GRAYS HARBOR COUNTY WATER DISTRICT #2
Newsletter for November 2019
Web Site
The Newsletters get thinner as we add content to the web site. Found at: https://www.centralparkwater.net. We also post timely information on the Facebook page.
Regulatory
The water district, being both a water system and a public agency, is regulated by a host of agencies, Federal, State and local. There are several big pushes going on right now. They are Records Management, Emergency Response, and Asset Management, which is an element of Full Cost Budgeting (see discussion below).
All but Full Cost Budgeting are not new. But the regulations are changing from recommendations to requirements. The District has been making efforts to conform to the recommendations.
Asset Management
The monster one is Asset Management. This has been growing from not much to a very big deal over the last few years. Asset Management is an element of Full Cost Budgeting.
So how much of an asset is the water district? It is quite a large asset, as a matter of fact. In outline:
Real Estate & Buildings based on County Assessor Values: $ 1,763,673
Infrastructure based on estimated replacement cost:
Wells/Pumps/Motors/Controls: $ 550,000
Water Mains: $30,000,000
Booster Stations $ 550,000
Total Value of Major Assets: $32,613,673
I bet you didn’t know there was so much buried treasure in the community.
The new regulations require that the district have a plan, and resources, for replacing all those assets when they have reached the end of their useful life. We are working on that plan. But we have been excluding the water mains. There is simply not $30,000,000 within the community. For the rest of it, the district must demonstrate a plan that accumulates replacement costs and scheduled replacement at the end of the service life. The reserves to do that represent a rather large element in the current (2020) budget, and, consequently, in the water rates.
So what are we doing about the water mains? Almost all of the district’s mains have exceeded their projected useful life. That is part of the bad news. The good news is that the pipes appear to be in very good condition. Which gives the district some time to try and figure out what to do.
The latest amendment to the Safe Drinking Water Act includes a requirement that all agencies regulated by the act budget using Full Cost Budgeting. What the exact impact on rates will be is unknown at this time, but it will be very significant. Beginning now, water utilities are required to utilize what is called “Full Cost Budgeting”. In the past, most special purpose districts, like GHCWD#2, have budgeted for operation and maintenance. Budgets did not include the accumulation of reserves to replace major infrastructure when it was no longer serviceable. This District was required, back before Full Cost Budgeting and Asset Management were on the horizon, to spend what reserves it had accumulated on additional reservoir capacity.
One solution to the water main problem is to borrow the money. That amount of money at 4% over 30 years would result in an additional approximately $300 added on to the bi-monthly water bill. That’s right, on top of the current rate. PLUS, the budget would have to include reserve accumulation to replace the new mains once they reach the end of their useful life. That adds an additional $68 onto the water rate. That doesn’t work.
The district could levy an assessment. To cover that much money an assessment would be approximately $20,500 on each property served. There may be some folks in the district that could pony up that much, but I don’t think there are very many. Most folks would have to take out a home equity loan (assuming they have that much equity) and make payments on that loan. Even if you could, it does not add value to your property, so why would you want to. Oh. Don’t forget the $68 added to the water bill. This is also not an attractive solution.
The water mains are actually in surprisingly good condition. Most of the asbestos cement pipe I have seen over the many years of my career has been crumbling to dust. The manufacturer’s marking on this District’s AC pipe can still be read. Also, we test the water for the presence of asbestos, which would indicate pipe deterioration, with the results indicating non-detection. So one strategy might be to assume the pipe will last another 60+ years. There would still be a significant impact on rates because of the Full Cost Budgeting requirement. This may be the most realistic, but the highest risk, approach. We are still working on it.
Your general manager is working through the Washington Association of Sewer & Water Districts (WASWD) to bring other districts with our situation (believe it. We are not alone) together to try and get the legislature’s attention. The hope is to establish a process by which water districts without the means to replace critical infrastructure can apply for grants rather than loans. Progress has actually been made. But there is a lot of work yet to be done before success can be assured. If the District were able to secure grant funding, the requirement for Full Cost Budgeting would remain.
