Should We Spend $28MM of our $38MM Windfall on Sewers?

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Everyone is asking: What should we do with the $38+ million that we are receiving from the federal government through the American Rescue Plan? This is usually followed by: Should we spend $28 million of that on our sewers?

Let’s unpack this.

We’re getting around $38.8 million from the federal government! ($38,817,062 to be exact.) Can we do whatever we want with that?

NO. According to the Treasury Department, here’s how money from the American Rescue Plan can be spent:

“The Coronavirus State and Local Fiscal Recovery Funds provide eligible state, local, territorial, and Tribal governments with a substantial infusion of resources to meet pandemic response needs and rebuild a stronger, and more equitable economy [italics mine] as the country recovers. Recipients may use these funds to:

  • Support public health expenditures, by, for example, funding COVID-19 mitigation efforts, medical expenses, behavioral healthcare, and certain public health and safety staff
  • Address negative economic impacts caused by the public health emergency, including economic harms to workers, households, small businesses, impacted industries, and the public sector
  • Replace lost public sector revenue, using this funding to provide government services to the extent of the reduction in revenue experienced due to the pandemic
  • Provide premium pay for essential workers, offering additional support to those who have and will bear the greatest health risks because of their service in critical infrastructure sectors
  • Invest in water, sewer, and broadband infrastructure, making necessary investments to improve access to clean drinking water, support vital wastewater and stormwater infrastructure, and to expand access to broadband internet

Within these overall categories, recipients have broad flexibility to decide how best to use this funding to meet the needs of their communities.”

This is a good deal more than some neighboring cities are getting. Why are we so fortunate?

Cleveland Heights is an entitlement city because we are classified as a city with a population over 50,000. However, our population has been declining for decades and, in fact, has been under 50,000 for over 20 years. We are at risk of losing our entitlement status.

This is just one reason why, among many, that we need to develop strategies for making our city attractive to new and younger residents. Marketing is nice, but as someone whose professional work is in marketing and communications, I can tell you that marketing can only sell what’s truly being offered. We need to make sure that we develop a clear vision of who we are, what makes us special, what kind of place we want to be, and what values we want to manifest in everything we do.

One of the most fundamental aspects we need to focus on is livability, which includes: Do we provide quality public services? Do people feel that their government is looking out for them and is responsive to their needs? Do we take care to protect and uplift the most vulnerable people in our community as part of maintaining the well-being of everyone in our community?

When do we get the money?

The funds are being sent to us in two batches. The federal government sent the first half in May, and the second half should arrive sometime around May of 2022. Our local government has created a fund separate from our other funds to receive it and to track our expenditures to ensure that they align with the guidelines for the money.

Word around town is that we’re planning on spending the lion’s share on fixing our sewers. Is this right?

Yes, the city’s current plan is to devote about $28 million toward paying for the first tier of our federal consent decree to bring our aging and insufficient sewer system into compliance with the Clean Water Act.

Wait—what is a consent decree?

A consent decree is a legally binding contract in which a person, corporation, or government body agrees to a set of actions, to be executed according to a defined schedule, to bring them—the person, corporation, or government body—into compliance with the law. In return for adhering to the consent decree, we avoid costly criminal penalties from the federal government.

What must Cleveland Heights do to comply with our consent decree with the EPA?

The consent decree has three stages—or tiers—of work to be done. The current projected price tag for it is around $570 million. The plan is to complete the work over the next few decades.

The $28 million will be used to partially pay for the first tier: correcting many of Cleveland Heights’ 40 sanitary sewer overflows (SSOs).

An SSO is a point in the sewer system where sewage is overflowing due to a defect or insufficiency in the system. The result is contamination of our water (and the resulting public health impacts) as well as sewage backups into homes and other buildings, causing costly property damage as well as negative health impacts.

This first tier will cost an estimated $40.3 million and will take about 15 years to complete.

The second tier is the big one. For this stage, we will need to fix our Common Trench Over-Under sewers. This is when “One manhole is used to access both the storm and the sanitary sewers, with a removal invert plate on the storm sewer to provide access to the sanitary sewer.” When these “invert plates” that separate the storm water from sewage are damaged, displaced, or missing, there is a direct connection between the two, causing contamination of the storm run-off water. You can see a visual rendering of it HERE.

Of Cleveland Heights’ sewers, 87 percent are dug in common trenches, and 33 percent are over-under. The projected cost for remediating these is $440 million.

The third tier will address the remaining SSOs that are subject to flooding, with a current projected cost of $130 million.

What will happen if we don’t use the American Rescue Plan funds to help pay for the first tier of our consent decree?

Just as stormwater flows downhill, so do costs.

If we do not use the American Rescue Plan money to cover some of the costs of the first tier, Cleveland Heights residents would pay a 6.3 percent annual surcharge increase on our sewer bills starting in 2022 and continuing through 2026, followed by a 3.8 percent increase per year from 2027 through 2036.

This will be on top of the increased sewer rates that began in 2017, which provided $12 million to study and televise our sewer systems—a necessary step to gain a detailed understanding of what’s happening down there and what we need to do to fix it.

BUT if we put $28 million of that federal money toward this cost, it would decrease that rate increase to a 1.5 percent annual increase to begin in 2024, followed by a 2.6 percent increase annually from 2027 through 2036.

Although we are not able to completely save our residents from ever-increasing sewer bills, this can help lessen the blow.

Why does this lower rate increase matter?

We all feel like we’re being nickel-and-dimed to death. But for people in or near poverty, even small yearly increases in necessary household costs—particularly as wages remain stagnant—can be devastating.

Functioning water service is necessary. It should be treated as a right in our wealthy nation. But in 2015 alone, in Cuyahoga County there were almost 50,000 water shutoffs when people were unable to pay their water bills.

Worse still, Ohio law allows water utility companies to place a lien on a home if the occupant falls behind on their water bills. While Cleveland Water says that they rarely begin this process, over 11,000 homes had liens placed against them between 2014 and 2018.

And even as mortgage foreclosures stabilize and even decrease, tax foreclosures have increased. An article published last year found that “one in ten homes that were water delinquent in 2015 were in tax foreclosure the following year. Three years later, data from the Neighborhood Stabilization Team (NST) shows that of the homes that were water delinquent in 2015, almost 14% (506) were tax foreclosed within the following three years.”

People are losing their homes—one of the greatest tools for building generational wealth and long-term stability—because they are drowning in ever-increasing basic household expenses.

This means that the fewer costs we can pass on to our residents, the more we can protect the most vulnerable people in our community.

And, at minimum, our government should do everything it can to ensure the security—both physical and financial—of its people, with particular focus on the people who are most at risk. This is what it means to promote the common good.

But this is also about equity. Equity is more than providing according to different needs; it is also about understanding that equal distribution of costs imposes unequal burdens on some in our community.

As I said, costs, like water, roll downhill. I know that using American Rescue Plan funds to pay for sewer repairs isn’t exciting or sexy. But this is our chance—as we face massive necessary costs in the coming decades—to push some of those costs back UPHILL. This is a way to protect, to whatever extent we can, some of our people from drowning financially.