Restructuring Small
Drinking Water Systems
Options and Case Studies
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Contents
Introduction to Restructuring .,............•••••'?••••••••••• •'.•;'• • *
Internal. Changes ............'....-,.; .''•• — • • 5
Hurlock, Maryland: New Well and Service Expansion Improves Water Quality ... .7
Vernon, New York: Installing New Distribution Line Reduces Costs .......... 8
Dolgevffle, New York: Self-Contracting for New Treatment Plant Dramatically
Cuts Costs - • • .""'•',?'
Joseph, Oregon: Installing Treatment and Making Other Changes Improves Service 10
Informal Cooperation . — 11
Tremonton, Utah: Regional Provider of Equipment and Supplies, . . . . .;.... . . 12
Great Falls and Helena, Montana: Providing Specialized Expertise Aids Systems
m Sum>unding Communities . ............... -.•••• ..•••••••.•• 13
- • • • .. • - • ' '14.
Contractual Assistance • • • •
Cherokee Rural Water District #13; Cookson, Oklahoma: Solving a
Water-Loss Problem ..... .•'. .... •••-•• • • -. • • • 15
WEB Water Development Association, Inc.; Ipswich, South Dakota: Purchasing
Water to Address Quality Problems ................ ..'•........... 16
Lakewood Benefited Water District; Norwalk, Iowa: Purchased Water Improves
• Water Quality '..... 1 /,
Washington! County Sanitary District, Maryland: Purchased Water Addresses
. a Health Problem ,.;................-....• 18
•. South Kaweah Mutual Water Company; Three Rivers, California: Laboratory
'. .Services Improve Compliance 19
Water Well Technologies, Inc. (WELLTECH); Akron, Ohio: Pooled Purchasing .
Power Reduces Lab Costs ..... . . . . • • • . ••• ..... • -.- • •• 20
County Service #33; Freestone, California: Telemetry-Assisted Contract O&M
Reduces Operating Costs . . ... 21
Program of Shared Operation and Management (POSOM), Florence, Montana:
Contractual Assistance Targets Individual Very Small System's Needs . . . . . . . 22
Beckham.County Rural Water #2; Erick, Oklahoma: Full Contract Operation
Reduces Operating Costs . . . . .-;. • . ........ • •'• • ...... • • • • 23.
Village of Pecatonica, Illmois: Privatized Water Services Address Supply and
Other Problems . . ...... ... . • • 24
Joint Powers Agencies 25
Boone County Public Water Supply Service, Inc.; Columbia, Missouri:
Centralized Administration Provides Cost-Effective Service 26
The Woodlands Joint Powers Agency; Montgomery County, Texas: Joint Powers
Agency Streamlines Member Systems' Operations . . . . . ............ . . 27
'" ' • '.'..- • • OO
Ownership Transfer . . ...... ............•••••• • ' • • • • • ;.-••• ^
Quantabacook Water District; Harrington, Maine: Transferring Ownership to a
• Public Water District Kept This System Going ... ... . . i . . . . ._'. . • ••..- • • 29
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Trailer Village Mobile Home Park; Centralia, Washington: Annexation Ensures
Safe Water For Low-Income Housing ••.•'••••: : • . ':' ' ' ' ''' "
East Prospect Water Authority; East Prospect, Peimsylvania: Ownership Transter
Is Economical Solution to Supply, Quality Problems . . .... . . . , . . • • • • • •
Greenacres Water Supply; North Canaan, Connecticut: State-Facilitated Takeover
. Improves'Quality of Water Service ...... ;. ........ . -V • • • •
33
Multifaceted Restructuring ''''''.:.' '^ri Y Y Wr''J~'.^i ' ' '
Community Water System; Higden, Arkansas: Providing Wholesale Water and
Technical Services Helps Small Systems .
North Lakeport-County Service District #21; Lakeport, California: ^
Private-to-Public Restructuring Leads to Reliable, Affordable Service ........ 35
Warren Rural Electric Cooperative; Bowling Green, Kentucky: Repeated _
• Restructurings Expand Water Service Throughout Region 3o
Pioneer Electric Cooperative; Greenville, Alabama: Creative Restructuring Helps
Bring Community Water to Rural Areas ....:......•••.• -,- • • • • • • —
• Roaring Creek Water Company; Shamokin, Pennsylvania: Need for Expanded. •.
Customer Base Drives Multifaceted Restructuring • ...... • **
Consumers New Hampshire Water Company; Londonderry, New Hampshire: .
Multifaceted Restructuring Addresses Needs of 12+ Small Systems . &
Lonaconing, Maryland: Internal Changes, Contract O&M; Ownership Transfers
' Ensure Safe Water .'. ............... ...;•• ...... 40
Derry Waterworks; Deny, New Hampshire: Municipal Ownership of New ^
Systems Prompts Multifaceted Restructuring ....... .-. ........ . • ...... 41
Homestead Municipal Utility District, El Paso, Texas: Internal Change Leads to
Series of Restructurings '"'' Y«FY '*'
' RolesviUe, North Carolina: Flexibility Leads to Contract O&M, Purchased Water to
. Meet Local Needs > • • •
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Introduction to
• * . #
Restructuring
If you are reading this booklet, you care about small water
systems. Perhaps you manage one of the more, than 50,000
small community water systems in the United States. Maybe
you provide technical assistance, training, or other services to
these systems. You might work for a local, State, or federal
regulatory or financial assistance'agency.
No matter what you do, you probably know of small systems
that provide excellent service at reasonable cost. You probably
also know of small systems that are struggling. They want to
provide safe water arid good service, but their system is run
down or their source water is of poor quality and their customers
just can't afford big rate increases. Maybe you know of systems
that are doing okay today, but are concerned about their ability
to continue to provide the best possible service in the years to
come.
Small systems face many significant challenges hi consistently-
providing quality service at an affordable cost. These challenges
include:
Deteriorated physical infrastructure.
Lack of access to capital.
Limited customer and rate base. . .
Lack of economies of scale.
Limited technical and managerial capabilities.
Systems that are having problems now,, or those that are worried
about the future, will want to evaluate all the options available
to them for overcoming these challenges. These.options include
restructuring system management/operations, utilization of
appropriate technology, financial assistance through grants or
subsidized loans, and training and technical assistance. Most
systems will probably find they need some combination of these
• ' , Restructuring Small Drinking Water Systems — 1
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Introduction to Restructuring
options to address their problems. This booklet explains
restructuring options. -
Restructuring is a broad term referring to a wide range of
changes a small system could make in its operations,
management, or institutional structure. Simply put, restructuring
means changing the way a system does business hi order to •
ensure its customers of the best possible, service at the lowest
possible cost. Restructuring can be as simple as raising rates
and improving system financial management, or it can be as
ambitious as creating a regional water authority.
The wide array of restructuring options is shown hi Figure 1, .
"The Restructuring Spectrum." the spectrum consists of five
broad categories of restructuring options, m reality, there are
a very large number of restructuring options available to small
water systems if they are willing to look at old problems in new
ways and be creative.
Maintaining local control is an important factor for many small
water systems considering restructuring. Most restructuring
options largely preserve local control over the water system. As
you move from left to right across the restructuring spectrum,
there is an increasing .transfer of responsibility for the water
system's operation and management.
This -booklet presents over 30 case studies of successful small
systems restructuring. Figure 2 organizes the case studies by
restructuring category. In addition to the case studies of systems
that adopted a single restructuring option, the stories of systems
that employed more than one restructuring technique are also
presented. These cases are referred to as multifaceted
restructuring. .
'The circumstances of each drinking water system that could
benefit from restructuring are unique. Consequently, it is not
possible to provide a structuring "cookbook" that explains step-
Restnicturing Small Drinking Water Systems — 2
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Introduction to Restructuring
. Figure 1 .
The Restructuring Spectrum
Internal
Changes
• Completely self
contained
• Requires no
cooperation or
interaction with
. other systems
• Examples of
internal changes:
- Installing
meters
- Raising rates
- Hiring a
.qualified
operator
- Drilling a well
-Soliciting ,
technical
assistance from
the state, or
from local
organizations
Informal
Cooperation
• Work with other
systems, but
without
• contractual
obligations'
• • Examples of
informal
cooperation:
- Bulk purchases
of supplies
- Mutual aid
arrangements
• . .
Contractual
Assistance
• Requires a
contract, but
contract is under
' the system's
control
. • 'System negotiates
the terms and
duration of the
contract
• Contract renewal
at the option of
. the system
' •Examples of
contract'sarvices:
-' Engineering
- Legal
- O&M '
- Purchasing
water
- Supplies
. - Laboratory '
services
Joint Powers
Agencies
• Creation of a, new
entity designed to
serve the systems
. that form it
• Creating systems
continue to exist
as independent
entities
• Requires
cooperation of, ,
and possible.
negotiation with, . .
member systems
in areas covered
by joint powers
agency
• Examples of areas
covered by joint
powers agencies: •
- System
management.
. - Source water
Ownership
Transfer
• Takeover by,
existing entity '
• Take over by ,
newly created
entity •
•• Examples of
ownership
transfers:
- Acquisition and
physical
interconnection.
- Acquisition and
satellite
operation .
-.'Transfer of
.privately
owned system
to new or .
existing public
entity
III^^^H^ Increasing Transfer of Responsibility ^^^^K
* . ' ' • .• ' -
by-step when and how to restructure. EPA hopes that these case
studies* showing how very different water systems from all over
the United States have benefitted from restructuring, will inspire
other small water systems to consider how they might benefit
from restructuring.