Full Cost Budgeting simply was not done “back in the day”. The regulatory focus in decades past was on maintenance & operation, not on asset management/full cost budgeting. “Best practices” can change dramatically, as they just have. The Full Cost Budgeting requirement only went into effect this year.
Not long ago a member of the community made the comment to the commissioners that, since they were in charge, they could do anything they wanted. Unfortunately, the path between all the regulations is extremely narrow.
Emergency Preparedness
Being prepared for unforeseen events has always been an important part of water system planning. The district has prepared, and maintains, a Vulnerability Assessment and an Emergency Response Plan.
However, by regulation, those plans have always focused primarily on “typical” emergencies. New focus on “black swan” events is changing the emergency preparedness landscape. A black swan event is any kind of event that completely destroys most infrastructure. This district has always cautioned you to be prepared to survive without assistance for at least three days. That has been pretty much the extent of the district’s focus on major events. The region wide plan is that the emergency response agencies would be available within about three days to provide basic essentials.
There is new focus on “resiliency”. The official definition is, how does the utility plan to recover from extensive, or even complete, destruction of not only its’ own infrastructure, but that of other utilities providing services, such as power, as well.
The planning process for this kind of plan is proving to be rather expensive. This district has not started that planning process with the hope that once the bigger systems have paved the way, the process can be less onerous, and therefore less expensive, for the smaller utilities. The larger utilities are finding the planning process to cost between $30,000 and $40,000. At this point, no one has any idea how expensive plan implementation will be.
Water Rates
The November newsletter always addresses next year’s rates. And, yes, there will be an increase. The reasons for this year’s increase are pretty much the same for all the previous years, plus some added pressures. The 2020 budget does not conform to the Full Cost Budgeting requirements. We are still working on how we are going to fulfill that requirement.
There always must be 2.5% to 3% increase to cover inflation. The district is required by state law to recover all costs. So no matter what happens, the district has to stay ahead of increasing costs. One example of increasing costs is our general liability insurance. That is going up about 25% in 2020. The district is also still seeing increases in costs of parts due to the requirements to eliminate lead in brass fittings. The service laterals (pipe from the water main to your meter) use brass fittings. Due to the use of galvanized steel fittings in year’s past, the district is fixing from two to five service laterals per week.
A major concern for the 2020 budget is the contribution to reserves. Reserves serve three purposes:
1. Replace failing infrastructure (other than water mains).
2. Cover unexpected expenses.
3. Provide upfront money while waiting for the insurance company or FEMA in an emergency event.
When reserves are tapped, they must be replenished. We tapped into reserves for two items in 2019.
1. There was a power surge due to an auto accident that took out two pump controllers and one booster pump.
That cost about $70,000.
2. Two of the district’s elderly vehicles reached the point where it further repairs were no long cost effective. The F-150 had
served the District for 28 years. The S-10 was purchased cheap and the District wrung the last miles out of it. We replaced
two trucks with one.
Currently the district is behind in contributions to reserves for the replacement of infrastructure. Though that is not completely detailed. We are working through that.
A concern coming up is the replacement of the water main from Aberdeen Lake Road west to the end of the system. Much of that water main is cast iron pipe and is in failure mode. The district was able to budget $100,000 for that replacement in 2019. But the engineering and permitting has exceeded the original estimate and and timeline, plus, unexpected difficulties in installation have been identified. The process has pushed that project into 2020. The project will almost certainly go over budget by a considerable amount.
An 8% increase in the base rate, and the base rate only, has been approved. In year’s past the district raised not only the base rate, but the usage rate, as well. For 2020 only the base rate is going up.
A copy of the new rate schedule is attached.
We do a detailed rate study every five years. It is a major task that simply can’t be done every year. The last one was in 2015. So we are due. Thanks to the financial management and billing systems we have phased in over the past few years, we will have much better, and more complete, data than was available for previous rate studies. The rate study, which will feature 10-year projections, will include strategies to comply with the new regulations.
