The Service Delivery Strategy Act A Guide for Carrying Out Water Supply/Wastewater Service Negotiations Prepared By Georgia Water Management Campaign A Collaborative Effort of the Association County Commissioners of Georgia, Georgia Environmental Protection Division, Georgia Environmental Facilities Authority, and Georgia Municipal Association September 1998 Acknowledgments This report was prepared by the Carl Vinson Institute of Government, The University of Georgia, for the Georgia Water Management Campaign to assist local government officials negotiate their water supply and wastewater services required by the Georgia Service Delivery Strategy Act of 1997. Authors of the report are Dr. Jim Kundell, Deanna Ruffer, Terry DeMeo, and Frank Sherrill. Assisting the authors was an advisory committee composed of state agency personnel, staff from regional development centers, and city and county officials who generously gave of their time to ensure that this document was accurate and would be helpful to local officials across the state. Members of the advisory committee include the following. i Mr. Al Crace Athens-Clarke County Manager Mr. Billy Edwards City Manager - Hinesville Honorable W. Al Gainey, Jr. Hall County Chairman Ms. Lisa Hollingsworth Chattahoochee-Flint RDC Ms. Linda Kuller Southwest Georgia RDC Honorable Billy Trapnell Mayor - City of Metter Mr. Al Outland Georgia Municipal Association Mr. Mork Winn EPD Water Resources Management Mr. Nap Caldwell EPD Water Resources Management Mr. Joe Pritchard Ware County Manager Mr. Paul Bryan Screven County Manager Mr. John Bennett City Manager - Rome Mr. Mike Gleaton Georgia Department of Community Affairs Mr. Harry Hayes Carl Vinson Institute of Government Mr. Bill Thornton Georgia Municipal Association Mr. Jim Grubiak Association County Commissioners of Georgia Mr. Ed Urheim ii EPD Drinking Water Program iii iv CONTENTS Clean Water Act ............................................................. EPD‟s Water Withdrawal Permit Program........................................................................... INTRODUCTION..............................................................................................................1 The Service Delivery Strategy Act: Georgia Planning Act Part V Requirements .................................................................. House Bill 489 .........................................................................................................1 The Service Delivery Strategy Act and Development of Regional Reservoirs ............................. Growth .....................................................................................................................2 MOVING TOWARD COMPREHENSIVE CURRENT AND FUTURE WATER WATER RESOURCES SUPPLY MANAGEMENT ...................................................................... AND WASTEWATER SERVICES .....................................................................4 APPENDICES WHAT Water-Related Services Are Currently Provided and Which A. Information Sources and Resources ......................... Ones Will Be Provided in the B. Capacity Development Key Future? .....................................................................................................................4 Questions 22 WHERE Are Water-Related Services Provided and Where Will REFERENCES ......................................................................... They Be Provided in the Future? .......................................................................6 BOXES HOW Are Water-Related Services Provided and How Will They 1. Water Supply Components ......................................... Be Provided in the Future? ................................................................................8 2. Wastewater Collection and Treatment HOW Are Water-Related Services Components .................................................................... Financed and How Will They 3. Stormwater Management Be Financed in the Future? ................................................................................9 Components ................................................................................ ALTERNATIVE SERVICE DELIVERY EXHIBITS CONSIDERATIONS .......................................................................................................10 1. Incorporation of Private Systems Managerial Capacity ..............................................................................................11 [City of Toccoa Case Study Excerpt] ............................. Technical Capacity.................................................................................................12 2. Wholesale Authority [Cobb County- Marietta Water Authority Financial Capacity .................................................................................................14 Case Study Excerpt] ................................................. STATE AND FEDERAL POLICIES AND PROGRAMS INFLUENCING 3. Multijurisdiction Water System, WATER SUPPLY/WASTEWATER Jointly Owned and Operated [City of Thomson - McDuffie DELIVERY STRATEGIES ............................................................................................16 County Case Study Excerpt] ....................................................... Safe Drinking Water Act .......................................................................................16 4. Contracted O&M System [City of Hinesville Case Study Excerpt] .................................................. v 5. Satellite Water Supply/Wastewater Treatment Systems [City of Savannah Case Study Excerpt] 14.......................................................................................................................... 6. Intergovernmental Watershed Protection Study [Big Haynes Creek Case Study Excerpt]……………………………………..18 vi INTRODUCTION 1 Water-related services are among the dozens of services that city and county officials are to negotiate under the Service Delivery Strategy Act. This guide is designed to help local officials in these negotiations by discussing policy-level options relative to water supply/wastewater service delivery strategies. In the context of this guide, the phrase water supply/wastewater service is intended to include all of those service components that draw on or impact water resources. These include the sources used for water supply and the water production and distribution system, as well as the wastewater collection and treatment infrastructure and operations, and the management of stormwater. Since water-related services are only one of many types of services that may be negotiated under the Service Delivery Strategy Act, they must be viewed in the context of the overall services provided by the county and cities. There are many challenges associated with providing a clean, safe water supply. Water quantity and water quality are now inextricably interwoven; decisions affecting one affect the other. In addition, implementing both existing and anticipated state and federal regulations will demand significant financial resources, as well as a wide variety of technical expertise and management skills. Determining the most effective way to ensure financial, technical, and managerial capacity to carry out water supply/wastewater service delivery should be a major factor of the service delivery negotiations. Even if no water supply/wastewater services have to be modified, this guide can be useful to local decision makers. It provides an overview of delivery and funding strategies and briefly describes how some of these options have been implemented in Georgia through selected case studies. Evaluating water-related service options can be an opportunity to explore alternatives which may result in better coordination, efficiency, and improved water supply/wastewater services to citizens. The water-related services negotiated at this time may only be the starting point in an effort to meet changing water-related needs in the future. This guide introduces some of the challenges and forces influencing future water supply/wastewater service decisions. Comprehensive water resource management planning is critical for determining the future of the community. The Service Delivery Strategy Act: House Bill 489 The Service Delivery Strategy Act requires local elected officials in each county and the cities within the county to develop and to adopt a Service Delivery Strategy by July 1, 1999. The locally developed strategy is intended to be a plan of action to minimize service duplication, overlap, and competition. The strategy will define service delivery responsibilities and funding sources among the various local governments and authorities in each county. Strategies must also eliminate conflicts between city and county land-use plans and ensure that water and sewer extensions are consistent with local land-use plans. This includes establishing responsibility for delivery of current and anticipated water, fire, police, and emergency management services, among others. The strategies adopted for water provision will affect the day-to-day operation of the water utility system, the future management of the water