Restructuring Small Drinking Water Systems — 3
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Introduction to Restructuring
Figure 2
Case Studies of Small System Restructuring
Ownership
Transfer
Joint Powers
Agencies
nformal
Cooperation
Contractual Assistance
Quantabacook
Water District;
Harrington,
Maine
Boone County
Public Water
Supply Service,
Inc.; Columbia,
Missouri
Technical Assistance
• Hurlock,
Maryland
• Cherokee Rural Water District #13;
Cookson, Oklahoma
• Great Falls
and Helena,
Montana
• Trailer Village
Mobile Home
Park;
Centralia,
Washington
Purchased Water
•• The Woodlands
Joint Powers
Agency;
Montgomery
County* Texas
Dolgeville,
Now York
WEB Water Development
Association, Inc.; Ipswich, South
Dakota
• Joseph,
Oregon
• East Prospect
Water
Authority;
East Prospect,
Pennsylvania
Lakawood Benefited Water District;
Norwalk, Iowa
Washington County Sanitary
District, Maryland
Greenacres
Water Supply;
North Canaan,
Connecticut
Laboratory Services
South Kaweah Mutual Water
Company. Three Rivers, California
Water Watt Technologies, Inc.
' IWBLTECH); Akron, Ohio
•.County Service *33; Freestone,
California
• Program of Shared Operation and
Management (POSOM); Florence,
Montana
• Beckham County Rural Water #2;
Erick, Oklahoma
Village of Pecatonia, Illinois
Multifaceted Restructurings
Lonaconing, Maryland
• Pioneer Electric Cooperative;
. Greenville, Alabama
• Community Water System;
Higden, Arkansas
• Deny Waterworks; Derry, New
• Hampshire
Roaring Creek Water Company;
Shamokin, Pennsylvania
• North Lakeport-County Service
District #21; Lakeport,
California
« Homestead Municipal Utility District;
El Paso, Texas <
• Consumers New Hampshire Water
Company; Londonderry, New
Hampshire
Warren Rural Electric
Cooperative; Bowling Green
Kentucky
• Rolesville, North Carolina
Restructuring Small Drinking Water Systems - 4
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Internal Changes
The simplest form of restructuring that a drinking water system
can pursue is to make internal changes in the way it operates.
Internal changes enable systems to be "all that they can be"
wMe retaining complete autonomy. They can help a system
increase its operating efficiency while reducing or containing
costs. By avoiding contractual arrangements, or even informal
cooperative agreements, system owners are free to take the
initiative and make the improvements they feel are necessary and
to control the timing and implementation of those changes.
For example, a system's owners or managers may decide that
the time has come to install water meters, hire a certified
operator or a part-time bookkeeper, or drill a new well. They
can take these steps on then* own, or they can seek outside help
if they think they need it. Another advantage is that they are
reversible. Ideas that may seem to make sense in theory, but
don't work out hi practice, can be reversed or revised at
management's direction.
Internal changes will be most beneficial to systems that are in.
good shape, that do not face serious or persistent.compliance
problems, and that can generate sufficient revenues or volunteer
labor to meet all then* needs. In most cases, however, internal
changes alone will not be enough to. solve the problems
confronting seriously compromised or badly dilapidated systems.
Not all drinking water systems have the same internal
capabilities, and some systems may want limited outside help in
making internal changes. State drinking water programs are
available to help drinking water systems make.internal changes.
So are organizations like the National Rural Water Association
and its local affiliates, and the Rural Community Assistance
Program. These groups can also help systems figure out which
internal changes are the most important and should be made
sooner rather than later. But the final decision .rests with the
system. .
' • , . Restructuring Small Drinking. Water Systems — 5
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As the following examples of internal changes show, when it comes to making
system-wide operational improvements, creativity—and a willingness to try—are
critically important.
Restructuring Small Drinking Water Systems — 6
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Internal Changes
Case Studies
Internal Changes
Hurlock, Maryland:
New Well and Service Expansion Improves Water Quality
'•''"''. -• ' .'-.'' " . t ' . '. '-''
Drilling a new well helped this system solve a nitrate contamination problem, and extending
its tines with state assistance brought a reliable supply of safe water to a nearby community.
In 1984, the Hurlock drinking water system on Maryland's eastern shore had a problem with
nitrate contamination of its well water. Hurlock had three wells. The nitrate level of its tap
water was il mg/1, exceeding the maximum contaminant level (MCL) of 10 mg/1. Hurlock's
solution to this problem was* to drill a deeper well with low-nitrate water and blend that with
water from one of the three original wells so that nitrate levels hi the finished water fell below
the MCL.
Immediately adjacent to Hurlock were the 60 homes that made up the minority community of
Jones Village. They were served by individual wells, and most of those wells had both nitrate
and bacteriological contamination.
The Maryland Department of the Environment (MDE) was interested in seeing Hurlock address'
its nitrate problem and hi finding a solution to Jones Village's water quality problems. Working
with MDE, Hurlock came up with a plan to drill a new well and extend its Water lines to serve
the adjacent village. .
Drilling a new well and making other improvements to Hurlock's system were estimated to cost
$323,535. Extending Hurlock's water lines to Jones Village, and constructing a water
distribution system there, would cost an estimated $331,765. Hurlock secured a $211,000 loan
from a local bank, and DEP provided a $55,865 loan and a $56,385 grant to drill Hurlock's new
well. DEP also made a $331,765 grant available to pay for extending Hurlock's water service
to Jones Village. The restructuring was completed in 1990.
Today, Hurlock's water system treats its water with chlorine and fluoride; it uses lime to control
pH, which naturally runs from 6.0 to 6,5. By blending water from its new well with that of the
older wells, Hurlock lowered the nitrate level hi its drinking water to 7 mg/1, which meets the
nitrate MCL. In addition, Jones Village now has a safe, reliable source of drinking water.
Water rates in Hurlock and Jones Village are identical, about $50 per quarter.
Restructuring Small Drinking Water Systems— 7
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Internal Changes
Case Studies
Vernon, New York: ;
Installing New Distribution Line Reduces Costs
A partnership formed by the Town of Vernon, the Village of Vernon, and the City ofOneida
brought safe drinking water to 47 homes formerly served by contaminated wells, and will
permit growth in both the Town and Village.
The upstate New York Village of Vernon purchases water from the neighboring City of SherriU.
In 1994, Sherrill charged Vernon some $65,000 per year for this service, based on Vernon's
water consumption and use of Sherrill's. water lines to bring water to the Village's lines.
Dissatisfied with the limits placed by Sherrill on Vernon's water purchases (the Village needed
more water to accommodate additional growth), Vernon officials decided some internal changes
•in then* operation were in order.
The state's Self-Help Support System reviewed Vemon's operations budget and discovered the
excessive cost SherriU. charged Vernon to use Sherrill's pipes. This excessive cost was
converted over different time frames into capital costs. Village officials could now clearly see
how this money could be used to finance a water project without raising water rates;
• (Established by New York's departments of State, Environmental Conservation, and Health, with*
assistance from Rensselaerville Institute, the Support System provides technical advice and other
support to help small communities alleviate their drinking water and wastewater problems.)
The Self-Help Support System was helping the Town of Vernon provide safe water to 47 homes
with unsatisfactory household wells. This required formation of a Town water district and
interconnection to a water supplier, but" the project, was too expensive. The Self-Help Support
system brought the Town of Vernon, the Village of Vernon, and City of Oneida together and
formed a partnership. Before proceeding with the project, several key issues had to.be.
negotiated between the Town and Village. The Town was willing to waive all local taxes levied
on the transmission line if the Village would serve water to .the 47 residences that had
contaminated water. The Village incurred the debt, operation, and new distribution system.
This was a critical issue. . . .
Vernon installed a 4.5-mile, 12-inch pipe around Sherrill at a cost of $420,000. Now< Oneida's
water could be piped directly to Vernon's 200,000-gallon storage facility. The Village of
Vernon financed, the pipeline project with a 10-year, $600,000 bank loan at 1 percent above the
prime rate. The extra funds were used to make internal improvements to the Vemon system,
including the installation of new meters and new billing equipment. Water service also was
extended to an additional 47 homes that had been plagued by poor-quality water and other
service problems. Before the expansion, the Vernon system served 499 customers.
By June 1994, the cost of purchased water from Oneida was $7,000 less than it had been the
previous June; when the water came through Sherrill. Water rates of $3.30/1,000 gallons within
the Village and $3.80/1,000 gallons for customers outside it have not increased a result of the
project. In less than 10 years the project's capital costs will be paid.
• ' Restructuring Small Drinking Water Systems —8
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Internal Changes
Case Studies
Dolgeville, New York:
Self-Contracting for New Treatment Plant Dramatically Cuts Costs
Acting as Us own contractor, and arranging for project financing on its own, this rural New
York community upgraded its drinking water system—saved almost $1 million.
When the New York State drinking water program told Dolgeville it had to treat its surface
water used for drinking, the town had an unfiltered surface water supply and needed to install
treatment.
The town considered building a treatment plant that uses diatomaceous earth as a filtration
medium. It also considered drilling'wells to replace its surface water source. Officials met with
representatives of the New York State Self-Help Support System and discussed treatment
options, financing, and other jelated issues. (Established by the departments of State,
Environmental Conservation and Health, with assistance from Rensselaerville Institute, the Self-
Help Support System assists small communities in alleviating ;their drinking water and.
wastewater problems by providing technical advice and other support.) Eventually, the town
opted for slow-sand filtration.
Slow sand filtration does not require high energy or chemical usage. Its simple operation makes
slow sand filtration particularly appropriate for a small village. A slow sand filter plant will last
three or four times longer than a package facility. Consequently, the community will not have
to invest in facility renovations in 25 years. By using slow sand .filtration, the system will
. operate as it had for 100 years, except for the new filter and covered storage.
