Millions diverted from water fund fueled Columbia's growth

By SAMMY FRETWELL and JEFF WILKINSON - sfretwell@thestate.com jwilkinson@thestate.com  Buzz up!

The city of Columbia has siphoned nearly $79 million in the past 11 years from its water and sewer fund to pay for other parts of city government, records show.

That's about $7 million annually that could have gone to improve its aging water and sewer system but did not. Each year, $4.5 million went into the general fund, paying for basic city services such as police and fire protection. The rest of the money paid for the city's business and industrial recruitment efforts.

But while City Council was raiding the utility fund, its water and sewer system was deteriorating and, in more than a few cases, spilling contaminants into Columbia's waterways.

   
Columbia's choices
This is the second in a four-part series about Columbia's choices, challenges and hopes on the eve of the city's April 6 elections.

TODAY: Columbia would not be what it is today if not for its lucrative water system. Was it wise for city leaders to use water money to drive economic development?

FIRST PART OF SERIES: Are Columbians happy with their city? ... Also, a sampling of questions and answers from the recent State newspaper/Metromark survey of city residents

COMING UP ...

March 21: What are we becoming? Are we ready?

March 28: What are our concerns, our fears, going forward?
Now, the city is in the midst of raising water and sewer rates to pay for long-term improvements to the system.

And the upcoming city election has rekindled debate on whether more money should have been poured back into maintenance of the water and sewer system.

"It just got easier and easier to go after that cash cow," former councilman Jim Papadea said of diverting water and sewer funds. "Some of that spending has got to be rethought."

Former councilman Hamilton Osborne said City Council in recent years "probably" went to the well too often.

"Did we set aside enough for maintenance and repairs? Probably not," he said. "But to do that we would have had to raise water rates and taxes, and there would have been a huge outcry."

Water and sewer money helps keep property taxes and water rates down for city residents, even though the annual transfers of water and sewer money into the general fund anger some suburbanites also served by the system. They pay almost twice as much as city residents.

Mayor Bob Coble said Columbia residents are entitled to a profit on their sewer and water system, and it should be used to offset the cost of running and growing the city. The annual raid on the water and sewer fund is less than 10 percent of the utility fund's annual $104 million budget.

"Without a return, why would you have a water system outside the city limits?" Coble asked. "Why would you (run water and sewer lines to enable) economic development outside the city that doesn't benefit you, if you didn't get a return?"

BUILDING BUSINESS

This year, Columbia is spending $7.4 million from the water and sewer fund on economic development and other city services.

Spending water money for economic development increased from $1.9 million in fiscal year 1999-2000 to $3.5 million in 2005-2006. That year, City Council dipped into the water fund for a record $8 million.

The theory behind the fund diversions is that as new stores, offices, factories and malls open, the city sells more water and takes in more revenue. In other words, new customers mean more money to run the city.

"We are trying to grow the city's tax base, grow water and sewer (revenues) and provide jobs for residents of the city of Columbia and the region," said the city's economic development director Jim Gambrell.

In addition to economic development, water funds pay for:

- The Columbia Development Corp. and three other development corporations. They are intended to encourage and guide investment in the Vista, Five Points, Rosewood and Two Notch Road areas.

- The Office of Business Opportunities. The office helps small and minority- and female-owned businesses get a share of city contracts, mostly in construction.

- The City Center Partnership, which encourages and guides investment in the central business district that stretches out from Main Street.

- The city's effort to help organizations such as Engenuity, a partnership with the state and USC that helps drive interest around the university's Innovista research campus.

One myth is that water money was used to build the Columbia Metropolitan Convention Center, to help build USC's Colonial Life Arena and even to stage the now-defunct Three Rivers Music Festival.

A tourism development fee paid by Columbia and Richland and Lexington counties built the convention center, city manager Steve Gantt said, and helped USC build the arena. Hotel and restaurant taxes paid for the music festival, although some general fund money was used to make up for shortfalls, which theoretically could be traced to water money.

Water and sewer money at one point did pay for the operations of the Columbia Museum of Art and EdVenture Children's Museum, before 2007, when some of the money was used for "community promotions." That spending peaked in 2003-2004 at $725,000, records show. Since 2007, no water funds have been used for community promotions.

"The day of frivolity in the general fund has come to a screeching halt," Gantt said, given the city's recent financial crisis and the need for utility improvements.

Gantt acknowledged that the city's overall budget has become dependent on water and sewer money. The city could be using more money to upgrade the water and sewer system each year, he said.

Columbia allocated about $23 million of its $104 million utility fund for big water and sewer projects this year. The rest went to debt payments, maintenance and other regular costs of a utility system. Gantt said he would like to set aside about $35 million annually for major sewer and water system work.

He doubts City Council would want to raise taxes or rates enough to raise $35 million, so he wants to emphasize greater efficiency, small but steady rate increases and growing the system to raise more money.

"They (City Council) look at that as their franchise fee," he said. "It's a successful operation, and they believe the citizens should enjoy the proceeds.

Setting aside more money for water and sewer improvements would have other consequences, Gantt said.

"How would it affect the number of police officers you could afford?" he said. "How would it affect basic services? How would it affect taxes?

"At the end of the day, it's a policy decision," he said.

SEWAGE SPILLS

People are aware of sewer spills when the city's rivers are threatened. They are aware when a water pipe breaks because they might lose service or have to boil their water to protect against contaminants - or have to drive around a collapsed city street.

But it is the sewage spills that are causing people to complain that the rivers defining South Carolina's capital city are suffering needlessly.