resources available to the community, and the future viability of the community itself. This document does not attempt to explain the Service Delivery Strategy Act requirements in-depth, nor does it provide guidance on the process to be used to develop a 2 service delivery strategy. Documents to assist local governments in these areas were developed as a joint effort of the Association County Commissioners of Georgia, Georgia Municipal Association, Georgia Department of Community Affairs and Carl Vinson Institute of Government, The University of Georgia. These are: Charting a Course for Cooperation and Collaboration, An Introduction to the Service Delivery Strategy Act for Local Governments and HB 489 Information Bulletin #1, Drafting a Service Delivery Strategy: Getting Started -- Some Ideas and Suggestions. Policy makers are encouraged to refer to these documents for information on these topics. In addition, a list of information sources is included in Appendix A. The Service Delivery Strategy Act and Growth Some local governments will find developing water supply/wastewater service delivery strategies more complex than others. The nature of growth and development occurring at the local level will affect the type and degree of changes required for water supply/wastewater services delivery. Areas experiencing no growth or population declines, for instance, may find that continuing current operational practices is sufficient. Areas undergoing expanding growth and development, however, may want to consider immediate and future needs and how these needs differ from current services. Rapidly developing counties exhibit the highest rates of population growth. Fifty-five counties, the 16 largest counties in the state together with the 39 most rapidly growing counties, currently contain three-quarters of the state's total population. Over the past 25 years, the population of the 16 largest counties increased by 51 percent while that of the 39 rapid-growth increased by 138 percent. Together, these gains accounted for about 90 percent of all population growth in the state. It is estimated that these trends will continue. By 2010, these 55 counties alone are projected to have a combined population in excess of 6.7 million people, more than Georgia's total population in 1990. Growing numbers of citizens means an increasing demand for water supply/wastewater services. In these localities, service needs and/or delivery arrangements will not be static and development of new or additional water supply/wastewater services must be anticipated to meet future demand. If current capabilities will not meet the anticipated service demand, local governments may want to determine alternative mechanisms for providing, either by itself or in cooperation with other jurisdictions, expanded water-related services. Policy makers in rapidly developing areas may want to respond to the current and anticipated increases in service delivery responsibilities by changing operational practices and envisioning new financing sources for both capital and operation and maintenance requirements. There are three general situations that will bear significantly on local governments‟ water-related service delivery. • Situation 1: Neither the county nor the cities within the county provide water-related services and there is no need for the county or cities to consider providing these services in the near future. • Situation 2: Water-related services are provided by the county and/or the cities. Both the county and the cities are satisfied with the current relationship and satisfied that the current arrangement will meet future needs. 3 • Situation 3: There is potential for duplication or a void in water-related services, or there is an identified need for expansion of one or more water-related services, or a need to designate water-related service areas for different governments or geographic areas to avoid disputes and unnecessary competition. In situations one and two, city and county officials may be comfortable with the current level of services and, as a result, the service delivery strategy document may simply describe the existing situation and state the jurisdictions‟ satisfaction with the current service delivery arrangements. If situation three describes the state of service delivery facing a county and the cities, however, changes will likely be required. Consequently, negotiations will need to focus on what service(s) might change, who will provide the service, where it will be provided, and how that service will be paid for. 4 5 6 CURRENT AND FUTURE WATER SUPPLY/WASTEWATER SERVICES 7 WHAT Water-Related Services Are Currently Provided and Which Ones Will Be Provided in the Future? Box 1. Water Supply Components Water Supply - Current Under the Service Delivery Strategy Groundwater Act, counties and cities are to inventory the services that they currently provide and to Wellhead Protection identify those services that will be needed in Aquifer Limits the future. Assessing the current water- Surface Water related service arrangements by describing Watershed Protection how services have been provided to date Reservoir Capacity may be a good starting point in discussing River Withdrawal strategies for future levels of operation. Conservation Measures Water Supply - Future Water utilities can encompass entire water supply/wastewater service systems that are Countywide Water Supply Plan made up of discrete service components. Groundwater These water-related service components Wellhead Protection include water supply, treatment, and Aquifer Limits distribution; wastewater collection, Surface Water treatment, and discharge; and stormwater Watershed Protection management activities. The components Reservoir Capacity may be provided by a single government or authority or they may be provided by River Withdrawal different jurisdictions or the private sector. Conservation Measures Considering water provision in terms of Water Supply/Withdrawal Permits service components provides policy makers Withdrawal Permit with the flexibility to negotiate the most Operational Permit (Safe Drinking Water) economic and efficient delivery strategies Water Withdrawal Treatment for each service component. Intake/Collection Infrastructure Wells Boxes 1 -3 provide a breakdown of the components of a water supply, Surface Water Intake Structure wastewater, and stormwater management Current Treatment Capacity systems. These Boxes can serve as a Potential Treatment Capacity checklist of water supply/wastewater Water Delivery/Distribution System services that may be discussed during the Current Service Provision negotiation process. Potential Expansion of Service Provision Storage Capacity Fire Suppression Distribution ISO Rating (Insurance Service Office) 8 ISO Rating (Insurance Service Office) 9 discussions. Which services will be ISO Rating (Insurance Service Office) negotiated depends largely on the specific situation facing the county and the cities within the county. To assist policy makers in these negotiations, it might be helpful to create a technical advisory committee of employees who have a working knowledge Most likely, not all of the service of the components of the water supply and components shown in Boxes 1 - 3 will be wastewater systems. under negotiation in the service delivery 10 Box 3. Stormwater Management Components Box 2. Wastewater Collection & Treatment Components Watershed Management Assessment Sewage Collection Plan Current Service Provision Monitoring/Enforcement Activities Potential Expansion of Service Provision Erosion & Sedimentation Control Infiltration/Inflow Plan/Ordinance Adopted Sewer Systems Overflows Permitting Process Sewage Treatment Monitoring/Enforcement Activities Industrial Pretreatment Program Stormwater Permit Facility Capacity Currently Required Hydraulic Capacity Permitting Process Loading Capacity Monitoring/Enforcement Activities Discharge Permit Required in Future Land Application System Facility Current Stormwater Collection Industrial Pretreatment Program Built Service System Facility Capacity Collection System Hydraulic Capacity Detention Structures Loading Capacity Pump Facility Storage Facility Treatment Capacity Spray Fields (acreage) Natural Service System Expandability Floodplain Protection Land Application System Permit Wetland Protection Sludge System Greenways Facility Capacity Landuse Practices Agriculture Permits Potential Expansion of Stormwater Collection Sludge Only Permits Built Service System Natural Service System Landuse Practices 11 12 In addition, the service system will be located in order to obtain a delivery strategy discussions can be guided written certificate of concurrence. by considering the: Local governments with publicly • current status of the water owned water supply/wastewater systems are supply/wastewater infrastructure and likely to be in the best position to evaluate services; the technical, financial, and managerial • who the responsible jurisdiction is for capability of proposed private systems and the infrastructure and services; assess the compatibility of the proposed • where the infrastructure is located or the system with