Town officials hired an engineering firm to design a 1 iniUion-galion-per-day slow-sand filter
and related facilities, including a 1 million gallon clearwell. The estimated cost of construction
was $2.2 million. Dolgeville decided to do its own contracting and arrange for its bwn
financing. (The Town had acted as its own contractor before, most recently to make
improvements to the local sewage treatment plant.)
Construction began hi April 1994, and the filter should be operational in the fall of. 1995.
(Winter conditions required that work stop between December 16, 1994 and April 10, 1995.)
. The Village has bought and rented equipment and hired temporary civil service employees to do
the construction. The project was on schedule and within budget as of July 1995. And the town
estimates the project will cost $1 million to $1.2 million.
The town is using $400,000 from a HUD small cities grant to pay for materials and engineering
only. Payroll and related expenses have come from a one-year bond anticipation note. The
town has been pre-approved for a $773,700 million Farmer's Home Administration (FmHA)
loan, according to the mayor. Water rates were increased by 40 percent in the third quarter of
1993, and are anticipated to rise agaui m 1995 to approximately $20 per month. .
Restructuring Small Drinking Water Systems — 9
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Internal Changes
Case Studies
Joseph, Oregon: _ .
Installing Treatment and Making Other Changes Improves Service
A series of internal changes that improved water quality and dramatically reduced usage have
been a net plus for this Pacific Northwest community.
This 630-cbnnection system serving a town of 1,135 residents provided no treatment besides
chlorination. It had long been unmetered because Wallowa Lake, the source of the system's
drinking water, provided an unlimited amount of "cheap" water. The system was plagued by
taste and odor problems associated with algae in Wallowa Lake, and water pressure was low m
ttie higher, elevations of the community.
Prompted by a requirement to filter its surface water supply, the system hired a consultant, who
designed a treatment system that included slow sand filtration and a reservoir.. The consultant
also designed system improvements including new fire hydrants and meters. Total cost of the
project was $2.7 million, which was paid with a combination of grant and loan funds from the
Farmers Home Administration.
" This internal restructuring was completed in November 1993. Treating the system's surface
water solved the taste and odor problem.and has been very popular with its customers. The
combination, of leak repairs and installation of water meters has cut monthly water usage 33
percent,'from 27 million gallons to 18 million.
Before the restructuring, system customers paid $6 per month for then- water. Now the average
monthly bill is more than $20, but the improvements in water quality realized by the
restructuring have outweighed.any complaints, about the increase in rates.
Restructuring Small Drinking Water Systems — 10
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Informal Cooperation
Sometimes a drinking water system's limited resources mean it
can't make the restructuring changes it needs on its own. Rather
than go it alone, systems in need of outside help can seek out
opportunities for informal cooperation.
In many parts of the country, informal cooperation isn't a new
way of doing business, it's an old way of life. In region after
region, Americans pride themselves hi helping then: neighbors,
and in looking out for the other guy. They volunteer to become
firefighters, or they join a town or county- board.. They get
involved in improving the quality of life for everyone.
The informal cooperation we're talking about here takes that
"get involved" attitude and puts it to work hi the water business.
Many systems are already involved in informal cooperation. It's
so second-nature, many system owners may not even realize
thereV a name for what they're doing. When systems get
together and agree to buy supplies in bulk, that's informal
cooperation. When a larger system uses its purchasing power to
buy supplies at a discount, then re-sells the supplies to its small
neighbors at cost, that's informal cooperation too. .
By working together informally, systems benefit in many ways.
They share knowledge and expertise. They may even share
supplies and equipment, or they may share then: purchasing
power., In a crisis or an emergency, they know there's
someone they can call oh to help. .
Informal cooperation may be most useful for small systems that
are already hi good shape and well managed, but would like to
increase their efficiency and reduce or contain their operating
costs. Informal cooperation alone will not solve the problems of
seriously impoverished or badly dilapidated systems.
Through informal cooperation there is virtually no transfer of
responsibility, and water systems remain virtually autonomous.
• • ' Restructuring Small Drinking Water Systems —11
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Informal Cooperation
Case Studies
Informal Cooperation
Tremonton, Utah:
Regional Provider of Equipment and Supplies
As the largest water system for 30 miles, Tremonton helps smaller systems buy supplies at a
discount, borrow equipment when they need it, and stay current with industry developments.
The custom of neighbor helping neighbor is firmly rooted in the pioneer spirit of the West. In
northern Utah that spirit is evident hi the informal cooperation between the Tremonton water
system (service population 3,500) and its 30 smaller neighbors. ,
For years, Tremonton has shared equipment parts with its neighboring systems, with the
• understanding that the borrowing systems would replace what they use. 'Since' chlorine
distributors won't deliver to many of these systems, principally because of logistics problems,
the Tremonton City Council agreed to act as a "chlorine clearing house." Tremonton buys the
chemical disinfectant, and systems within a 30-mile radius pick up what they need when they
need it. The systems pay Tremonton the same price for the chlorine that Tremonton paid the
distributor.
In 1993, Tremonton was instrumental in establishing an organization to provide training to water
system operators. The Utah sectipn of the.National Rural Water Association and the Rural.
Community Assistance Program (RCAP) provided assistance, but the operators' group is not
affiliated with any national organization. The monthly meetings cover the latest developments
of interest to drinking water system operators; a recent session covered lead and copper
monitoring. The meetings also provide opportunities for systems to replace the-parts they
borrowed from Tremonton, or to pick up chlorine if they need it.
Tremonton's transformation into an informal regional supplier of equipment parts and supplies
grew out of long-standing practice. The operators' organization it helped found grew out of
need. Such informal cooperation has helped more than 30 small systems hi Utah improve their
quality of service. ,
Restructuring Small Drinking Water Systems — 12
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Informal Cooperation
Case Studies
Great Falls and Helena, Montana:
Providing Specialized Expertise Aids Systems In Surrounding Communities
Helping neighboring systems tap their water mains provides a useful, and specialized, service.
Because the communities surrounding Great Falls and Helena, Montana, typically lack the
equipment and expertise to make large taps in their water mains, the Great Falls Department of
Public Works, Division of Water Distribution, and the Helena Water Department makes the taps
for them. • .
The process in Great Falls is simple. The system that requires assistance approaches the public
works department for help. The Division of Water Distribution requests permission from the
city manager. Having obtained the city manager's okay, the division schedules the tap for off-
duty hours. Personnel from the division use the city's equipment to make the requested tap.
Great Falls bills the requesting community for its employees' time and travel expenses, plus a
minimal charge for the use of the equipment. Division of Water Distribution staff have traveled
as far as 150 miles to make a top.
The city of Helena provides a similar service for communities within a 50-mile radius. Helena
Water Department staff have the equipment to make tops as large as eight inches; to make larger
tops they must borrow cutting heads ,from Great Falls. Like Great Falls, Helena bills the
community for its costs in providing mis service. In addition, Helena will loan neighboring
systems valves, pipe fittings, and other parts that they cannot immediately obtain from a
supplier, with the understanding that the system will replace any parts provided by the Helena-
Water Department.
By making its equipment and expertise available to communities in the surrounding area, the
cities of Great Fails and Helena provide then- neighbors with an essential service.
Restructuring Small Drinking Water Systems — 13
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Contractual
* - '
Assistance
When a drinking water system requires more complicated,
specialized, or regular support than informal cooperation can
provide, contractual assistance may be a good solution.
There are numerous providers of contract services. Some may
be other drinking Water systems. Others may be companies
formed especially to provide certain types .of services, such as
contract O&M, to drinking water systems. Still others may be
firms, such as engineering, accounting, or law firms, that
provide professional services to a range of industries including
water systems (or that specialize in water utilities).
Just about any normal business function of a drinking water
system can be obtained in this way. Contract operations and
maintenance may be the most familiar example, but there are
others. Engineering, legal, and laboratory services are all
available on a contract basis. Operating supplies such as
disinfectants can also be obtained with a contract.
Obtaining services through contracts allows a system to acquire
exactly those services that it needs, no more and no less. The
contractor works for, and reports to, the system owner, board of
directors, or other governing body which retains complete
control over financial and policy matters.
Restructuring Small Drinking Water Systems -* 14
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Contractual Assistance
Case Studies
Contractual Assistance
Cherokee Rural Water District #13; Cookson, Oklahoma:
Solving a Water-Loss Problem
A short-term contract for a water audit to determine why it was losing water also helped this
system identify a need for operator training.
The 473-connection drinking water system known as Cherokee #13 had a problem. Somehow,
the system was losing a great deal of water, and no one knew why. System managers turned
to the Oklahoma Rural Water Association (ORWA) for help.
Cherokee #13 hired Water Systems Management, Inc., the "for-profit" subsidiary of ORWA,
to do a water audit and leak detection survey. The review of the system determined that:
• The system's pumps were cycling on and off too rapidly, thus creating a "water hammer1'
that was fracturing the system's plastic pipes.
• Use of the two pumps that draw raw water from the system's lake source should be
alternated to extend pump, life and reduce power consumption.
• Meters should be installed to improve the efficiency of chemical treatment, and to monitor.
the discharge from recently installed chlorine and turbidity monitors.
• The operator's daily water log should be expanded to include estimates of the amount of
water associated with line flushing, leaks, overflowing storage, cleaning the settling basin,
• and unmetered discharge from the distribution system.
• A low-pressure switch should be installed on the clear well to prevent the distribution
pumps from potentially pumping air, and a pressure switching device should be installed
at the storage tank to monitor the level of water in storage.
• A meter testing program should be initiated to ensure that corrective actions are taken as
needed!
Correcting the water hammer problem became a simple matter of repairing the pipe and, more
important, correcting the operation of the pumpsr Water Systems Management, Inc. estimated
that if its recommendations were adopted, Cherokee Country RWD #13 could save $4,880
annually hi reduced electrical power consumption, and reduced water loss caused by leaks.
