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									         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
        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.

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
EPD Drinking Water Program

CONTENTS                                                                        Clean Water Act .............................................................

                                                                       EPD‟s Water Withdrawal Permit

          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
     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
     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 ................................................................................
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] .................................................
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] ..................................................
       5. Satellite Water Supply/Wastewater
Treatment Systems
           [City of Savannah Case Study
Excerpt] 14..........................................................................................................................

        6. Intergovernmental Watershed
Protection Study
            [Big Haynes Creek Case Study


        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

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
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.

•   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.


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
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)

 ISO Rating (Insurance Service Office)

                                                 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

                                                        Box  3.    Stormwater               Management
Box 2. Wastewater                 Collection   &
Treatment Components                                    Watershed Management
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

               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

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.

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

         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]

                                                       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

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

        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]

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

        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

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,

       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

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
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.

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
[City of Hinesville contact: Mr. Billy Edwards, 912/876-3564]

•   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.

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

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

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]

•   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.


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

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

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
[Big Haynes Creek contact: Mr. Jim Santo, 404/364-2583]

                                                     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.


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.

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
Consequently, local governments may find it
advantageous, or even necessary, to think
regionally in undertaking water supply and
wastewater planning.

           APPENDIX A

Association County
Commissioners of Georgia
50 Hurt Plaza, Suite 1000
Atlanta, Georgia 30303

Georgia Municipal Association
201 Pryor Street, S.W.
Atlanta, Georgia 30303

Office of Planning and Budget
270 Washington Street
Atlanta, Georgia 30334

Georgia Environmental Facilities Authority (GEFA)
100 Peachtree Street, N.W.
Suite 2090
Atlanta, Georgia 30303

Water Resources Branch
Environmental Protection Division
Suite 1362 East
205 Butler Street, S.E.
Atlanta, Georgia 30334

Water Protection Branch
Environmental Protection Division
Suite 1058 East
205 Butler Street, S.E.
Atlanta, Georgia 30334

Middle Georgia Regional Office
Program Coordination Branch
Environmental Protection Division 2640 Shurling Drive
Macon, Georgia 31211

Northeast Regional Office
Program Coordination Branch
Environmental Protection Division 745 Gaines School Road
Athens, Georgia 30605
Northwest Regional Office
Program Coordination Branch
Environmental Protection Division Suite 114
4244 International Parkway
Atlanta, Georgia 30354

Southeast Regional Office
Program Coordination Branch
Environmental Protection Division
One Conservation Way

Brunswick, Georgia 31520

Satellite EPD Office
6555 Abercorn Street
Suite 130
Savannah, Georgia 31405

Southwest Regional Office
Program Coordination Branch
Environmental Protection Division 2024 Newton Road
Albany, Georgia 31701

Department of Community Affairs
Planning Program
60 Executive Park, South, N.E.
Atlanta, Georgia 30329

Department of Community Affairs
Department of Industry, Trade & Tourism Service Center
Region 1
527 Broad Street
Rome, Georgia 30162

Department of Community Affairs
Department of Industry, Trade & Tourism Service Center
Region 2
500 Jesse Jewell Parkway
Gainesville, Georgia 30501

Department of Community Affairs
Department of Industry, Trade & Tourism Service Center
Region 3
60 Executive Park, South, N.E.
Atlanta, Georgia 30329

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

Department of Community Affairs
Department of Industry, Trade & Tourism Service Center

Region 6
400 Corder Road, Suite B
Warner Robins, Georgia 31088

Department of Community Affairs
Department of Industry, Trade & Tourism Service Center
Region 7
1054 Claussen Road
Augusta, Georgia 30907

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

Department of Community Affairs
Department of Industry, Trade & Tourism Service Center
Region 11
101 North Peterson Avenue
Douglas, Georgia 31533

Department of Community Affairs
Department of Industry, Trade & Tourism Service Center
Region 12
305 MLK Jr., Blvd.
Savannah, Georgia 31401

Atlanta Regional Commission
3715 Northside Parkway
200 Northcreek - Suite 300
Atlanta, Georgia 30327

Regional Development Center
P.O. Box 1600

13273 Highway 34 East
Franklin, Georgia 30217

Georgia Mountains
Regional Development Center
P.O. Box 1720
1310 West Ridge Road
Gainesville, Georgia 30501

McIntosh Trail
Regional Development Center
P.O. Drawer A
408 Thomaston Street
Barnesville, Georgia 30204

Central Savannah River Area
Regional Development Center
P.O. Box 2800
2123 Wrightsboro Road
Augusta, Georgia 30914

Coastal Georgia
Regional Development Center
P.O. Drawer 1917
127 F. Street
Brunswick, Georgia 31521

Heart of Georgia - Altamaha
Regional Development Center
501 Oak Street
Eastman, Georgia 31023

Middle Flint
Regional Development Center
228 West Lamar Street
Americus, Georgia 31709

Coosa Valley
Regional Development Center
P.O. Box 1793
Jackson Hill Drive
Rome, Georgia 30163
Lower Chattahoochee Area Regional Development Center
P.O. Box 1908
1428 Second Avenue
Columbus, Georgia 31902

Middle Georgia

Regional Development Center
175-C Emery Highway
Macon, Georgia 31201

North Georgia
Regional Development Center
503 West Waugh Street
Dalton, Georgia 30720

Southeast Georgia
Regional Development Center
3395 Harris Road
Waycross, Georgia 31503

Northeast Georgia
Regional Development Center
305 Research Drive
Athens, Georgia 30605

Southwest Georgia
Regional Development Center
P.O. Box 346
30 West Broad Street
Camilla, Georgia 31730

South Georgia
Regional Development Center
P.O. Box 1223
327 West Savannah Avenue
Valdosta, Georgia 31601

    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?

    •   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?

    •   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
    •   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:

    •   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
    •   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?

    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

Association County
       Commissioners of
       Georgia, Georgia
       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
       December 1997.

Iowa Association of
      Municipal Utilities.
      Safe Drinking Water,
      A Promise for Your


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