August 2019

Toledo Water Agreement – Is it Good?

The City of Toledo’s mayor and administration sent to their city council an ordinance asking for approval for the mayor to sign a new water agreement with the suburbs.

This agreement called the “Uniform Water Purchase and Supply Agreement” would sell water to the eight contract communities with existing expiring contracts. Seven of these entities would transition to a wholesale water rate formula for purchases over eight years. (The sole exception is Lucas County which would transition its rates similar to Toledo using a “retail-cost of operation” basis).

Is This A Good Agreement?

Yes and no, would be my answer, for now.

Yes, in that it reduces ongoing costs that are reflected in wholesale (cost-of-treating) water expenses. Prior to this, all contracts included water rates that were calculated using retail as well as wholesale expenses. Retail is the cost to serve the treatment and delivery of water from the water plant directly to the consumer’s tap. Examples of these expenses include the cost to cover meter-reading, billing, collection, and customer service. Such expenses will no longer be charged to wholesale purchases since these services are no longer needed from Toledo. The buyers of wholesale water will provide these services and incur these costs when they calculate their own local charges which are included in the distribution or operation and maintenance (O&M) rates. Besides changes in the rate formula, we would have a seat on the new Regional Water Commission with oversight of rates and capital project budgeting.

No, because in our Toledo water service area, we currently have five different contract areas, with differing rates and these rates will be adjusted up or down over the next eight years. While we prefer a shorter transition, this is what was negotiated with the City of Toledo and other contracting communities. The impact of these new rates will vary depending upon our customer’s contract areas. Some will see increasing rates and some will see stable or decreasing rates over the transition period. Regardless all contracts will include the $500 million investment in the City of Toledo water treatment system and the debt will be equitably distributed among all customers, including those in Whitehouse, Lucas County, Maumee, Perrysburg, Fulton County, Monroe County, and Perrysburg.

In addition to the change in the formula for water rates, Toledo insists on leaving an economic development paragraph in the contract which requires income tax-sharing from our area’s governments (who already had such agreements in place). So, besides the changes in rate calculation (and loss of the higher discounts), the tax-sharing is a new requirement not seen before. This tax-sharing issue is a difficult issue for us as we cannot commit to tax-sharing for our other contract communities.

What’s Next

Toledo hopes to approve this agreement on September 5th. The 8 adjacent buyers will review it soon thereafter. The District will be hosting a public forum on this and other alternatives on Thursday, September 5th at 6:30 p.m. at the Quality Inn, 10612 Fremont Pike, Perrysburg, Ohio. Two speakers will outline the two primary options for our board and the public. All are invited, but please call ahead for seating reservations and any special accommodation needs.

Our board will likely decide mid-late fall 2019 since our contract(s) expire in 2024, just a few years away!

Jerry Greiner
August 19, 2019