future plans for the provision of services are provided; government-owned or government- • how the service and capital costs are controlled water supply/wastewater services. financed; A local government that does not currently • alternatives to the current situation; and own or operate a community water • strategies for the future. supply/wastewater system may find it advantageous to either work with or refer Not all of these factors can be the private developer to an adjacent local applied to all of the components of the water government that does own a community supply, wastewater, and stormwater water supply/wastewater system. In this management systems appearing in Boxes 1 - case, although the proposed system is not 3. However, it may be helpful to consider within its jurisdiction, the needed service them for all applicable components before might be provided by the adjacent local entering into detailed negotiations. government, thus eliminating the development of a new system. At the same time that current services provided by the local governments are being inventoried, it may also be WHERE Are Water-Related Services beneficial to inventory the existing privately Provided and Where Will They Be owned water supply/wastewater systems. Provided in the Future? This should include defining where these privately owned systems are located, who Delineating current and future water owns and operates the systems, and the supply/wastewater service areas involves customer base served. policy considerations aimed at eliminating service duplication and establishing areas of As of January 1, 1998, several new future development based on local rules became effective concerning the government plans. Strategy discussions permitting of new privately owned water offer opportunities to guide development supply systems. These new rules provide an toward service areas that require the least opportunity for cities and counties to work investment in infrastructure, bring the together to avoid duplication of services. greatest economic return, and protect or The rules also discourage the development enhance natural and cultural resources. of small systems in situations that may be Delineating service territories should be better served by a large regional system linked to the local comprehensive plan and and/or expansion of an existing publicly must be supported by compatible future owned system. To comply with a new land-use plans. In addition, regional regulation, the private owners of a proposed entities, private sector service providers, and community water supply system must the Environmental Protection Division approach the local government in which the (EPD) have a role in decisions about the 13 water-related service system. An agreement assessing whether or not the governments among all relevant public and private intend to continue to rely on private systems partners regarding where services will be in the future. In some instances, the planned provided can be in the form of a expansion of a local public water memorandum of understanding or a joint supply/wastewater system could result in the resolution. Relevant agreements must be need to transfer ownership of existing listed on the Service Delivery Strategy privately owned systems to the local forms. government when tie-in becomes feasible. In others, it may be beneficial for one While the Service Delivery Strategy governmental entity to seek input from Act focuses on services provided by cities another governmental entity prior to and counties, as suggested earlier, when concurring with the proposed development inventorying services local governments of a privately owned system. Planning for might benefit from identifying those areas these types of arrangements can be a that are served by privately owned water valuable part of the process of developing supply/wastewater systems and then the Service Delivery Strategy. 14 Exhibit 1. Incorporation of Private Systems In 1986, the City of Toccoa and Stephens County began a cooperative ten-year program to extend water supply distribution lines to unincorporated areas of the county. By the middle of 1998 as the city and county approach the end of the contractual program, which has cost approximately $20 million, about 98% of the county citizens have received access to water supply services. Although the county has been responsible for the SPLOST funding and locating the placement of distribution lines, the city owns the water supply system and provides service to the county. This arrangement was based on the city‟s access to adequate water sources, its ownership of an existing system that could be expanded, and its managerial and technical capabilities to manage the water supply service. Over the course of the project, water lines were run to three private water supply systems resulting in the incorporation of two of the systems. The city consolidated the service area of a failing private system when the owner/operator died. Another owner/operator voluntarily closed a second private system and the service area united with the city when water lines provided a higher level of customer service including fire protection. The third private system is still operating with parallel private and city lines in the service area. As a result of county-wide water supply service, the county and city have realized tremendous economic development opportunities. The City of Toccoa has been able to attract sixteen sizable industries some of which are located outside its jurisdiction. In addition, fire protection capability has been increased county-wide. Benefits of the county-wide water supply service include reduced fire insurance rates in some areas and enhanced quality of life for the citizens of the City of Toccoa and Stephens County. [City of Toccoa contact: Mr. Bill DeFoor, 706/282-3311] 15 capabilities to carry out the water supply/wastewater service responsibilities. HOW Are Water-Related Services Provided and How Will They Be Local governments exploring Provided in the Future? alternatives to public ownership should consider factors such as who can provide Water supply/wastewater service quality service, who should be held components may be provided as a package accountable for that service, and at what cost by one local government or authority, or the service can be provided. There are some individually by different jurisdictions, additional important considerations when authorities, or private interests. In selecting a service provider. One is a addressing who provides water prospective provider‟s history of compliance with the law in regard to seeking and supply/wastewater services, each local holding permits. Another is a requirement government will face a policy decision as to of the Service Delivery Strategy Act that the what extent, if at all, it will enter or remain provider of water supply/ wastewater service in the water utility business. The Service to another jurisdiction must coordinate Delivery Strategy process is not intended to services with that jurisdiction‟s local encourage or discourage local governments comprehensive plan, land-use plan, and to enter into the water utility business. existing ordinances, regulations, and other However, it does encourage governments to land-use controls. select a service provider with the managerial, technical, and financial 16 Exhibit 2. Wholesale Authority The Cobb County-Marietta Water Authority (Authority) is a public utility providing drinking water on a wholesale basis. The Authority was formed by an Act of the General Assembly in 1951, later becoming the first multi-source water system in the State. It has no taxing power and no legal right to obtain appropriations from any governmental body. It is governed by a seven member Board that appoints a General Manager to run the day to day operations. The Authority has entered into long-term (usually 50-year) contracts to supply treated water under pressure at wholesale rates to thirteen retail customers for distribution through their water systems. Customers include: Cobb, Cherokee, and Paulding counties; Marietta, Austell, Kennesaw, Powder Springs, Smyrna, Mountain Park, and Woodstock municipalities; the Douglasville/Douglas County Water and Sewer Authority; the Lockheed Corporation; and the Southern College of Technology. The early decision to take water service provision out of „city hall‟ and place it in an independent organization has been key to the success of the Authority. The simplicity of the Authority, in particular the make-up of the seven member Board, has also contributed to its success. The Board is comprised of the Chairman of the Cobb County Board of Commissioners, one member selected by the City of Marietta, and four members (residents of Cobb County) selected by a caucus of legislators whose districts are wholly or partially within Cobb County. Five retail customers follow a formula to select the remaining member on a rotating basis. The Board is politically responsible and responsive to the local governments but has enough distance to be visionary. This unique structure has allowed the Authority to become renown, winning the EPA Region IV 1996 