 2023 through 2029 is shown in a drawing prepared by Hennessey Engineers, and is driven in part by the location and number of recent water main breaks.
The city purchases its water, and the water lost through leakage and breaks must still be paid to the Great Lakes Water Authority even though it is not associated with a metered user.
Krizan said that if 10 percent of the city’s water is not billable, the city must bear the $251,000 cost.
In fiscal year 2016, Lincoln Park’s water loss was 19.49 percent; in 2017, 14.75 percent; 2018, 26.78 percent; 2019, 28.51 percent; 2020, 36.94 percent; and in 2021, 35.59 percent.
In addition to the city paying for the lost water, it must pay for all the water main breakage associated with its aging system.
Krizan said breaks and water loss represent a $1.4 million annual cost to the city.
He said water main breaks are also a public safety risk, since drops in water pressure can allow bacteria to enter the system, which can prompt a boil water advisory.
A drop in water pressure can also put automatic fire suppression systems at risk, since they require a minimum pressure to operate effectively. Hydrants also rely on consistent water pressure to operate properly.
While the city currently replaces one mile of water main pipes a year, at that rate it would take 130 years to replace every water main in the city. Meanwhile, the system continues to deteriorate at an accelerating pace.
Krizan said that American Rescue Plan Act money may be used in the next two years to increase the rate of water main replacement, from one to five miles of water main per year.
He said the sections replaced first would be those with the most recorded breaks, which should have an immediate impact by reducing water main repair costs.
In 2030, the city hopes to replace the water mains for Gregory, Buckingham and Pagel between Dix and Fort Street, and in 2024, London, Richmond, Merrell and Stewart between Dix and Fort will be replaced.
Krizan said that while the two-year program using ARPA money is a jumpstart, more water main upgrades must continue to be performed each year.
He said that by replacing six miles of water mains each year for five years following the two initial ARPA years, the city could effectively replace a quarter of the system and eliminate much of the unwanted water loss.
To replace a large section of water main, the city must find a way to pay for it, and Krizan said pay-as-you-go is not recommended, and while grants are also welcome, they are not enough, nor are they guaranteed over the life of the proposed replacement time span.
Financing debt over an extended time period is the best option, he said. Revenue bonds can fund projects, but would require the city to raise water rates.
A preferred option would be to have residents authorize unlimited tax general obligation bonds, which would allow the city to levy a special millage to cover the cost of the bonds on an annual basis.
Krizan recommended a 20-year bond at 4.5 percent, which would be paid off 13 years after the 7-year project is completed.
Bonds are also available for 25 years at 4.75 percent, and for 30 years at 5 percent. The longer the bond period, the higher the interest rate.
The longer the bond period, the harder it is to predict the city’s need to replace other infrastructure and city buildings.
Project Manager Steven Svireff of Hennessey Engineers said that as water mains are replaced, the annual water main repair costs will decrease.
He said the new PVC pipes have a 500-year life expectancy.
Svireff said ductile liners installed in existing pipes are expensive, and have a 150-year expected lifetime.
He also said that all the lead pipe water lead lines would be replaced wherever water mains are replaced, per state mandate.
Svireff said most water mains are located on the edge of the road, while some are in the roadway and some are located under the easement.
He said that any new water mains would not be placed in the roadway.
Miller Canfield attorney Steven Mann and Robert Bendzinski, a registered municipal advisor, explained the city’s bond options and recommended unlimited tax general obligation bonds.
To see video recordings of the study session and other city council meetings online, go to citylp.com/government/agenda_and_minutes/city_council.php.