Power Outages
When power outages occur, it impacts the District’s ability to pump water from the wells up to the reservoirs. It is important to minimize water use during power outages. If you have internet access during a power outage through your phone or tablet, be sure and check the District’s Facebook page and web site for information and updates. Pass along what you learn to any neighbors who are without internet access.
Emergency Water Source
It is not unusual during repair events to have to isolate part of the community. Often those are emergency situations and people do not have a chance to prepare for the water outage.
There is an emergency water source (yard hydrant) located behind the district office. Unfortunately, we have to keep it locked. But it is unlocked any time there is an outage in the community that does not include the district office. You will have to bring your own containers.
About Leaks
The property owner is responsible for the condition of the plumbing on their side of the meter. So check your meter every now and then. Look at your water meter with all water use turned off. If there is any movement anywhere on the face of the meter, you have a leak. Call us. The District offers one hour of leak detection at no cost. If you don’t know where your meter is located, call us. We are glad to come out and show you.
Credit Card Payments
The District can accept payments by credit/debit card at the desk or over the phone. There is a transaction cost of 2.5% with a minimum $2.00. That fee goes to the processing company.
Online Payments
You can arrange online bill payment through your bank.
Emergency Notification
If you have not registered your phone number with the Grays Harbor County Office of Emergency Management, please do so right away. Emergency Management can be reached through the County’s web site. If you don’t have internet access contact the Water District and we will help you get registered. The water district will use this service in case of an event requiring widespread notifications.
Conditions of Service
There are conditions attached to the provision of water service. If you don’t have a copy, please drop by the office and pick one up. The Conditions of Service are posted on the web site.
Special Needs
It is absolutely vital that you inform the District if you have special needs. If you suffer from an immune deficiency, have in-home dialysis, or other situation where a lack of water could be life-threatening, we need to know.
Projects
Attached is a spreadsheet detailing the backlogged projects facing the District. This list only includes projects that are due. It does not include such projects as major capital expenditures, such as water main replacement, or planned capital projects. There is no better answer to the question, “Why do rates keep going up?”.
Radio Read Meters
The District has installed radio read meters on services fronting on Highway 12. This is a safety measure. Having crews out reading meters along the highway is quite dangerous. There is no plan to install radio read meters anywhere else in the District. We can’t afford it.
Those who have had the radio read meters installed will almost certain notice an increase in usage. These meters not only include the radio read technology, the entire meter is new technology that will more accurately measure used water and capture lower flows.
Office Hours
The office is open a limited number of hours each day. Staffing the office, and having it open for the public’s convenience, is important. But it is not as important as having staff in the field. So we limit that budget line item as one of those things we use to try and keep rates down. Hours are 12:00 Noon to 4:40PM. The closing time is dictated by the need to get to the bank.
Tours
The District is offering a very limited number of system tours. We can only accommodate two people at a time and tours are limited to one per week. A full tour takes about two hours. If you are interested call the office for scheduling. Tour availability is subject to operational and weather considerations. You must be physically able to get into and out of a pickup truck.
EMERGENCY NUMBERS
360-580-2172
360-589-6007
PLEASE POST
Thank You
Thank you for wading through all this information. If you have questions, or there are issues that we have not addressed in this newsletter, please feel free to call the office (360-532-1828) during posted hours, email the General Manager (reg@centralparkwater.net) or drop by the office during posted hours. You are always welcome at commissioners' meetings held at 7:00PM on the second Wednesday of each month in the District office. You can learn a lot at commissioners' meetings. The District office is located on East Cross Road just off of Hill Road.
Feel free to call, email or drop in if you have questions or concerns. We love to talk with you.
Grays Harbor County Water District #2 is an equal opportunity provider and employer and does not discriminate on the basis of race, color, national origin, age, disability, sex, gender identity, or religion.