Safe Drinking Water Act Excellence Award for Public Water Supply. [Cobb County-Marietta Water Authority contact: Mr. A. Roy Fowler, 770/426-8788] 17 HOW Are Water-Related Services operating costs and repayment of capital Financed and How Will They Be costs, thus allowing the service to be Financed in the Future? operated as a financially independent and self-sustaining entity. If discussions include Some state funding, such as water assumptions about future water and sewer loans, is available to creditworthy supply/wastewater service needs, the rate local governments and authorities to structure(s) and service delivery strategy implement portions of a service delivery should reflect those assumptions. strategy. Revenue bonds, grants, state revolving loan program funds and other The Service Delivery Strategy Act Georgia Environmental Facilities Authority requires that water and sewer rates not be (GEFA) loan program funds, a special- arbitrarily or unreasonably different among purpose local option sales tax, and special- the locations served. Local governments service district fees have been used also to charging different water and sewer rates to pay for capital costs of new facilities. customers outside their boundaries than they Policy makers, however, should take into charge customers within, must be able to account that the Service Delivery Strategy justify the reason for such differentials. For Act does not provide general state funds for instance, a differential rate structure might service delivery strategy implementation. It be based on a wide variance in the density of would be prudent, therefore, to select a users within the service districts. Another service provider, either a local government justification might be the decision to link or other entity, that is self-sufficient and can hook-up, line extension, and other charges to take responsibility for funding capital and the real costs of providing the service rather operating costs. than averaging costs system-wide. Looking at the entire water supply/wastewater system Although rates and related financial and considering what rate structure(s) would issues can be complex, information on rate cover the cost of operating the utility as a structures and various types of funding business is another approach to be mechanisms can help policy makers during considered. Ultimately, the objective is to their strategy discussions on how services have a rate structure that is equitable and will be financed. It is generally accepted meets operating costs and debt service. that the rate structures should cover 18 19 20 ALTERNATIVE SERVICE DELIVERY CONSIDERATIONS In identifying alternatives for service resource management plan could be listed as delivery, policy makers can first consider a strategy in the service delivery document. who is currently in the business and who has demonstrated the managerial, technical, and Service delivery alternatives can be financial capability to provide safe and divided into three categories: (1) managerial reliable water supply/wastewater service. structures, (2) technical/operational Combining resources with other water arrangements, and (3) financial providers might benefit both systems. A arrangements. Together, managerial, local government might discover, however, technical, and financial capabilities can that additional information will be necessary optimize provision of high quality, cost- in order to make a decision on how to best effective water supply/wastewater services; achieve some of the service components. In ensure proper and responsible management; such case, the need for an outside study or and increase the ability of the local the development of a comprehensive water jurisdiction(s) to remain in compliance with regulations. Exhibit 3. Multijurisdictional Water System, Jointly Owned and Operated A multijurisdiction water supply and wastewater system, jointly owned and operated by the City of Thomson and McDuffie County, was formed in 1990 through adoption of a fifty-year contract. The drought of the 1980s raised alarm over access to adequate water supplies as many private wells began to go dry and the City of Thomson‟s water supply, Usry‟s Pond, was at half capacity. The city and county combined resources in a joint strategy to acquire additional sources of potable water, expand water services to the county and establish financing that would prevent long-term debt. A joint Water Commission was established to guide the development of the multijurisdiction system‟s infrastructure and expanding water services. A Commission which is advisory to the elected bodies was selected rather than an Authority to maintain local governmental control. Composition of the Commission includes: the Mayor and a Councilman from the City of Thomson; the Chairman and a Commissioner from McDuffie County; the Mayor of Dearing; and two citizens, one selected by the city and one by the county. The City of Thomson has managerial oversight of operation and maintenance to maximize the efficiency of a single department providing this service and to take advantage of its existing managerial and operational capabilities. The initial contractual arrangements required that the rate differential in the county and the city be levelized. Since 1990, the water rates have twice increased to residents of the city while remaining the same in the county; one more increase will equalize rates to all customers. The establishment of the multijurisdiction water supply/wastewater system and the expansion of services county-wide has occurred. The success of the joint system has been based on the personal commitment of the elected officials to remain dedicated and determined to serve the collective needs of their constituents. [City of Thomson contact: Mr. Dewayne Patrick, 706/595-1781. McDuffie County contact: Ms. Joyce Blevins, 706/595-2100] The 1996 Amendments to the Safe system‟s ability to provide reliable safe Drinking Water Act (SDWA) place strong drinking water. Appendix B lists key emphasis on the technical, financial and questions local policy makers can use to managerial capability of water supply assess the managerial, technical, and systems. Enhancing and ensuring the financial capacity development of potential capabilities of a water system is widely service providers. believed to be fundamental to ensuring that 21 Managerial Capacity to capture the true cost of building and operating the system and projects costs and Managerial capacity involves the revenues over time. Local officials can use personnel expertise required to administer the business plan to obtain a comprehensive overall water supply/wastewater system review of the condition of the system, operations. It includes clear ownership, including the physical condition of the directorship, and accountability; capable system‟s water source, infrastructure and personnel and adequate personnel policies; operations as well as the managerial and understanding of regulations, rules, financial condition of the system. Because it ordinances, and professional practices; is a forward-looking document it can also be customer responsiveness and outreach; a useful tool when evaluating and planning contingency planning and insurance; and for future service delivery arrangements. appropriate management information systems. For more information on key Consideration of the above options may managerial capacity considerations, see include an evaluation of the „privatization‟ Appendix B. of water supply/wastewater services. Frequently, the term refers to a number of The previously mentioned different arrangements, some of which are publication, Charting a Course for an administrative compact under which the Cooperation and Collaboration, provides government shifts some of its examples of managerial structures that can responsibilities to a private entity. For be considered as service provider options. example, the term „privatization‟ has been They are presented as alternatives to a local used to describe: (1) systems which are government acting as sole service provider, privately owned; (2) publicly owned although in many cases that will be the systems which are operated by a private selected option. entity under contract to the governmental owner; and (3) special-purpose • Create a service jointly owned and governmental institutions, such as operated by the county and city authorities and commissions, which are governments. independently operated through contractual arrangements with one or more local • Contract with another government or a governments. In actuality, only the first is private entity for the delivery of the true privatization. The second and third are service but maintain the ultimate more accurately referred to as contract responsibility for providing the service. services and consolidation or regionalization, both of which are discussed • Turn over responsibility for providing below in more detail under Technical the service to one government in the Capacity. county: either a city or the county. Although privatization can be a valuable • Create a countywide, intergovernmental, means of management, it is by no means the or