Restructuring Small Drinking Water Systems — 15
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WEB Water Development Association, Inc.; Ipswich, South Dakota:
Purchasing Water to Address Quality Problems
'when its own water proved to have overly high concentrations of minerals, this South t Dakota
watt wMrvsTem decided the best solution to the problem was to purchase better quality
water. . .
WEB's Pirpose was staple: to provide
(99 pLent of it grant funds) from the federal Bureau of Reclamation.
The town of Ipswich (population .1,000) is the seat of Edmunds County and one of the
"(IDS) 2,131 mg/1. The water temperature was 70 degrees Fahrenheit.
Bv 1994 water bills in Ipswich ran between $12 and .$15 per month for residential customers;
previously, the average residential water bill was about one-third as much.
Restructuring Small Drinking Water Systems -16
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Contractual Assistance
Case Studies
Lakewood Benefited Water District; Norwalk, Iowa:
Purchased Water Improves Water Quality
To obtain better-quality drinking water, residents of a large subdivision decided to buy the
groundwater system from the subdivision's developer and tie into the nearby Des Moines
system.
When a private developer built a 500-home subdivision about two miles south of Des Moines,
wells were drilled to provide drinking water. The well water was highly mineralized, however,
and residents wanted better quality drinking water. The developer refused to make any
investments to improve water service after the subdivision was completed, so the residents took
matters into then- own hands.
In 1981, they formed the Lakewood Benefited Water District. Funded by a $380,000 Farmers
Home Administration (FmHA) loan, the district bought the development's water system from
the developer and connected it to Des Monies' water system. (The feasibility study required to
obtain the FmHA loan had determined this to be the most cost-effective solution. The loan was
paid off hi 1988.) The mmmium water bill in 1995 was $7.56 for 3,000 gallons, and the
average bill was just $15 per month. .
Restructuring Small Drinking Water Systems -+>
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Contractual Assistance
Case Studies
Washington County Sanitary District, Mary/and:
Purchased Water Addresses A Health Problem
> * • ..'* •' ' • *
After private wells were implicated in an outbreak of a serious waterborne disease, state
officials ordered a restructuring that involved the purchase of drinking water from a nearby
municipal system.
Private drinking water wells were the suspected source of a 1983 outbreak of Hepatitis A in the
Cearfoss/Marfins Crossroads area of Maryland's Washington County. Inresponse, the Maryland
Department of the Environment (MDE) exercised its authority to'order the county government
to construct or extend a public water system. MDE ordered Washington County officials to
provide water service to the area.
Three years after the hepatitis outbreak, the Washington County Sanitary District completed its
feasibility study. The study determined that the most cost-effective way to bring drinking water
to the Cearfoss/Martins Crossroads area was to purchase it from Hagerstown, about three miles
away. . .
Later in 1986 design of the drinking water system began. System construction started in 1987
'and was completed in 1988. Some 55,000 feet of pipe were laid at a cost of $21JB million to
serve 329 customers. Project funds came from grants ($1,842,252), loans ($804,000) and
connection fees .($164,500).
By the end of 1994, 412 connections were being served by the system. Customers in the 6-
square-mile area pay $70.70 per quarter for 10,000 gallons of water, and $1.65 for each
• additional 1,000 gallons. .
Restructuring Small Drinking Water Systems —18
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Contractual Assistance
Case Studios
South Kaweah Mutual Water Company; Three Rivers, California:
Laboratory Services Improve Compliance
When the metier of two small rural systems failed to solve their operating problems, the
surviving system decided it was time to contract for help in meeting monitoring requirements.
In the late 1980s, the South Kaweah Mutual Water Company absorbed the Three Rivers Mutual
Water System, which was located near Sequoia National Park hi California. Before the merger,
South Kaweah Mutual had two wells, no storage, and 65 connections; Three Rivers had one
well, 35 connections and a storage system. The acquisition benefitted both systems, but
problems remained.
The Tulare County Health Department took water samples to analyze for the presence of
microbiological contaminants. - The system was responsible for taking samples to analyze for
chemical contaminants, but operators were uncomfortable with the labs with which they were
dealing To solve that problem, in 1989 South Kaweah contracted with FGL Labs in Santa
Paula, more than 150 miles away, to take, ship, and analyze the chemical samples and report
the results to the county health department. By knowing what sampling is required at what time,
the lab helps the system avoid monitoring and reporting violations.
South Kaweah pays the county health department $15 to collect a sample monthly and more than
$20 to process it. The system's 1994 contract for chemical sampling by FGL was $540. Two
other labs serve the Three Rivers area, and South Kaweah chose FGL on the basis of price and
'.service. • - ' '• ' . ... ••'_,'• '. ' ' • • ' -_-."..'
The systems' water rates rise with consumption, thereby encouraging conservation:, vacant lots
are charged $78 per year, and the base cost of water is $132 per year for 10,000 gallons a
month Monthly charges for additional water usage are as follows: 10,000 to 20,000 gallons,
$0 50 per 1,000 gallons; 20,000 to 40,000 gallons, $1,50 per 1,000 gallons; 40,000 to 60,000
gallons $3 per 1,000 gallons; and over 60,000 gallons, $5 per 1,000 gallons. Under this
system, homeowners with large green lawns pay about $200 per month for then: water.
Restructuring Small Drinking Water Systems -^
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Contractual Assistance
Case Studies
Water Well Technologies, Inc. (WELLTECH); Akron, Ohio:
Pooled Purchasing Power Reduces. Lab Costs
Consolidating the buying power of more than 100 Ohio drinking water systems brings them
great savings on laboratory services-and provides a new line of business for the consortium s
organizer.
Recognizing a wide variance in .what laboratories were charging for various tests turned into a
business opportunity for WELLTECH, a full service company that provides operations and
maintenance services to 32 Ohio public water systems.
'In 1992 WELLTECH formed a consortium of more than 100 systems that buy their laboratory
services'in bulk—and at a discount. WELLTECH solicits bids from laboratories and contracts with
' winning laboratories on behalf of member systems. In a typical arrangement, WELLTECH tracks
required sampling and orders necessary sample kits from certified labs. A lab sends sample
containers to systems, which are responsible for taking samples, the systems send the samples
back to the lab for analysis. The laboratory reports the analysis results to the Ohio
Environmental Protection Agency, and to WELLTECH. The laboratories also bills WELLTECH,
which reviews the analysis results and forwards the lab reports to system owners, along with
their bills.
In three years of operation, there has been a noticeable drop hi the cost of laboratory analyses.
In 1992, the cost,of testing for volatile organic chemicals ,(VOCs) ranged from $150 to $290;
in 1995 Ihe contract price was $85. Testing for maximum contaminant levels of inorganics
" posted'a similar price decrease, from $250 in 1992 to $95. The cost of nitrate-nitrite testing
dropped from $15 - $20 each in 1992 to $10.20 for both in 1995, and lead and copper testing
declined from as much as $27 to $7 each during the same period.
The consortium approach illustrated by-WELLTECH shows how volume discounts offered by
•laboratories can reduce monitoring costs. A recent survey by the Ohio Environmental Protection
Agency found that five of six laboratories surveyed provided Volume discounts of 10 to 50
percent, depending on the type of analyses and number of samples. Drinking water systems
would be well advised to shop around for the best deal they can get before deciding whether to
proceed with the formation of a consortium.
Restructuring Small Drinking Water Systems — 20
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Contractual Assistance
Case Studies
County Service #33; Freestone, California:
Telemetry-Assisted Contract O&M Reduces Operating Costs
Contract O&M helped address some of this rural California system's operating problems, but
it wasn't until a filtration system monitored by telemetry was installed that operations really
improved, • . .
The water system serving the historic village of Freestone grew gradually from the village's
founding hi the 1860s to the installation of a distribution network during the 1920s. Over the
years, however, the system fell into a serious state of disrepair. A frequent violator of turbidity,
bacteriological, and monitoring requirements, it was also plagued by inadequate supply.
In the late 1980s, the citizens' association responsible for the system's operation and
maintenance successfully sought the creation of a County Service District (GSD), The CSD
assumed responsibility for the system and in turn hired a contract O&M firm to run it.
Operations unproved, but violations persisted until upgrades, including the installation of a dual
filtration system, were made in the early 1990s. .
A major factor in the success of this restructuring was the installation of telemetry equipment
so that the treatment plant's operation could be monitored from the O&M firm's office 13 miles
away. Because of the telemetry system, the state cut the frequency of required visits to the site
from daily to weekly. This reduced to an average of 13" hours per month the time required to
operate and maintain the equipment. (That 13 hours per month includes travel time and state-
mandated weekly site visits.) As operator time went down, so did O&M costs.
The overall cost of Freestone's dual-stage filtration system was $7.56 per 1,000 gallons, about
42 percent less than the estimated cost of a similarly sized coagulation-filtration system for the
site (approximately. $13.00 per 1,000 gallons). Transferring system ownership to the county was
a key factor m the project's success...
The system's customers have seen then: Water rates decline as a result of the restructuring. Prior
to 1990, the system charged each of its 23 connections $60, and customers still had to use
bottled water because of the contamination problems. By. 1995, three new connections had been
added, water rates had declined to $42, and bottled water was no longer mandatory. Water is
sometimes in short supply, however, and must be trucked in to supplement water from surface
and ground water sources. .
Restructuring Small Drinking Water Systems — 21
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Contractual Assistance
Case Studies
Program of Shared Operation and Management (POSOM), Florence,
Contradtual Ass/stance Targets Individual Very Small System's Needs
A flexible system of contract management and operational services enables volunteer operators
andmanagers of very matt systems to stay on top of what they needto know to do their jobs,
and helps keep State officials apprised of the issues these systems are facing.
