MSD's Prop Y passes by wide margin; choice was pay now or pay more later
This post first appeared in the St. Louis Beacon: July 30, 2008 - One ballot measure that may have St. Louis city and county voters scratching their heads is Proposition Y. The bond issue is on the Aug. 5 ballot because the Metropolitan St. Louis Sewer District needs to comply with the federal Clean Water Act. But the question before voters is financial not environmental: How to fund the work?
The results will influence how MSD bills will rise in the next few years. If voters approve Proposition Y, a $275 million revenue bond issue, rate increases will not be as sharp as they will be if they don't, according to MSD.
There appears to be no organized opposition to the measure. Tom Sullivan of University City, a perennial critic of MSD, said he will not vote for Proposition Y but is not telling others to oppose it.
“This is a tough one to deal with,” he said in an interview. “They’ve arranged it in such a way that it’s ‘heads you lose, tails you lose.’ You can either have your rates raised and pay interest or pay as you go and have your rates raised even more.
“They’re not very good at fixing sewer problems but they’re pretty good at maneuvering to get more money from ratepayers,” he said.
Lance LeComb, MSD manager of public information, explains the measure for voters.
What is Prop Y?
Proposition Y is "strictly a financing question," LeComb said. Passage of Prop Y would allow MSD to issue $275 million in revenue bonds to be used for the $662.5 million Phase 2 of its $4 billion capital improvement plan.
The revenue would help fund repairs and improvements to the sewer system and allow for additional and replacement sewers to help MSD comply with the Clean Water Act passed by Congress in the early 1970s and amended in 1987. "There is no choice about doing this work," LeComb said. "We have to do it."
Why did MSD propose a bond issue?
Proposition Y represents "a choice for our community" on how to finance the improvements, LeComb said.
"Our rates are going to continue to go up no matter what. This work has to be done. So, we're faced with this question: Do we use $275 million in bonds to help pay for Phase 2 or do we pay for it strictly through our rates? It's really a choice of a combination of bonds and pay-as-you-go rates or strictly pay-as-you-go rates. It's a philosophical question the community needs to weigh in on because it's such a generational investment."
Without the bonds, rates would increase more dramatically than they will with them.
Why are the repairs and improvements needed?
The EPA sued MSD last year because its sewers do not meet the requirements of the Clean Water Act, which prohibits wastewater from being dumped into rivers and streams.
"We're continuing to talk to them about it," LeComb said. "We hope to reach an agreement that's beneficial to everyone. It's not a question of doing the work. Everyone agrees that it needs to done. It's how quickly you do that work."
Why hasn't MSD met the EPA standards?
MSD's network of sewers is very large and very old. "We have the fourth largest sewer system in the United States in terms of mileage, and that's not including our stormwater sewers," LeComb said. "Los Angeles is in third place, just ahead of us. The big difference between us and Los Angeles is we have a third of the population LA does. That really creates some challenges in terms of funding maintenance and rehabilitation of the system."
Some sewers go back to the 1850s, predating the Civil War. "We still have sewers in downtown St. Louis that are made of wood," LeComb said. "They work just fine but they are going to be replaced at some point."
Compounding the problem is the fact that MSD has taken in 79 separate sewer districts since it was created in 1954. "Each sewer district was built to its own standards so we've been cobbling together these disparate systems," LeComb said. "If we were to start over today, we'd certainly do it a different way."
MSD's system includes two types of sewers: combined systems that take in rainwater and sewage; and separate sewers for wastewater and stormwater.
In some places, overflows act as relief valves when too much water gets into the sewer system. "Instead of thousands of basement back-ups and miles and miles of street flooding, these overflows discharge a combination of rainwater and wastewater into area rivers and streams," LeComb said. "Is it an ideal set-up? No. But when you compare it to basement backups and street floodings, it's the lesser of two evils."
Under the Clean Water Act, MSD must cut discharge of raw sewage by eliminating separate sewer overflows and managing the overflows in the combined sewers.
How would the money be used?
For construction and engineering to improve the capacity of the sewer system and to address overflows.
What happens if Prop Y fails?
MSD rates will increase more dramatically than they would if it passes. The average homeowner now pays $25.74. In July 2011, the average homeowner would pay $28.73, a 28 percent increase, if Prop Y passed. If it fails, the average homeowner would pay $36.79, a 64 percent increase.
Besides higher rates, the long-term costs would be shifted to future generations, costing more in the long run.
Kathie Sutin is a freelance writer.