regional water authority or only approach. The decision to privatize or commission to deliver services. contract for services depends heavily on the needs of the community and the types of One managerial tool used by many water services to be considered. In some cases it supply/wastewater systems is a business is the most logical approach; in others it is plan. A water supply/wastewater system inappropriate. The key is understanding business plan is a comprehensive and needs, evaluating needs against current and forward looking document, which attempts future capabilities, and developing a strategy 22 to meet needs in a manner that protects public health, safety and welfare. The following represent some of the technical options policy makers can Most importantly, privatization or consider. All of these examples increase contracting for services does not eliminate economies of scale and access to technical the local government‟s responsibility. expertise but vary in availability and degree Although private involvement can help carry of local control. In addition, there are out a service, the ultimate responsibility for certification requirements for water supply the public health, safety, and welfare of a and wastewater facility operators and community remains in the hands of its local laboratory personnel in order to meet quality government. Even if the local government assurance standards. develops a relationship where all services are handled privately, it must, at a minimum, • Operation and Maintenance (O & M) ensure that the services are being provided Contract: This option, also called to meet the needs of the community. turnkey operation or a service contract, allows a private company or a large Technical Capacity water system in another jurisdiction to provide operation and maintenance Technical capacity refers to the ability of a services under contract. For example, a water supply/wastewater system to operate local government contracts with another and maintain its infrastructure now and in government or private entity for the the future. Technical capacity involves the delivery of the service but maintains the existence and maintenance of appropriate ultimate responsibility (and liability) for infrastructure and technologies; compliance providing the service. This option with all applicable standards and codes allows continued local control and including consistency with professional flexibility of service while potentially standards, emergency equipment, reliable increasing economies of scale and and quality water source(s); and awareness technical expertise. The O & M service of quality/quantity linkages. For more may not be available everywhere and, in information on key technical capacity itself, it cannot remedy water system considerations, see Appendix B. problems. 23 Exhibit 4. Contracted O&M System The City of Hinesville has entered into an operation and maintenance (O&M) contract with a private firm, OMI, to operate the city owned water supply/wastewater treatment facilities. In 1984, the city found it lacked technical expertise in-house to operate a new regional wastewater treatment facility and furthermore discovered it would be less costly to contract services with a reputable firm. The city engaged in a process that estimated the cost of services and selected a contract operator that could partner with the local government to provide service at a competitive rate. In 1992, the scope of the O&M contract was expanded to include all of the city‟s public works functions including public safety services such as drinking water supply and highly visible services like street cleaning and mosquito spraying. The City of Hinesville developed a budget establishing an operations and management baseline for the regional wastewater facility. The city used its projected budget and a set of criteria to screen O&M contract operator proposals. Although OMI was not the lowest bidder, the city entered an agreement with the firm in August 1984 to operate the regional wastewater facility and master pumping station. The selection criteria included a firm with a large number of employees that could provide an extensive expertise base, a firm with long-standing relationships under other contracts, and an estimated cost that was less expensive than the city‟s projected budget. In 1992 when the scope of contracted services was expanded to incorporate all of the city‟s public works including its water supply service and the balance of its wastewater collection and transportation operations, OMI was again selected based on the established relationship of mutual respect and trust. In the first 12 months of the public works contract, the city realized a $125,000 savings over its 1992 baseline budget. The City of Hinesville has received high levels service, expertise, and financial management through an O&M contract operator service provision strategy. [City of Hinesville contact: Mr. Billy Edwards, 912/876-3564] 24 • Satellite Management or Shared Services: The satellite management option is a form of the O & M contract in which the contractor is the owner/operator of a large neighboring water or wastewater system that takes over management, and perhaps ownership, of a small system, but the systems are not physically connected. A satellite water system functions independently but benefits from the managerial, technical, and financial capability of the larger utility. Shared services may consist of buying water wholesale from a larger system, pumping into the local government's distribution system and selling to jurisdictional customers. Shared services may also involve physically hooking up to the large neighboring system and buying water and system management from it. Wastewater collection systems may also be connected with treatment occurring at the other jurisdiction‟s wastewater treatment facility. In addition, a water supply/wastewater service could be created that is jointly owned and operated by the county and city governments; or groups of small systems could buy and share specific services in a cooperative arrangement. An example of this option would be several small systems sharing one certified operator. These options allow for local control and provide flexibility of service. 25 Exhibit 5. Satellite Water Supply/Wastewater Treatment Systems Since the 1960s, the City of Savannah, at the request of private developers, has been purchasing private water supply systems. It is now the primary purveyor of water supply and wastewater services in Chatham County. Six of the eight systems it owns and operates are satellite systems, located outside its municipal boundaries, which operate completely isolated from and physically unattached to the city‟s main system. As with its two water systems, the city is responsible for the maintenance and upgrade of the satellite systems to meet existing and future water supply needs. In-depth financial analyses were undertaken prior to the acquisition of the satellite systems. Each potential satellite system was examined to compare the quality of the built system to specifications, to determine its capacity and possible system neglect, to evaluate the cost of upgrades and maintenance, and to determine the possibility of system expansion. The consolidation of satellite systems under one jurisdiction that has efficient operational and technical capabilities and the financial wherewithal to expand services has increased the assurance of safe drinking water and the level of service to the citizens of Chatham County. [City of Savannah contact: Mr. Harry Jue, 912/651-4241] 26 • Consolidation or Regionalization: This option describes the merger or purchase of small systems to a large system. The connection to the large service provider could be either physical or not, but the responsibility for providing the service would be turned over to one government in the county: either a city or the county. Regionalization is the merger and connection of small systems to a large public water supply or wastewater system on a regional scale in which a countywide, multicounty or multijurisdictional authority or entity is created to deliver services. This option could help solve systemwide problems and increase access to capital, including eligibility for public funding. However, the development of an interlocal agreement or formation of a regional public system may be complex and lengthy. Furthermore, there may be financial issues to be addressed, such as a restriction of existing franchise or service areas and inadequate compensation for acquisitions. Financial Capacity Financial capacity refers to the monetary resources that support the water supply/wastewater system. Elements of financial capacity include the ability to meet current and future capital and operating cost needs; rates and revenues; bonds, guarantees, and assurances; depreciation expenses and reserves; financial ratios and ratings, credit record, and access to credit; and financial books and records. For more information on key financial capacity considerations, see Appendix B. Selecting an appropriate financial option, along with establishing efficient managerial and