Very small drinking water systems with as few as 13 to 14 hookups-particularly homeowners
associations, schools, and mobile home parks-are served by volunteer operators and managers
These volunteers have full-time jobs, earning livings for their families, and now they find
themselves facing the difficult task -of managing or operating a water system. None of these
•systems can'afford to hire a full-time operator, and none of them need one anyway.
The Midwest Assistance.Program affiliate of the Rural Community Assistance Program set up
the Program of Shared .Operation and Management (POSOM) to meet the needs of these very
small systems. By contracting with several systems clustered in the same geographic area, toe
per-system cost is very affordable-and must less than toe cost of hiring an individual operator
•' for each system. • .
Most of these systems don't really need, operational assistance, but they desperately need
management help. They know how to take samples, but they need to know when to take them,
what new contaminant they will need to test for next, and what toe projected costs of analysis
are In other words, they need to know what they must do to stay in compliance with toe Safe
Drinking Water Act. Another problem they face is not knowing who can give them toe answers
to these questions. They are unable to attend training sessions regularly due to cost, travel time,
and toe loss-of wages from their jobs; so many times they are "in toe dark" about new
requirements.
Each contract with POSOM is individualized to meet a particular system*s needs. The program
offers management services and operation services components. Systems may contract for one
or both components at various costs. The monthly cost of a three-month contract is more than
that of an annual,con.tract.
Each system receives a newsletter.with information answering questions they have raised and
with any new and timely information toe POSOM program deems helpful to these systems. The
program also works closely with toe State Water Quality Division, and regularly reports to toe
Division on issues identified in toe field.
Restructuring Small Drinking Water Systems - 22
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Contractual Assistance
Case Studies
Beckham County Rural Water #2; Erick, Oklahoma:
Full Contract Operation Reduces Operating Costs
When the technical demands of operation surpassed the capabilities of this sprawling drinking
water system, those in charge found that contracting system operations was cheaper than
hiring an operator.
The board in charge of this water district in western Oklahoma county of Beckham was having
a difficult time keeping up with the technical demands of system operations. The system's single
employee lacked sufficient skills to operate the system, and when he quit in 1993 the board
decided to seek outside help. .
The Board contracted with Water Systems Management (WSM), the "for-profit" subsidiary of
the Oklahoma Rural Water Association, to fuUy manage and operate the district's 212-cqnnection
system. WSM looks after the system's 100+ miles of water mam, its three wells, and its
chlorination, storage, and pumping mfrastructure. The association also is responsible for meter
reading, billing, accounting, and O&M. The water district provides material and equipment free
of charge for WSM's use in operating the system.
This arrangement has proved to be a cost-effective one for Beckham County; contracting with
WSM is cheaper than hiring a system operator or paying for other labor to operate the system.
Average water bills for residential customers range from $25 to $50 per month; the minimum
bill is $18.50 per .month for 1,000 gallons of water.
Restructuring Small Drinking Water Systems — 23
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Contractual Assistance
Case Studies
Village of Pecatonica, Illinois:
Privatized Water Services Address Supply and Other Problems
The privatization of this community's public works operations, including the water system, may
enhance fire protection and correct supply and other problems plaguing drinking water
customers.
' i . - • , •
The drinking water system in this community of 1,800 located a few miles- west of Rockford hi
Winnebago County is hi need of major improvement. It does not have enough water at high
enough pressure to provide adequate fire protection. In a number of instances, two or three
homes are served by the same 1-inch service line. This significantly contributes to the
low-pressure problems. In addition, the system's 100,000-gallon elevated storage tank is too
small and set too low; the system needs a third well; and 70 percent of its distribution network
is' made up of 4-inch pipe mat needs to be replaced with larger lines to eliminate bottlenecks.
Residential customers are unmetered, so.daily per capita usage Averages 155 gallons. The rate
system needs updating; residential customers now pay $20 per month for sewer and water
services. J. .
In 1994, the village contracted with St. Louis-based Environmental Management Corporation
to provide all public works services, including water. EMC is revising the local water and
sewer ordinances before undertaking a rate study. The water system heeds to generate enough
cash to fi* its problems.
EMC is one example of the many firms that began hi the waste water business and are now-
branching out into drinking water. . .
Restructuring Small Drinking Water Systems — 24
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Joint Powers
incies
When systems face challenges greater than each can meet on its
own, they may want to form a "Joint Powers Agency."
In this method of restructuring, systems form a new entity to
serve them, while continuing to exist, and operate,
independently. For example, let's say four neighboring systems
served by wells realize they'd be better off tapping a nearby lake
for source water, but no system alone can afford to run pipe to
the lake and install treatment. These systems could form a joint
powers agency to provide them with water from the lake.
Where there once were four entities, there are now five. Each
system is represented on the new agency's board of directors,
and each system has a say in the agency's operation. Depending
on how the agency is set up, most or all of the member systems
will have to agree to an agency action before it is implemented.
But, except hi matters over which the agency has jurisdiction,.
each member system remains free to operate as it sees fit.
Forming,a joint powers agency can be more complicated than
• some of the other forms of restructuring presented in this
manual. Depending oh local and state laws, it may be necessary
to obtain governmental approval at some point. Legal counsel
experienced in regulatory and other governmental affairs is an
absolute necessity during the formation of a joint power&agency.
Once established, a joint powers agency will likely remain hi
existence as long as its members need it. And once they join,
member systems should be committed to participating in the
agency as long as the need for the agency remains. In this way,
member systems can address the concerns that affect them all.
Restructuring Small Drinking Water Systems — 25
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Joint'Powers Agencies
Case Studies
Joint Powers Agencies
Boone County Public Water Supply Service, Inc.; Columbia, Missouri:
Centralized Administration Provides Cost-Effective Service
Centralizing purchasing, accounting, and other support services in a joint powers agency has
administration of several Water Districts in this central Missoun County.
The Boone County Public Water Supply Service, a nonprofit corporation was formed in 1968
to provide administrative and other services for the 10 water districts in this Missouri County.
Four of the 10 districts initially joined. In 1975 three of the districts merged and the
organizationnow serves two water districts with a total of 6,700 customers. By 1995, Boone
County Public Water .Supply Service was providing:
Computerized billing, accounts receivable, accounts payable, and payroll services.
A communications center for telephone calls and two-way radio communications.
Insurance and annual audit administration.
Work-order preparation and record keeping.
Join purchasing of materials and services.
•• Financing and refinancing assistance. .
•• Attendance at Board meetings, and preparation of agendas, correspondence, financial
reports, and meeting minutes. . .
• Assistance in the processing and distribution of .quarterly newsletters to customers.
The service company develops an annual budget, which must be approved by its Boardxrf '
Directors. The Board is made up of the presidents of the participating water districts, (The
consolidated district, Public Water Supply District No. 1, has two representatives on the Board )
Funds for the annual budget are raised by charging each District a monthly fee. In 1995, the
monthly fee was .$2. 10 .per. customer.
Boone County Public Water Supply Service, Inc. has provided a cost-effective service to its
member districts. Its central office eliminates separate, duplicate office for each district and
provides a central location at which customers, suppliers, and government agencies can do
business.
In 1990 a joint project with the local electric cooperative provided new, expanded headquarters
for the company and the consolidated water district. The offices of the county sewer district are
also located on the electric cooperative's property. This arrangement has drawn a positive
response from the customers served by all three utilities.
Restructuring Small Drinking Water Systems — 26
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Joint Powers Agencies
Case Studies
The Woodlands Joint Powers Agency; Montgomery County, Texas:
Joint Powers Agency Streamlines Member Systems'Operations
\ i ' • ,,_ "• •_ •
Rather than staff 10 separate water systems, this planned community relies on a joint powers
agency to operate nine municipal utility districts serving residential customers and one serving
the downtown commercial area.
The Woodlands is 25,000-acre planned community located in the southeast Texas county of
Montgomery, whose county seat is Conroe. Ten Municipal Utility Districts (MUDs) deliver
water provided by the San Jacinto River Authority from 12 wells; nine districts serve the
Woodlands' residential areas, and one serves the commercial area. (The San Jacinto River
Authority provides all water lines 12 inches and above in size, all storage facilities, and all the
water.) . -,':••'
Staffing separate water systems, each headed by a general manager, was obviously economically
inefficient. In 1974, through an interlocal agreement, the nine MUDs serving residential areas
formed a Joint Powers Agency to operate the systems, which total 14,000 connections; The
MUDs have no staff, but the Woodlands Joint Power Agency has 26.
Each/MUD has an elected board of directors, and one member of each residential MUD sits on
the board of the Joint Powers Agency (JPA). In that way, the JPA's activities are coordinated
and member utility district has a say in its operations. Water rates for residential customers
average $1.13 per 1,000 gallons for a minimum of 10,000 gallons.
Restructuring Small Drinking Water Systems — 27
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Ownership Transfer
Sometimes the owners of a drinking water system decide, for
one reason or another, that they no longer want to "go it alone.
Perhaps they cannot afford to make necessary improvements to
their system. Or maybe an unforeseen contamination problem
threatens to overwhelm their technical or financial capabilities.
In such cases, a change in ownership may be the best solution.
Some states have programs in place to facilitate ownership •'
transfers by helping to remove regulatory, barriers. Such
programs can help ensure that the customers of a viable drinking
water system are not required to pay a disproportionate share of
the costs to acquire or improve a troubled one. A few states,
such as Connecticut and Washington, have legal mechanisms to
compel, under certain circumstances, the takeover of seriously
troubled drinking water systems.
