By Peter White
NASHVILLE, TN — In November State Comptroller Justin Wilson and his deputy, Jason Mumpower, came to the David Scobey Council Chamber to deliver warnings to the City Council and Metro Water Services about the woeful state of their finances.
Wilson told the Council and the Mayor’s office to balance the city’s budget or face a state takeover. On December 11, Finance Director Kevin Crumbo balanced the budget and calamity was avoided. (see Budget)
Metro Water Services (MWS) has not kept up with replacing the city’s aging water and sewer systems. They know that. They have been telling City Hall that for years. But nobody told the City Council.
The Mayor and MWS Director Scott Potter got a letter from Wilson’s office some months ago about the sorry state of the department’s finances. On November 13, 2019 Deputy Comptroller Jason Mumpower delivered the bad news to the council.
“Metro expenses have grown substantially since you last adjusted your water rates way back in 2011. The water department is simply not bringing in enough money to support its operations and maintain and upgrade its aging infrastructure. The statutorily defined net position has declined for three years in a row and your metro water system is considered financially distressed,” Mumpower said.
“The comptroller knew about the issue as well as the previous mayors. Was the water department aware of the financial distress of the department and if you were all aware why wasn’t that brought up during budget hearings or brought to the council?” asked District 29 Councilwoman Delishia Porterfield.
“The letter was addressed to me and the Mayor of Nashville,” Potter replied. “Following the chain of command, we went with the Mayor’s office determination of how we went forward,” Potter said. He was saying it wasn’t his place to inform the council.
But that will change when the Council passes two bills requiring an annual report from the Water Department and the council will get copies of all letters from state agencies so they are not left in the dark. Potter told At-Large Councilman Bob Mendez, who chaired the meeting, that he would welcome that change.
Mayor John Cooper and Mendez met with state comptrollers in October 2019. They planned an agenda for a double presentation to the Council on November 13. Wilson spoke about the city’s long-term debt. Potter presented a new water rate plan. Both had polished PowerPoint presentations.
The City Council sat in their chambers watching and listening to what they were being told.
“How do we reconcile with our citizens that a rate increase is needed when for years you’ve come before the mayors and you’ve come before this body indicating that revenues are up and expenses are down and the department is running really strong?” asked District 28 Councilwoman Tanaka Vercher.
Potter said revenues were up, largely due to Nashville’s growth. And he said expenses were down because they’ve computerized operations and now save $2 million/yr. in energy costs by using sewer gas to power some equipment. Since 1999, the department has laid off 61 people. But all that still didn’t improve the long-term situation.
“We gradually cut back capital investment because we had to protect our bond covenants,” Potter said. That meant the scheduled replacement of the city’s 1200 miles of old water pipes and 1044 miles of old sewer pipes slowed way down.
The department needs $400 million to upgrade the city’s main sewer treatment plant and another $283 million to rehab of the Mill Creek Tunnel storage project. Both have sewage overflows. And under the terms of a 2009 consent decree, they have to be fixed by 2028.
“Why didn’t we have this conversation during the storm water fee? This isn’t new information for you,” Vercher asked.
“We were told it wasn’t the proper time,” Potter said. A storm water fee increase was approved during the Barry administration in March 2017.
Water rates have not changed since 2011 but the department’s operating costs have increased 30% in the last decade. Potter said that water rates were cut in half in 2007 to encourage development.
“There wasn’t a reason for that other than that it stimulated business,” he said. Potter had an outside company do a study and the new rates are based on industry standards and are more equitable. Still the new rates are still lower than most other cities. Also, residential water customers will no longer subsidize developers.
A week after Potter presented the rate increase plan, he was back before the Budget & Finance Committee and Vercher raked him over the coals again. She was angry the council was left in the dark for so long about the department’s finances.
“In the private sector you’d be terminated immediately because that’s gross negligence. Something of this magnitude, this body should not have had to have the comptroller come before us and tell us about the fiscal distress of our water department. That falls on the director himself, not the administration,” Vercher said.
Potter stood his ground. “I did raise the alarm,” he said. At that point At Large Councilman Bob Mendez, who was chairing the meeting, separated the two.
“It won’t happen again and the city will be better off for it,” Mendez said. He was referring to the two new disclosure bills to keep the Council in the loop in the future.