technical arrangements, can lead to creative resolution of some of the complexities of water supply/wastewater service delivery. The following are meant to represent some, but not all, of the financial options local policy makers may want to consider. • Local System Improvement Contract: In this option, the local government enters into a contract with a private company or large water system for specific system improvement services such as equipment maintenance and repair, material purchasing, or water quality monitoring. This option allows for complete and continued local control of water provision services but must be funded through local revenues such as general obligation or water revenue bonds. • Operation and Maintenance Contract with Financing: This option is a variation of the above but includes contracting costs for installation of the system or for working capital for operations. Although this alternative increases access to capital and can solve more severe water system problems, it allows for limited local control and the availability and cost of these services may vary considerably by location. • Private Takeover or Acquisitions: This option is a variation of public merger or regionalization but may be driven by an emphasis on financial considerations. It involves ownership and management by a privately owned, profit-making entity. Benefits include a reduction in the size of the regulated community, increased access to capital, and remedies for severe system problems. However, it also represents a loss of local control and creates ineligibility for public funds. As well, it could involve a complex and lengthy process to form the new system. There may also be financial disincentives and issues related to compensation for acquisitions. 27 28 29 STATE AND FEDERAL SUPPLY/WASTEWATER POLICIES AND PROGRAMS DELIVERY STRATEGIES INFLUENCING WATER 30 There are a number of state and federal policies and programs that will influence the There may be further shifts in anticipated decisions made by cities and counties about state and federal regulations. The federal the future provision of water supply and Clean Water Act is up for reauthorization wastewater services. Some of these have which might result in more stringent federal been referenced throughout this document. requirements. Regardless of the actions of Others, while not directly related to today s Congress on the Clean Water Act, the decisions regarding service delivery, may Georgia Environmental Protection Division have a significant influence on local (EPD) is now requiring watershed government‟s future role in the management assessments for new or expanded of water resources. The following wastewater discharge permits under the discussion describes some of these policies Georgia Water Quality Control Program. In and programs. addition, the recent Total Maximum Daily Loads (TMDLs) program activities will also trigger watershed inventory and assessments Safe Drinking Water Act linked to the National Pollutant Discharge Elimination System (NPDES) permitting Local jurisdictions are facing shifting process. responsibilities stipulated by the 1996 Amendments to the Safe Drinking Water Act. For example, the Amendments require EPD's Water Withdrawal Permit most water systems to provide annual Program Consumer Confidence Reports beginning in 1999. The reports must tell consumers EPD's Water Withdrawal Permit Program is where their water comes from, results of now requiring water supply planning in tests for contaminants in the water supply, areas facing water supply issues. The 24 likely causes of any contaminants, and coastal counties are currently responding to provide information on health concerns. a state requirement for water supply Before 1999, states will adopt matching management plans due to overdraft of the regulations requiring water systems to Upper Floridan Aquifer and resulting provide these reports at the minimum saltwater contamination problems. This standards set by EPA or to provide issue is a good example of the inextricable information that exceeds the national link between water quality and water requirements. In addition, the Safe quantity inherent in water supply and Drinking Water Act source water resource management. Although the issue is assessment process will require local one of using too great a quantity of water, governments to analyze and plan for the the result is a water quality problem (i.e., protection of their water sources. saltwater contamination of wells). Clean Water Act 31 Exhibit 6. Intergovernmental Watershed Protection Study The Big Haynes Creek Watershed includes portions of Gwinnett, Newton, Rockdale, and Walton Counties and the cities of Grayson, Loganville, and Snellville. These local jurisdictions along with regional and state agencies organized to develop and implement a plan to maintain a high quality water supply source for the Big Haynes Creek Reservoir while allowing continued economic and population growth in an area facing significant development pressure. In 1992, governments in the watershed began cooperating to conduct and finance a joint watershed study with the objective to produce flexible development standards while providing protection for the water supply watershed. The local governments have remained the primary decision-makers, responsible for the direction of the study, throughout the consensus driven process. The watershed study resulted in recommendations to which the local jurisdictions have made long-term commitments in good faith. Following the study‟s completion, the participating governments signed an intergovernmental agreement creating a Watershed Council and a supporting Technical Advisory Committee. These bodies coordinate the development and enactment of the local ordinances and amendments necessary to implement the study recommendations and monitor and review their effectiveness. In addition, the Watershed Council and Technical Advisory Committee meet on issues of mutual concern regarding the watershed. As part of the intergovernmental agreement, the local governments in the watershed agreed to goals limiting the amount of impervious surface which would be allowed within each jurisdiction. The participating governments also agreed to common best management practices for controlling stormwater runoff and erosion and sedimentation control as well as the implementation of a cooperative water quality monitoring program. Unexpected benefits of this multijurisdiction effort include reduced costs of meeting state and federal requirements, better flood control, improved surface water quality, and higher recreational value of the reservoir. Furthermore, Gwinnett, Rockdale and Walton county officials are discussing the benefits of constructing shared water treatment facilities. [Big Haynes Creek contact: Mr. Jim Santo, 404/364-2583] 32 protection of the entire watershed. Water Georgia Planning Act Part V does not respect jurisdictional boundaries Requirements and those living downstream depend upon the efforts of their upstream neighbors for Another factor prompting long-term water their supply of clean, safe water. Protection resource planning is the recent shift in the and provision of an adequate supply of clean Georgia Planning Act Part V Requirements. water, therefore, requires cooperation of The previously voluntary environmental those sharing the resource and planning criteria for source water protection comprehensive watershed approaches are now mandatory in revisions to local including inventories, assessments, and comprehensive plans. The environmental management. In addition, land-use planning criteria categories that must now be is a critical and inseparable component of addressed include: water supply watersheds, providing wholesome water. This can only significant groundwater recharge areas, be accomplished through comprehensive wetlands, stream corridors, and higher water resources planning coupled with the elevation and steep slopes of the Georgia directed use of local land-use control mountains. (See EPD Rules for authority to protect water resources. Environmental Planning Criteria; Chapter 391-3-16). The challenges of meeting new regulatory requirements and of providing water Development of Regional Reservoirs supply/wastewater services will require an investment of both time and money. The development of regional reservoirs in Smaller systems with limited resources may North Georgia is requiring local be required to meet the same water-quality standards as large systems with many governments to consider watershed employees and a broad customer base. The protection measures. Water-quality impacts task of providing safe, affordable water is to the reservoir may originate in one or becoming more complex and difficult even several counties within the watershed. for the largest of public water systems that Regional reservoirs necessitate cooperative are not expected to serve rapidly growing multijurisdictional arrangements to ensure populations. 