In some cases, it makes sense to transfer ownership of a small
water system from the private to the public sector. That's
because many low-interest loan and grant programs from
agencies such as the Rural Utilities Service, or RUS; (formerly
the Farmers Home Administration) are available only to publicly
owned water systems.
In other cases, however, private sector ownership would be most
advantageous. Private sector water companies may be able to
bring economies of scale and management efficiencies to bear to
help troubled small systems, -they may physically interconnect
with these small systems, or they may run them as physically
separate operations known as satellite systems:
In the end, the decision to transfer ownership will depend on the
financial and technical problems faced by a system's owners.
The nature of the ownership transfer also will depend on local
conditions, the state regulatory environment, and other concerns.
Restructuring Small Drinking Water Systems r- 28
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Ownership Transfer
Case Studies
Ownership Transfer
Quantabacook Water District; Harrington, Maine:
Transferring Ownership to a Public Water District Kept This System Going
When the magnitude of its problems surpassed its financial resources, a privately owned system
in Maine determined to go public in order to give its customers the quality of service they
deserve..
As a privately owned system, the Quantabacook Water Company had serious problems with its
source and with low water pressure, inadequate storage, and undersized water mains that were
old and deteriorated. Violations of the maximum contaminant levels for microbiological
organisms were numerous, and the system was on a boil water notice from 1988 through 1994.
After a sanitary survey, the state ordered that the system be pressurized and that proportion-to-
flow disinfection equipment be installed.
The utility's weak financial position ruled out a commercial loan to correct the problems. And
other costs loomed ahead for the system, which was founded in the 1860s. A prospective
wellhead protection program would require the system to conduct a hydrogeological investigation
and, possibly, purchase several.acres of land for protection. The three-person board of directors
was concerned about the project cost and about depleting the system's $25,000 reserve fund.
In the early spring of 1989, with the help,of the Maine Rural Water Association, they decided
to restructure by transferring the company's assets to. a water district. ;
Although the town selectmen endorsed the action, and the state legislature unanimously passed'
the water district charter, Harrington's voters defeated the restructuring in a referendum. Many
voters were concerned that the town would be liable for the system's debt. (Actually, the town
faced no liability.) Some voters were concerned about whether the Farmers Home
Administration (FmHA) would require fire hydrants. After their concerns were addressed by
a state Public Utilities Commission attorney in a subsequent meeting, voters endorsed the water ,
district's creation by almost 4:1.
The district's new board of directors hired an engineering firm and applied for a grant and a
loan from the FmHA. An engineering firm put together a $1.9 million project mat included
developing a larger, more reliable water source; replacing 21,000 feet of undersized water main;
and erecting a 300,000 gallon storage tank for fire protection. Construction began in the fall
of 1993, and the system went on line hi the fall of 1984.
FmHA provided the district with a $1.36 million grant and a $536,000 loan; the 5-percent loan
will be amortized over 40 years. Average annual water bills for the system's approximately 145
customers will increase from $75 to about $264.
Restructuring Small Drinking Water Systems — 29
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Ownership Transfer
Case Studies
Trailer Village Mobile Home Park; Centra/la, Washington:
Annexation Ensures Safe Water For Low-Income Housing
'A contamination problem that may have begun 30 years earlier led a neighboring community
to annex this mobile home park and to assume ownership of the park's drinking water system.
When Phase I (Volatile Organic Chemical) sampling found high concentrations of .
tetrachloroethylene (PCE) in its drinking, water wells in 1991, the Trailer Village MobileiHome
Park outside Centralia, Washington had few options. Its two weUs which showed PCE
concentrations of 25 ppb and 103 ppb (the maximum contaminant level is 5 ppb), were taken
off line and bottled water was provided to its 85 households.. The park's water distribution
•system was connected to the irrigation well of a-nearby cemetery to provide water for washing
and other domestic purposes in the short term.
A preliminary site assessment implicated a dry-cleaning busmess mat had operated on the mobile
home park site from 1960 to 1978 as the likely source of the contamination. The PCE
contamination threatened hundreds of area wells that pumped water from the aquifer. Working
with Portland, OR-base.d Backflow Management, Inc., the mobile home park owners investigated
• -several long-term options, including: . .
• Installing an air stripper to control PCE in water pumped by the park's two wells.
• Drilling a new well. '
• Connecting to the city of Centralia's water system about five miles away.
They chose to connect to the Centralia water system; Before that could happen, however, the.
state health department had to approve the design and construction of a new distribution system
for the park. Nor could the park just hook up to the Centralia system and buy water from it.
The health department required that Centralia own and maintain the new system. This was
consistent with the health departments policy of promoting the annexation of small systems by
• larger ones Whenever possible. Local ordinance prevented Centralia from extending water
- service beyond the city's boundaries, so Centralia had to annex the mobile home park. Thepark
could not hook up with city water without also hooking up to the city sewer, so new sewer lines
' also were laid to serve the park, which previously had been served by a septic system.
Construction was completed in September 1994. Total costs exceeded $640,000. A portion of
the costs will be covered by a loan to Centralia from the state-funded Public /Trust Fund.
Because 81 percent of park households have low-to-moderate incomes, a state Community
Development Block Grant also provided loan funds. The park's owners will repay the loans.
The mobile home park's residents will keep their homes and will have an adequate supply of
safe drinking water. Their bills will be about $35 per month for both water and sewer;
previously water service had been included in their rental fee. Centralia has increased its tax
base and gained a low-income housing community served by new water and sewage systems and
a new city well. .
Restructuring Small Drinking Water Systems - 30
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Ownership Transfer
Case Studfos
East Prospect Water Authority; East Prospect, Pennsylvania:
Ownership Transfer Is Economical Solution to Supply, Quality Problems
Concerned about water supplies and increasing operating costs, town officials in East Prospect,
Pennsylvania opted to sell their drinking water system to a nearby water company. The
company had already acquired three small systems that were faced with rising operating costs.
When the developer of a 60-home subdivision half in and half out of the town of East Prospect
drilled a well to serve .the homes, he became concerned about the quality of the water. This
raised concerns among East Prospect officials, who were facing water problems of their own.
The East Prospect Water Authority's operating costs were increasing, and a recent drought had
raised concerns about the quantity of water available in town. An engineering feasibility study
speculated that the, town's three springs and two wells, located within 200 feet of a river, were
ground water under the direct influence of surface water and so would require the construction
of a treatment plant under the Surface Water Treatment Rule (SWTR).
Faced with mounting compliance costs, East Prospect officials examined their options. The
potential water quality problems with the developer's well ruled out tapping the aquifer beneath
the town. So, the officials decided to opt for the most economical alternative available and
transferred ownership of their system to The York Water Company, whose transmission main
was 12,000 feet away. .
The restructuring will be completed in 1995. Although water rates in East Prospect are expected
ito increase from their pre-restracturing level of $160 annually, they would have doubled or
tripled had the town attempted to solve its drinking water problems on its -own. Pre-
restructuring customers of the York Water Company are not expected to see their $240 annual
. cost increase .significantly. .
By the end of 1995, The York Water Company will have connected with water systems serving.
three small Pennsylvania communities that petitioned to be taken over in 1993. Concern about
rising operating costs led the systems to petition for the takeovers. The York Water Company
has added the private system serving Saginaw (60 connections) and the municipally owned
systems serving East Prospect and Seven Valleys (200 and 180 customers, respectively). York
replaced the small systems' water sources and ran 6,000 feet of pipe to serve Saginaw, 12,000
feet to serve East Prospect, and another 12,000 feet to serve Seven Valleys. The physical
connections were completed by late 1995. The Pennsylvania Department of Environmental
Resources and Public Utility Commission helped remove regulatory hurdles York faced in taking
over the private system in Saginaw. V.' , .
The added customers will give York a greater customer base over which to spread its own
increasing operating costs. The company currently has a 30 million-gallohs-per-day surface
water treatment plant with storage and distribution systems. It charges $36.74 per 10,000
gallons of water; the average annual bill is about $240. That compares favorably with the
Pennsylvania-wide average residential water bill of $200 to $300.
..:-•' . Restructuring Small Drinking Water Systems ^ 31
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Case Studies
Ownership Transfer
Greenacres Water Supply; North Canaan, Connecticut^
State-Facilitated Takeover Improves Quality of Water Service
men the owners of a very small, troubled system decided to quit the water business,
Connecticut's takeover statute helped facilitate a fair and orderly ownership transfer.
Although ordered by the Connecticut Department of Health Services (DOHS) to make
of implements, the owners of Greenacres Water Supply determined tiiey couldn t afford the
$191,000 required to upgrade their 115-connection system. Instead, they notified DOHS that
they wanted to quit the water business altogether.
DQHS asked the state Department of Utility Control (DPUC) to hold a hearing on the matter.
During the hearing, two water systems expressed interest in purchasing Greenacres Water Supp y
ando^rating it i a satellite. system. Later, GreehacresV owners agreed to sell the system to
the Tyter Lake Water Company for $10,000, but the DPUC consumer counsel opposed the price
as excessive After examining Greenacres' financial records and considering the improvements
Sat fce System required, DOHS and DPUC determined (1) that $617 was ^ more ^onable
price and (2) the Bridgeport Hydraulic Company (BHC) was the "more suitable entity to own
^ro^rate Greenacres (Bridgeport Hydraulic already operated the North Canaan water
'system, and its water mains ran within 4,000 feet of Greenacres Water Supply.)
Ownership of Greenacres was transferred in 1988. The drinking water system that BHC
purchased had three wells, one spring, a 6,300-gallon and a 2,500-gallon atoiosphenc water
tank and a 5,000-gallon pressure tank. The distribution system consisted of 11,583 feet of l-
and 2-inch galvanized, plastic, and copper pipe. None of the 107 residential, 1 commercial, or
7 industrial customers were metered. There was no fire protection.
