Sanitary Sewer System and Sewer Fund

By Tim Rood

I support completing the phased rehabilitation of the remaining 1/3 of Piedmont's sanitary sewer mains using low-cost state loans. The projected sewer fund shortfall could be covered by borrowing from the General Fund and repaying the debt when the sewer fund again shows a surplus, approximately 2023.

Although Piedmont's current, permanent dedicated sewer tax provides about $2.2 million annually in revenue, the combination of debt service from past phases of rehabilitation, increased regulatory requirements, and the need to rehabilitate the remaining 1/3 or so of the system and reduce the risk of expensive and disruptive sewer failures and emergency repairs all point to a projected, temporary shortfall in the sewer fund between 2016 and 2023.

For the past two years, the Budget Advisory & Financial Planning Committee has identified this shortfall as one of the primary financial risks to the City. We unanimously recommended beginning the process of obtaining a low‐interest State loan to restart phased sewer main rehabilitation, which we estimate could save taxpayers $4.4 million compared to continuing patchwork repairs. Funding sources could include a temporary sewer tax surcharge measure, which would require approval of 2/3 of the voters, borrowing from the General Fund to cover the projected shortfall in the Sewer Fund, or some combination of the two.

As maintaining the sewer system is a basic and high-priority function of City government, we encouraged the Council to consider borrowing from the General Fund to cover the projected temporary sewer shortfall and to size any proposed surcharge to minimize the burden on taxpayers. The failed Measure A was a 50% surcharge for 10 years, generating over $11 million. But our long-range projections found that the shortfall could be resolved with only $2.3 million in additional revenue.

I support full Council investigation of multiple options for addressing this temporary projected shortfall before a new sewer tax measure is placed before the voters.