State agency says city will have to raise rates to qualify for $6 million in funds for repairs
The city of Marion has until August 1 to develop a plan for long-term fiscal sustainability if it wants to secure $6 million in funding to replace its beleaguered water system. The state agency offering to fund that work wants to see that the city’s water revenues will be enough to fund its system in the long term. In short, that will mean rate increases for the system’s customers.
The city is actively seeking to address ongoing issues with its water system by securing a $6 million grant under the FY 2022 Clean and Drinking Water State Revolving Fund- American Rescue Plan Act- Bipartisan Infrastructure Law. The funding aims to enhance the city’s water infrastructure, including the installation of new pipes, system upgrades, and the implementation of modern water technologies.
The Alabama Department of Environmental Management (ADEM) has offered an ARPA grant of $1.25 million for the first phase of the project, following a review of the city’s 2021 audited financial statements. An additional $4 million portion is planned to be covered by a Drinking Water SRF Bipartisan Infrastructure Law (BIL) loan, which includes $3,613,250 in principle forgiveness to replace cast iron pipes and service lines.
To secure the grant, however, the city is required to develop a fiscal sustainability plan (FSP), which includes the potential for raising water rates. This action aligns with the recommendations of a rate study by the Alabama Rural Water Association. While it was estimated in the 2021 study that rates would increase by 3-5%, a new study will be made public upon its completion.
The necessity of the improvements is underscored by the city’s history of water system failures. Persistent issues, including discolored water and prolonged outages in 2020 and 2021, led to an emergency situation. Despite the fact that there have been no sustained outages in recent years, the system’s reliability and the safety of the water are still concerns for many residents. Potential rate increases have sparked backlash, particularly in light of ongoing questions about water quality.
However, the city’s annual water quality report, published in June, stated there were no serious contamination or safety issues with Marion’s city water. Nonetheless, it remains incumbent upon the city council to assure citizens that the money raised will be used responsibly.
Councilmember Jeremy Arrington addressed his constituents via a social media post regarding the impending decisions. “These funds will help us to start getting our water system upgraded to where it needs to be,” he said. Acknowledging the challenge of increasing rates while delivering quality water, he urged understanding, stating, “I know you all feel why should we raise the rate and you’re not getting good quality water. I truly understand how you feel but these are the state terms and we must agree to them in order for the city to receive these funds.”
Councilmember Jeff Nail voiced reservations about the city’s fiscal management when contacted about the issue this week. “I think the city probably does need to raise water rates to get the money to fix our system,” Nail stated. However, he expressed his constituents’ lack of confidence in the city’s stewardship of the funds, saying, “But my constituents and I don’t have confidence that the city is being good stewards of the money they already collect.”
The proposed plan will be discussed, and public concerns heard, during the next City Council meeting on Monday, July 17, at 6:00 p.m. A special called meeting for Monday, July 25, is proposed, during which the council will vote on whether to accept the proposed funds and review potential rate changes before replying to ADEM by August 1, 2023.
The city, in a social media post, stressed the importance of public participation and understanding in this critical project aimed at improving Marion’s water system. ADEM has told Marion that failure to demonstrate adequate planning and fiscal responsibility could result in it redirecting the funds to other projects in other cities. The start date for the project, if approved, is slated for June 30, 2024, with completion by June 30, 2026.