In the past two decades, tens of millions of gallons of raw sewage have leaked when the city's aging wastewater system has failed.

Sometimes, raw sewage has spilled into area rivers and creeks. In at least one instance, wastewater apparently drained into the Columbia Canal, which runs alongside the Broad and Congaree rivers downtown and is a major drinking water source for about half of Columbia's customers.

A 2009 S.C. Sierra Club report, which analyzed state records, said Columbia had more reported spills - 558 - than any other wastewater system in South Carolina during the previous decade. Many spills did not pour directly into rivers, but the report gave insight into how the system is operating.

State enforcement records, meanwhile, show the city has been fined at least $77,000 since 1992 by the S.C. Department of Health and Environmental Control for sewer spills and other wastewater problems.

Among those was a $14,000 fine in 2005 for a spill off River Drive near the canal.

An estimated 20 million gallons poured out when a pump station failed, causing sewage to backup. The spill, which occurred in September 2004, went on for about a week.

John Dooley, the city's public utilities director, said sewage likely drained into the canal since the leak occurred less than a mile away. But Dooley said the city tested the water in the canal after the spill and was able to safely treat it.

More recently, 500,000 gallons of raw sewage spilled when a pump station along the Broad River was overwhelmed. The January 2009 spill occurred in the same general area as the one in 2004 - and at about the same time college rowing teams from the Northeast were in town to practice on the river. Just a month earlier, a comparably sized spill occurred in the same area.

Dooley said Columbia plans to upgrade major pump stations in the Broad River Road-River Drive area, where the spills occurred. The improvements are part of a major, long-term project for sewerage improvements in a city where two-thirds of the wastewater system is more than 50 years old.

Columbia sold $80 million worth of bonds last year to make some improvements to the sewer system and is in the process of raising water and sewer rates 25 percent over five years to pay for future upgrades.

Another bond issue, this one for $100 million, is also in the works and should take place by late April, Gantt said. In 2011, the city expects to issue $100 million more in bonds, he said.

It's important to get these projects launched, city officials say, because, all told, Columbia has more than a half-billion dollars worth of water and sewer needs.

Some of the money being spent will go toward fixing water as well as sewer pipes.

Dooley and Coble also noted that Columbia has made some major sewer system improvements in recent years that many people will remember.

Among them were projects in the Five Points, Main Street, North Main Street, Lady Street and Lake Katherine areas. Coble argued that it was because so much work was getting done that the city was criticized for obstructing businesses, closing streets and disturbing neighborhoods.

SAVING THE RIVERS

Folks such as Michael Mayo said the city should put every dollar it can into fixing its sewer system.

Mayo makes his living renting kayaks, inner tubes and canoes so people can float down Columbia-area rivers. He doesn't live in the city limits but says any problems with Columbia's sewer system hurt more than just city residents. Records show the city has the largest wastewater plant in South Carolina, able to process up to 60 million gallons per day.

"There is a point in time where Columbia needs to step up to the plate," Mayo said. "It needs to divert whatever funds it can into developing a more ecologically friendly system. My stance is that it's worth the investment."

Mayo and Charlene Coleman, an outspoken river protection advocate, are among many who back a 20-year-old plan to get all discharges out of the lower Saluda River, just above the city of Columbia.

The Saluda is a clear-running resource filled with whitewater rapids that attract kayakers. Tying small, private, spill-prone utilities in with large sewer plants in Columbia or neighboring Cayce should help, Coleman and Mayo say.

The discharges would go to the Congaree River just south of Columbia and would, in theory, be better monitored by a well-staffed, large system, they say. A 2008 sewer spill at Alpine Utilities that kept people out of Columbia's waterways for days refocused attention on hooking small utilities in with Columbia or Cayce.

But large systems need to work properly, Coleman said.

"Columbia getting everything straight is going to be the largest piece to this puzzle," she said.

City officials say Columbia has so many water and sewer needs that the $78.6 million diverted from its utility fund would not have fixed everything.

Still, Dooley and Gantt said Columbia's wastewater system would have benefited from that money during the past decade.

"That's a no-brainer," Gantt said. "It would certainly help. But on the other side, we would have to come up with another revenue stream to cover basic services in the city."

 

PDF: A look at the state of Columbia's pipes
PDF: A year-by-year look at where the water money went
Story: Aging sewer system under stress

 

Water & sewer rates
About Columbia's water and sewer systems:

135,000 | Number of water customers, most of whom live outside the city

68,900 | Number of sewer customers, roughly half of whom live outside the city

$68.06 | Average monthly water and sewer bill for a home outside the city limits

$39.31 | Average monthly water and sewer bill for a home inside the city limits

SOURCE: City of Columbia

Across the state
Below are average monthly rates for in-city customers from a sampling of S.C. municipal systems. The rates are for 802 cubic feet of water and 6,000 gallons of sewer.

.............WATER SEWER

Anderson $20.94 $26.72

Beaufort $25.92 $39.60

Charleston $17.10 $49.33

Columbia $14.04 $25.27

Florence $22.91 $33.32

Greenville $11.85 $43.74

Hilton Head $12.19 $24.00

Myrtle Beach $12.95 $17.78

Rock Hill $17.48 $33.76

Source: SC Budget & Control Board. Note: Comparative rates outside of city limits were not available.

Reach Fretwell at (803) 771-8537. Reach Wilkinson at (803) 771-8495.

Read more: http://www.thestate.com/2010/03/14/1200073/how-did-we-get-here.html#ixzz0iKn7D42K