Water rate increase fails: What's next for Norman?

Apr. 17—City officials are back to the drawing board for needed water infrastructure improvements under fear of state fines in the thousands after voters said no to a water rate increase at the polls on April 5.

The $4.7 million revenue increase would have been used to issue revenue bonds for automatic meter readers, a groundwater blending facility to improve chlorination levels, and water line replacements, among others.

As previously reported by The Transcript, automatic meter readers help the city and residents conserve water as the meter detects usage and reports to the city in real time in the event of a usage spike, such as a leaking pipe or faucet.

The city could be forced to pay thousands of dollars a day in fines to the Oklahoma Department of Environmental Quality (DEQ) if the groundwater blending facility is not built. The facility would ensure the city is in compliance with the agency's recommended chlorine levels for blended groundwater and surface water.

DEQ spokeswoman Erin Hatfield said the city is in compliance with all other drinking water requirements except for one.

"The ground water from Norman's wells does not receive treatment which is allowed under federal rules implemented by DEQ, except when surface and ground water is mixed. Norman is required to disinfect all drinking water entering the distribution system. Norman is currently out of compliance with this treatment/operational requirement. DEQ has been working with Norman to address this and we will continue to do so," she said.

City spokeswoman Tiffany Vrska said DEQ could impose up to $10,000 for each day the city is not compliant.

Hatfield confirmed that drinking water fines can reach $10,000 a day, but that is rare.

"We don't typically do that and instead work with the system to find a resolution to the issue. If a consent order is issued, though, there is typically a fine included and those fines are case specific," she said.

The well blending project is on application at the state. But if it is not granted, the city will have to reorganize its budget, Pyle said.

But layoffs are out of the question, Pyle said.

"Council has told us in the past that laying off people, that we don't want to go there," he said. "We've worked mightily and bitten off our nails on more than one occasion to make sure that we don't go there."

To find money to pay for these improvements, the city has considered $1.8 billion available to the state through the American Rescue Plan Act — much of which will fund infrastructure, city manager Darrel Pyle said last week.

To date, the city has applied to the state for $220 million in projects — from vehicle replacements and road projects to several water and stormwater improvements.

City Financial Services Director Anthony Francisco and Utilities Director Chris Mattingly are not holding out much hope that applications for water projects that would have been funded by the rate increase will be granted.

They said a consequence of the "no" vote is that money will likely be given to projects already obligated by bonds or loans and projects that are ready to begin immediately.

"I'm concerned if we don't have loans, there won't be a principal to forgive, and we won't get some of that money," Mattingly said.

Francisco said while the rules for distributing federal funds haven't been written yet, it will likely be through existing programs that give principal forgiveness for loans.

Because the water rate increase did not pass, the city cannot issue revenue bonds based on that projected additional income from the rate increase, Francisco said.

The city cannot use a general obligation bond because unlike other services, some residents do not use city water. The water fund is also a different "pot" of money from the general fund, where general bond money would be deposited.

"It would be unfair for us to do a general obligation bond for water lines because, 'Why are our thousands of residents who aren't paying for water services from the city paying for that with their taxes?'" he said.

While the city's application for those funds are waiting for approval, staff does not know which ones, if any, will be granted.

As applications make their way through the review process, Pyle said it's Governor Kevin Stitt "who gets to pick" as the final grantor.

The city expects to see notices of awarded money by July.

Aside from the city's successful applications for federal money, the city could enact plans to replace water lines and install automatic meter readers as money is available.

The longer it takes to install the meters and lines, the more it will cost as supply prices increase and savings gained by replacement vanishes with repairs, said Francisco. Utilities staff have known for years which lines need to be replaced, but the money has not been there to replace it.

"We know from a financial perspective it's much more financially prudent to get out ahead of things," Francisco said. Not having money to be proactive "is not wise," he said.

Mindy Wood covers City Hall news and notable court cases for The Transcript. Reach her at mwood@normantranscript.com or 405-416-4420.