The state ordered BHC to spread the cost of system improvements acrossite ^ase of 96,000
customers to reduce the financial burden on Greenacres' customers. DOHS and DPUC also
ruled that Greenacres' customers would be .billed at their old rate until all the residences were
metered Then BHC could bill them at the same rate as its other customers in the area. BHC
was given a schedule for improving the Greenacres system. It also was required to submit
S fniLial information to the DPUC and to notify Greenacres' customers -of the
acquisition. ' • .
This ownership transfer was facilitated by Connecticut's takeover statute, which empower the
state to promote system acquisitions as a way of correcting the problems of troubled systems.
Restructuring Small Drinking Water Systems — 32
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Multifaceted
Restructuring
This manual presents a spectrum of restructuring options from
which drinking water systems can choose. In many cases,
however, drinking water systems may need to implement more
than one type of restructuring option at a time. We call such
actions multifaceted restructuring.
Muitifaceted restructuring can involve the implementation of
more than one option within a single category. For example, a
system may-decide to hire a certified operator and drill a new
well. ; Both actions are examples of internal changes. Or, "a
system may opt for restructuring options from more than one
category. It may decide, for example, to make internal changes
and contract for outside operations and maintenance services.
The systems whose stories are presented in this section have all
adopted multifaceted restructuring. By matching the
restructuring options available to them with the problems they
faced, they have derived effective solutions. By thinking.
creatively, about restructuring, these systems have unproved the
quality of their service,, and in many cases have been able to
expand water service into new areas.
Necessity is the mother of invention* according to the old
saying. Necessity can also be the catalyst to restructuring. And
creativity, along with an openness and a willingness to change,
can lead to multifaceted restructuring to address complex
problems.
Restructuring Small Drinking .Water Systems — 33
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Mult/faceted•Restructuring
Case Studies
Multifaceted Restructuring
Community Water System; Higden, Arkansas:
Providing Wholesale Water and Technical Services Helps Small Systems
\
When buying good quality water at wholesale prices became the most economic alternative they
had to meet their customers' need for safe drinking water, more than a half dozen rural
systems elected to do just that, and a half dozen more are waiting in line. Now, their supplier
setts administrative and technical services, as well as water.
Built to serve an area of northern Arkansas that lacked drinking water service, Coinmumty
• Water System, located on Greers Ferry Lake in Higden, Arkansas, originally served 1,500
customers in 1972. CWS now serves 4,100 retail customers and is expanding its services to sell
wholesale water and provide contract administrative and technical services to over a half dozen
rural water systems in northern Arkansas. . •
CWS has been fortunate to have Greers Ferry Lake, an abundant source of quality raw water.
Northern Arkansas lacks an abundance of groundwater, and the systems served by CWS benefit
from the lake's abundant source of quality drinking water.
Much of Community Water System's original' service area in Cleburn County included
recreational areas that saw considerable seasonal use. Eventually, the board of directors decided
to expand in an effort to improve the system's economies of scale. In 1986, CWS began selling
wholesale water to the City of Shirley, Arkansas, a system wim approximately SOOmeters,
expanding the CWS's service area to 85 square miles in two counties. Since 1992, CWS has
performed several extensions to the system, ranging in size from 3 miles of pipe to serve 21 new
customers; all the way to 86. miles of pipe to serve 600 new customers.
Construction began in March 1995 to add seven wholesale customers. CWS took the lead'role
as Project Developer, providing direct interaction with the engineering and legal services and
arranging for financing of the project. The system is currently working with a second groupof
nine rural communities seeking to secure .a safe and reliable source of drinking water. The
second group has already contracted with CWS for administrative and technical services.
The ability to monitor all the critical elements involved in providing water on a wholesale basis
from one site is key to their success. The system's expansion into these activities has had little
impact on the retail customers of its base system. The rate they pay for 4,000 gallons per month
is $22 70 and this rate is not expected to increase. The impact on the other system s retail rates
varies according to their indebtedness and operating costs, but the wholesale water rate is the
same for each system. The incentive for all the systems to become involved in CWS projects
is based on a need for a long-term, stable supply of quality water at a reasonable price Simply
put, buying good quality water at wholesale was cheaper than the other options they had to meet
their'customer's needs for safe drinking water.
. Restructuring Small Drinking Water Systems — 34
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Mult/faceted Restructuring
Case Studies
North Lakeport-County Service District #2 7; Lakeport, California:
Private-to-Public Restructuring Leads to Reliable, Affordable Service
A series of ownership transfers and the creation of a county service district have consolidated
more than four dozen drinking water systems into one, improving service to existing customers
and making additional development possible.
Ownership transfers and the formation of a county service district brought together 51 small
drinking water systems hi this county north of San Francisco, (California defines a small system
as one with fewer than 200 service connections.) Now the customers of these once-independent
systems in subdivisions, mobile home parks, and resorts enjoy safe, reliable drinking water—and
new development has been made possible by the availability of adequate drinking water.
Prior to 1981, most small systems hi Lake County provided little or no treatment of their water,
and this led to numerous violations of drinking water regulations. State and county records
indicate that 80 percent of the systems had violated regulations requiring them to sample
regularly and limit turbidity and coliforms; systems served by wells often violated limits on
arsenic and barium, or had high levels of iron, manganese, and dissolved solids. Water
shortages occurred, and development hi many areas had stopped because of a lack of water.
*• ,.'"•• -. - • > . '
In 1984 and again hi 1986, .California voters approved the Safe Drinking Water Bond Laws,
which provided $150 million in low-interest loans and grants for water system construction to
correct public health problems. The California Department of Health Services identified North
Lakeport as a possible candidate for a regional water system and invited the County Special
* District Office to apply for funding. The. county hired an engineering firm to prepare a
feasibility study, which in June 1985 recommended formation of a regional system. That system
would be composed of the existing small drinking water systems, individual homes served by
poor-quality water^ the Lakeside Community Hospital, the county juvenile detention center, four
new residential developments, and the county's planned minimum-security jail for 500 prisoners.
The total project cost wss $10.4 million.
Using the results of the engineering study, the county completed its application; the state
committed to providing $5 million in low-interest loans and a $400,000 grant. The county
formed an assessment district to raise the additional $5 million the project required. Several
meetings were held at which the county health department stressed that the small systems would
have to make significant, and costly, improvements to comply, with drinking water regulations
and provide water of adequate quality. Voters were convinced that forming the district was the
least costly solution, and in October 1989 they voted to do just that. The $5 million loan from
the state is paid out of water user charges. The bonds sold by the county are being paid back
through the assessment district. ,
Construction of the new regional system began in January 1990, The project was expected to
add $10-$12 to the monthly water bill charged to each service connection. In 1994, the regional
system's base rate was $11.91 per month, plus $0.64 per 100 cubic feet of water used.
: Restructuring Small Drinking Water Systems — 35
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Case Studies
Warren Rural Electric Cooperative; Bowling Green, Kentucky:^
Repeated Restructurings Expand Water Service Throughout Region
In the 30 years since it helped start its first drinking water system, this rural electric
cloperatoel™^
districts in four western Kentucky counties.
Providing quality drinking water in rural areas poses many, problems .Systems tote ratal
served by fee Warren Rural Electrical Cooperative (REC) found their lack
rSlnd economies of scale to be particularly troublesome. Restructuring
.fcr addressing these problems, however, and Warren REG is a good example
of how a variety of restructuring tools can be used to good effect. .
Warren REC helped start its first drinking water system in 1964. The system had 60
cSo^arl^
Warren REC provides a full range of services to the rural water districts of Warren, Butter,
Son^dSson counties, which collectively have more than 23,000 connections.^ The
«£Sv7r*rforms operations and maintenance tasks, management and admmistration duties
rfa?K*d contacting, and planning and engineering functions. The four-count* 'area.
served by the REC stretches almost 70 miles from the Tennessee state line north almost to
EUzabethtowh, KY . " . .
Typical of WarrenRECs projects is 1994's $2 million expansion to bring water service to 550
the Grayson County Water District. Warren REC provided the nind
, arranged for financing, and wiU continue to operate the ex
Warren REC intends to add the capability to monitor from a central location the drinking water
oSonTfor which it is responsible. The cooperative plans to purchase a Supervisory Control
STACKS (SCADA) system to permit remote monitoring of systems throughout its
four-county coverage area. . ...
Water rates are set for each county water district In Warren County, which has the_ most
connections (15,000), the average customer pays $15.25 per month; customers located in less
densely populated areas pay about $24 per month.
Restructuring Small Drinking Water Systems - 36
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Muto'facdted Restructuring
Case Stud/as
Pioneer Electric Cooperative; Greenville, Alabama:
Creative Restructuring Helps Bring Community Water to Rural Areas
In on effort to bring community water to rural parts of southern Alabama, Pioneer Electric
Cooperative has aided the creation of county water authorities and, along with existing water
systems, provides management, administration, operation, and maintenance services.
• \ ' , - . ' '•
In 1975 Pioneer Electric Cooperative (PEC), headquartered in the southern Alabama community
of Greenville, began working to bring community water to rural areas of Butler County unserved
by water systems. Since then, PEC has spearheaded a number of projects to expand community
water service in this part of the state. .
PEC helped in the creation of the Butler County Water Authority (BCWA) hi 1975. Initially,
the BCWA had 1,200 customers. An additional 2,100 have been'added with the assistance of
three loans and grants from the Farmers Home Administration and the Community Development
Block Grant Program. Half of the BCWA's 3,300 customers get their electric power from PEC.
The South Dallas Water Authority (SDWA) was also organized with the help of the PEC.