33 34 MOVING TOWARD COMPREHENSIVE WATER RESOURCE MANAGEMENT The value of a community's water resources It is also important to bring all the is tied to its quality of life, economic stakeholders to the table when undertaking development, and environmental quality. comprehensive water supply and wastewater As local governments go through the service management planning. This is particularly delivery discussion and negotiation process, true in dealing with nonpoint source it may be advantageous to consider if they pollution problems. Stakeholders become should undertake developing a more committed to problems such as comprehensive water resources management controlling nonpoint source pollution when plan. Planning for a safe, affordable water they are included in the process of finding a supply and effective wastewater treatment solution. Furthermore, an inclusive and collection system for the future is a approach provides a forum for natural extension of the Service Delivery communication and coordination of efforts. Strategy Act discussions because water supply/wastewater service provision will This document has presented water guide future growth. supply/wastewater service components for consideration during the Service Delivery Fortunately, comprehensive water resources Strategy Act discussions. Local management at the local and regional level governments are encouraged to consider is consistent with and complementary to alternative ways to effectively and reliably EPD's River Basin Management Planning provide water supply/wastewater services at activities. The River Basin Management an equitable cost. Negotiations resulting Planning program will support local and from the Act should also consider future regional comprehensive water resources water-related needs; such deliberations management by providing inventory and underscore the value of comprehensive assessment data. The River Basin water resources planning. A proposed Management Planning activities will also future publication will look more closely at provide a framework and process to support management tools that will be needed for watershed-level resource planning and such comprehensive long-term planning. management. As suggested here, cities and counties that are comprehensively examining their water supply and wastewater management programs may find it important to look beyond their borders--to get a regional perspective. Activities occurring outside a jurisdiction can have profound impacts on water and water-related decisions within the jurisdiction. Consequently, local governments may find it advantageous, or even necessary, to think regionally in undertaking water supply and wastewater planning. 35 APPENDIX A INFORMATION SOURCES AND RESOURCES 36 Association County Commissioners of Georgia 50 Hurt Plaza, Suite 1000 Atlanta, Georgia 30303 404/522-5022 Georgia Municipal Association 201 Pryor Street, S.W. Atlanta, Georgia 30303 404/688-0472 Office of Planning and Budget 270 Washington Street Atlanta, Georgia 30334 404/656-3820 Georgia Environmental Facilities Authority (GEFA) 100 Peachtree Street, N.W. Suite 2090 Atlanta, Georgia 30303 404/656-0938 Water Resources Branch Environmental Protection Division Suite 1362 East 205 Butler Street, S.E. Atlanta, Georgia 30334 404/656-6328 Water Protection Branch Environmental Protection Division Suite 1058 East 205 Butler Street, S.E. Atlanta, Georgia 30334 404/656-4708 Middle Georgia Regional Office Program Coordination Branch Environmental Protection Division 2640 Shurling Drive Macon, Georgia 31211 912/751-6612 Northeast Regional Office Program Coordination Branch Environmental Protection Division 745 Gaines School Road Athens, Georgia 30605 706/369-6376 Northwest Regional Office Program Coordination Branch Environmental Protection Division Suite 114 4244 International Parkway Atlanta, Georgia 30354 404/362-2671 Southeast Regional Office Program Coordination Branch Environmental Protection Division One Conservation Way 37 Brunswick, Georgia 31520 912/264-7284 Satellite EPD Office 6555 Abercorn Street Suite 130 Savannah, Georgia 31405 912/353-3225 Southwest Regional Office Program Coordination Branch Environmental Protection Division 2024 Newton Road Albany, Georgia 31701 912/430-4144 Department of Community Affairs Planning Program 60 Executive Park, South, N.E. Atlanta, Georgia 30329 404/679-4947 Department of Community Affairs Department of Industry, Trade & Tourism Service Center Region 1 527 Broad Street Rome, Georgia 30162 706/802-5490 Department of Community Affairs Department of Industry, Trade & Tourism Service Center Region 2 500 Jesse Jewell Parkway Gainesville, Georgia 30501 770/538-2751 Department of Community Affairs Department of Industry, Trade & Tourism Service Center Region 3 60 Executive Park, South, N.E. Atlanta, Georgia 30329 404/679-4947 Department of Community Affairs Department of Industry, Trade & Tourism Service Center Region 4 31 B Postal Parkway Newnan, Georgia 30263 *Not available at time of printing. Department of Community Affairs Department of Industry, Trade & Tourism Service Center Region 5 1180 East Broad Street Athens, Georgia 30602 706/542-9967 Department of Community Affairs Department of Industry, Trade & Tourism Service Center 38 Region 6 400 Corder Road, Suite B Warner Robins, Georgia 31088 912/329-4830 Department of Community Affairs Department of Industry, Trade & Tourism Service Center Region 7 1054 Claussen Road Augusta, Georgia 30907 706/667-4860 Department of Community Affairs Department of Industry, Trade & Tourism Service Center Region 8 119 W. Forsyth Street Americus, Georgia *Not available at time of printing. Department of Community Affairs Department of Industry, Trade & Tourism Service Center Region 9 1825 Veterans Boulevard Dublin, Georgia 31021 *Not available at time of printing. Department of Community Affairs Department of Industry, Trade & Tourism Service Center Region 10 265 North Main Street Blakely, Georgia 31723 912/724-2075 Department of Community Affairs Department of Industry, Trade & Tourism Service Center Region 11 101 North Peterson Avenue Douglas, Georgia 31533 912/389-4195 Department of Community Affairs Department of Industry, Trade & Tourism Service Center Region 12 305 MLK Jr., Blvd. Savannah, Georgia 31401 912/651-7590 Atlanta Regional Commission 3715 Northside Parkway 200 Northcreek - Suite 300 Atlanta, Georgia 30327 404/364-2500 Chattahoochee-Flint Regional Development Center P.O. Box 1600 39 13273 Highway 34 East Franklin, Georgia 30217 706/675-6721 Georgia Mountains Regional Development Center P.O. Box 1720 1310 West Ridge Road Gainesville, Georgia 30501 770/536-3431 McIntosh Trail Regional Development Center P.O. Drawer A 408 Thomaston Street Barnesville, Georgia 30204 770/227-6300 Central Savannah River Area Regional Development Center P.O. Box 2800 2123 Wrightsboro Road Augusta, Georgia 30914 706/737-1823 Coastal Georgia Regional Development Center P.O. Drawer 1917 127 F. Street Brunswick, Georgia 31521 912/264-7363 Heart of Georgia - Altamaha Regional Development Center 501 Oak Street Eastman, Georgia 31023 912/374-4771 Middle Flint Regional Development Center 228 West Lamar Street Americus, Georgia 31709 912/931-2909 Coosa Valley Regional Development Center P.O. Box 1793 Jackson Hill Drive Rome, Georgia 30163 706/295-6485 Lower Chattahoochee Area Regional Development Center P.O. Box 1908 1428 Second Avenue Columbus, Georgia 31902 706/649-7468 Middle Georgia 40 Regional Development Center 175-C Emery Highway Macon, Georgia 31201 912/751-6160 North Georgia Regional Development Center 503 West Waugh Street Dalton, Georgia 30720 706/272-2300 Southeast Georgia Regional Development Center 3395 Harris Road Waycross, Georgia 31503 912/285-6097 Northeast Georgia Regional Development Center 305 Research Drive Athens, Georgia 30605 706/369-5650 Southwest Georgia Regional Development Center P.O. Box 346 30 West Broad Street Camilla, Georgia 31730 912/336-5616 South Georgia Regional Development Center P.O. Box 1223 327 West Savannah Avenue Valdosta, Georgia 31601 912/333-5277 41 APPENDIX B CAPACITY DEVELOPMENT KEY QUESTIONS (Reprint from METHODS OF ASSESSING CAPACITY U. S. Environmental Protection Agency) The Safe Drinking Water Act does not define “technical, managerial, and financial capability,” but the following ideas may help states and local government think about what is generally meant by the term when applied to water supply systems. Technical capacity. Technical capacity generally refers to a water system‟s ability to operate and maintain its infrastructure now and in the future. When assessing a system‟s technical capacity, the following might be considered: • Appropriate infrastructure and technologies (“hardware”). Are the entire water system and its various components appropriately sized, constructed, and appropriately operated for the needs of the service population? • Compliance with all applicable standards and codes (federal, state, and local). Is the system in compliance with federal and state drinking water regulations? Does it meet additional state and local codes and ordinances regarding water pressure, pipe sizing, and fire protection? • Consistency with professional standards. Do the system and its operator comply with industry and professional standards established by relevant technical, professional, and trade organizations? • Reliable water source(s) of reasonable quality. Does the system have access to a reliable source of water (including purchased water, if applicable)? Is source water of a quality that can be treated with available technologies to meet drinking water standards? • Infrastructure maintenance. Does the system maintain the water delivery infrastructure and related equipment to assure performance? • Appropriate technical redundancy. Does the system have cost-effective redundancies to ensure reliable water service? • Emergency equipment. Does the system have access to emergency or backup equipment in case of natural or other emergencies or disasters? 42 • Awareness of quality/quantity linkages. Are technical personnel aware of the linkages between water quantity and water quality. Are those linkages adequately managed by the system? Managerial Capacity. Managerial capacity involves the personnel expertise required to administer overall water system operations. In assessing managerial capacity, the following elements may be considered: • Clear ownership identity. Is the ownership of the system known to the service population, the local community, and regulators? Is the owner responsive to inquiries about ownership? • Clear directorship and accountability. Is the system‟s management governed by and accountable to an appropriate governing board? Can management be held accountable? • Capable personnel and adequate personnel policies. Does the management retain and compensate personnel with training and expertise appropriate to the needs of the system? Are adequate personnel procedures in place? • Understanding of regulations, rules, ordinances and professional practices. Is the water system‟s management aware of applicable regulations, rules, ordinances, and professional practices in the water supply area? • Awareness of legislative and regulatory processes. Does the management follow legislative and regulatory processes affecting the system and the industry and become involved as appropriate? • Involvement with professional groups. Does the management participate in local meetings and technical forums or professional associations? Does the management benefit from the training opportunities, information resources, and policy-related activities of membership groups? • Customer responsiveness, outreach, and service orientation. Is the system oriented to customer service and responsive to customer needs? Does it use outreach and educational methods, including information to water customers about the cost of service? • Contingency planning and insurance. Are managers prepared for emergencies and other contingencies? Does the system have adequate insurance? • Appropriate management information systems. Do managers have appropriate information systems to monitor operations, personnel, and other areas of performance? Financial Capacity. Financial capacity can be understood in terms of the monetary resources that support the cost of water system operations. Selected elements of financial capacity include: • Ability to meet current and future capital and operating needs. Does the system have the required resources (or access to resources) for current and future operations in accordance with other relevant performance criteria? • Adequate rates, charges, and revenues. Are rates and charges, along with other system revenue sources, adequate for supporting the cost of service? Do the system‟s rates and charges send appropriate signals about the cost and value of water service? 43 • Bonds, guarantees, and assurances. Can the system and the entities responsible for it provide appropriate legal assurances that system operations will be financially sound? • Depreciation expense and adequate reserves. Does the system recognize the service life of assets through accounting and rate-making means? Has a reserve system been established to help pay for replacements and contingencies? • Healthy financial ratios and ratings. Do key financial ratios indicate adequate cash flow, liquidity, leverage, and profitability (for privately owned systems)? Are bond ratings for the system or its owners adequate for attracting financial capital? • Credit record and access to credit. Does the system have a good credit record? Does it have credit or access to credit for operations and contingencies? Can the system pass a market test of establishing a line of credit? • Appropriate debt/equity ratio (for privately owned systems). Does the system have an appropriate ratio of debt to equity in the eyes of financial and economic regulators? • Appropriate valuation of rate base (for privately owned systems). Does the system have a rate base? Is the value of the rate base appropriately established and documented? • Financial books and records. Does the system maintain appropriate financial books and records for auditing and financial planning purposes? Technical/Managerial Capacity. Technical capacity involves the physical performance and condition of the water system. Managerial capacity can be understood very broadly in terms of the personnel expertise required to administer overall water system operations. The following elements of capacity have both technical and managerial aspects: • Infrastructure an capacity planning. Does the system have a plan to meet future infrastructure and capacity needs? • Source protection and management. Is the source water protection area properly delineated? Does the system have a plan for source protection and management? • Monitoring and testing. Does the system comply with all applicable monitoring and testing requirements for assuring safe drinking water? • Operator certification and knowledge (“software”). Do technical personnel have the credentials and knowledge to operate the system? • Continuing education. Does management provide opportunities for continuing education for technical personnel? • Use of available technical assistance. Is management aware of available technical assistance? Are managers willing to explore technical assistance options? Technical/Financial Capacity. Elements that deal with a system‟s ability to develop and execute a plan for the system‟s infrastructure are in the overlap between technical and financial capacity. Some of these overlapping elements include: 44 • Infrastructure replacement and improvement strategy. Does the system follow a plan for replacements and improvements as components of the infrastructure end their useful life? Can the cost of replacements be supported? • Water leakage and loss. Does the system have a program to address water that is lost due to leakage? Does the system understand loss control as both a financial and technical issue? • Investment in technical personnel. Does the system invest appropriately in expert personnel through in-house or contractual arrangements? Are the costs of certification and training recognized? Managerial/Financial Capacity. Some elements of a water system‟s capacity concern both its managerial and it‟s financial capabilities. Basically, these questions assess management‟s ability to identify and implement sound financial planning: • Appropriate accounting standards, practices, and audits. Does the system follow accepted accounting standards and practices? Does it conduct audits or perform well in audits conducted by others? • Financial and business planning. Can the system prepare a financial and business plan? Does the system make use of available planning models? • Annual budgeting and reporting. Does the system prepare an annual budget, as well as other periodic financial reports as required by regulatory agencies? • Cost-of-service studies and analysis. Does the system establish the cost of service and use this information in rate design? Are managers aware of cost drivers? • Financial investment strategy. Does the system have a relationship with a financial institution and an appropriate investment strategy for its funds? • Billing and collections procedures. Does the system maintain an appropriate billing and collection process? Does it receive payments in a reasonable manner? • Awareness of grant/loan programs. Are managers aware of available grant and loan programs, including State Revolving Fund loans? 45 REFERENCES Community's Future. A Road Map for Water System Association County Management in Iowa. Commissioners of No date. Georgia, Georgia Municipal Schretter, Howard. A Association, Georgia Classification of Department of Georgia's Counties by Community Affairs, Population Growth and Carl Vinson Trends. Unpublished Institute of bulletin. No date. Government, The University of Georgia. Charting a Course for Cooperation and Collaboration, An Introduction to the Service Delivery Strategy Act for Local Governments. June 1997. Association County Commissioners of Georgia, Georgia Municipal Association, Georgia Department of Community Affairs, and Carl Vinson Institute of Government, The University of Georgia. HB 489 Information Bulletin #1, Drafting a Service Delivery Strategy: Getting Started -- Some Ideas and Suggestions. December 1997. Iowa Association of Municipal Utilities. Safe Drinking Water, A Promise for Your 46
"Private Takeover Contract"