Funding was approved hi 1988, and 1,200 customers-were connected to the system during the
project's first phase. The second phase, which is pending, will add another 200 customers to
the system. • . . •
PEC also manages existing systems owned by the West Dallas and the Lowndes County Water
Authorities. A project is underway that will add 500 connections to West Dallas' current 345.
Lowndes County has 985 connections. In addition, PEC continues to explore options to provide
water, O&M services, and other forms of support to systems hi need of help.
Each Water Authority has a board, but no staff. PEC perfb.rms all management,, administration,
operation, and maintenance tasks. All the systems it runs use ground water, and they aU have
chlorihation, pumping, and storage facilities. PEC is also responsible for more than 900,miles
of.pipe. BCWA has 570 nules, Lowndes has 185, SDWA has 156, and West Dallas has 33
miles of pipe. .
PEC's goal is to serve all the homes hi its counties with water. In Butler County (population
22,000) all but 300 homes are now served, and a project is hi place to serve 125 of them. To
help meet its goal, PEC plans to have its entire system on a Supervisory Control and Data
Acquisition (SCADA) system, which will enable PEC to monitor system operations from a
remote location. All of the BCWA is currently on SCADA, and South Dallas will be going on-
line soon.
Minimum water rates for 2,000 gallons are as follows: Butter, $10.50; Lowndes, $12.00; South
Dallas, $12.50; and West Dallas, $1.3.00.
Restructuring Small Drinking Water Systems — 37
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Mult/faceted Restructuring
Case Studies
Roaring Creek Water Company; Shamokin, Pennsylvania:
Need for Expanded Customer Base Drives Multifaceted Restructuring
• The need for a larger customer base over which to spread the cost of a new *"*"*£*
fortoosmaU, Gently acquired drinking water systems prompted this case of multtfaceted
restructuring in Pennsylvania.
Although the consolidation of water systems most typically occurs locally,- some private water
comSs ^ Cognizing business opportunities on a regional basis. In the case of Consumers
Wa^rTom^ofZiland, MainV, that region can extend as far away as the eastern
Pennsylvania town of Shamokin.
J* 1986, Consumers Water Company (CWC) 1«^ *« 1*'(^^
Water Company in the Northumberland County town of Shamokin. At ti* tin£ Roaring
Creek's dams needed repairs and the surface water used by the system required filtration. To
rSe th7p?r°o^S cost of treatment plant construction, CWC decided to expand Roaring
Creek's customer base by acquisition.
'Two nearby small water systems, Butler and Trevertori, were already .connected to Roaring
Creek'as stendby or emergency sources. .Both systems had problems of their own, however
Relying on, untreated- surface water, Butler (800+ connections) w* plagued by turbidity
problems. -Treverton'sweUd^^^ £*
Ltems suffered from lack of investment, which had led to O&M problems. Despite these
problems, Roaring Creek Water Company purchased the Butler and Treverton systems in 1992
They and the other systems operated by Roaring Creek will be served.by surface water and .the
new $10 million, 8 million-gallons-per-day treatment plant went on line June 6, 1995.
The purchase of the Butler and Treverton water systems resulted in lower .water rates for their
customers, and more than $100,000 in capital investments by Roaring Creek Water Company.
Roaring Creek's system^wide water rate at the time of the acquisition was $42 per quarter
Butler and'Treverton customers paid about $50 per quarter. A rate mcrease.to cover- toe cost
oTSie new treatment plant was approved, and went into effect on June 6, 1995. The Roarmg
Creek Water Company currently serves some 18,000 customers in 15 Pennsylvania communities
bmd ovS three counties. Most recently, the Roaring Creek Water Company purchased the
rircon^uSTwater systems serving Mount Carmel and Ralpho Township. (Comecutive
systems buy water from another water company and then sell the water to fceir customers ,) Its
PW company, CWC, owns and operates 10 water utilities in 6 states which provide service
to more than 216,000 customers.
Restructuring Small Drinking Water Systems - 38
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Multifaceted Restructuring
Case Studies
Consumers New Hampshire Water Company; Londonderry, New
Hampshire: ' •
Multifaceted Restructuring Addresses Needs of 12 + Small Systems
More than a dozen developer-built small systems have undergone muUifaceted restructuring
to address a variety of problems encompassing water quality, distribution, and O&M.
The Policy Water Company was composed of 14 systems built by developers in southern New
Hampshire These systems were built when there were no state or local design criteria, no
construction inspection, and no operational oversight. A developer typically "bid-off" one pump
company against another to obtain the least cost system. These developers gave these systems
to Policy once they realized the systems were liabilities rather than assets. Together; the
systems served about 960 customers; the smallest system had 14 connections, the largest had
about 220. these poorly maintained systems had numerous problems, including problems with
distribution and O&M. .
In the mid-1980s, the Southern New Hampshire Water Company (now Consumers New
Hampshire Water Company) purchased these 14 systems for the purpose of obtaining a water
utility franchise in the community and set about upgrading them. Six years-later, almost all the
regulatory deficiencies have been eliminated, and the company is,in the process.of
interconnecting the systems, whose connections now total more than 1,000.
The customers of all 14 of the systems are now charged a minimum of $13.14 per month. The
systems are all within a 25-mile radius (1 hour one way) of Londonderry, New Hampshire.
They are operated as satellite systems. ...
Consumers New Hampshire Water Company is a subsidiary of Consumers Water Company in
Portland, Maine. (See the case study on the Roaring Creek Water Company for more
information about Consumers Water Company.) Consumers New Hampshire Water Company
owns and operates 20 non-interconnected satellite systems within 11 towns which, when
combined, total 37 wells and 339,000 gallons of storage.. Its core service area is composed of
the communities of Hudson and Litchfield. It serves a total of approximately 5,000 customers,
most of them residential users. Three wells currently provide source water for the core
Consumers New Hampshire Water Company system, and purchase agreements with the water
systems serving the communities of Derry and Manchester, and with the Pennichuck Water
Works, supply additional water. Although the customers of these systems benefitted from this
purchase by unproved water service, they pay almost the highest rates of any system in New
Hampshire.
Restructuring Small Drinking Water Systems — 39
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Mutt/faceted Restructuring
Case Studies
,. .»» ' r .•,,
Lonaconing, Maryland: . .
7/tfe/wa/ Changes, Contract O&M, Ownership Transfers Ensure Safe Water
A restructuring first envisioned more than 70 years eartter finally became reality by1994
when, through a series of restructurings, a regional water system was developed m Maryland s
Upper Georges Creek watershed.
In the late 1980s, the Allegany County towns of Nikep-Moscow and Barton were plagued by
problems with water quality and quantity. The nearby community of Lonaconing had a water
system that had three surface reservoirs, but provided no treatment other than disinfection. State
action to-require the treatment of-surface water supplies served as a catalyst to restructuring
involving internal changes, contract O&M, and ownership transfers.
•As a result of a series of projects from 1988 to 1994, Lonaconing became a regional water
• system serving the Lower Georges Creek area encompassing Lonaconing (1,134 connections),
Nikep-Moscow (135 connections), and Barton (345 connections). Projects in 1988 extended
Lonaconing's system to both towns and to an additional 3.1 homes in an area outside Barton
known as Meadows. A follow-on project in 1993 and 1994 provided treatment for each of the
three water sources serving the regional system and increased the system's storage capacity.
Lacking a certified operator to run and maintain the new filtration plants, Lonaconing contracted
out-for-those services. •
The Maryland Department of the Environment was instrumental in encouraging this regional.
solution to the drinking water problems along Georges Creek. The state provided $1.826 million
in grant funds for the projects. The Farmers Home Administration provided a $2,371 million
grant and $2.48 million loan. The system improvements cost $6.8 million.
Quarterly water rates in Lonaconing were a minimum of $22 and an average of $41 before the
project; after the project, rates will double to a minimum of $44 and an average of $82 per
quarter. • • : ,
he-restructuring on the Upper Georges Creek watershed was first described more than 70 years
o by state sanitary engineer Robert B. Morse and his assistant, Abel Wolinan. In the first
:gineering tuUetin published by the Maryland State Department of Health, they wrote:
The efforts of the State Department of Health are not being confined to individual towns, but are being.
extended to encouraging the establishment of water and sewerage districts consisting of favorably located.
communities or of larger towns and their unincorporated suburbs. In the latter case the extension of
municipal systems into sections which have not been able to obtain improvements under county government
is rendered feasible. Progress is now being made towards the formation of a water and sewerage district
in the Georges Creek region, where within a comparatively small area there are communities with an
aggregate population of over 30,000 which now have inadequate facilities. [Emphasis added.]
Restructuring Small Drinking Water Systems — 40
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Mult/faceted Restructuring
Case Studies
Deny Waterworks; Derry, New Hampshire:
Municipal Ownership of New Systems Prompts Multifaceted Restructuring
When officials of the New Hampshire town of Derry decided that all new drinking water
systems in their community should be municipally owned and operated, they set in motion a
multifaceted restructuring involving internal changes, contracts, and ownership transfers.
Located near the Massachusetts state line, the town of Deny, NH, is a bedroom community for
the metro-Boston area. The town experienced phenomenal growth during the 1960s, 70s, and
80s Numerous housing developments were constructed. Since developers were not required
to tie in to the municipal water system, by 1985 there were approximately 35 very small public
water systems constructed by developers in the immediate vicinity of the municipal service area.
During the 1980s, citizens complained more and more about these developer systems. Then-
grievances included water rates, alleged poor responsiveness of state regulators, wells going dry,
system disrepair, and poor responsiveness on the part of system owners. These complaints made
an impression on local elected officials.
The town had been experimenting with "contract ops" of its municipal water distribution system
from 1986 to 1990. Near the end of that period, the public works management team made a
crucial decision that Derry's long-term interests were best served by having town employees
operate the entire municipal water system. This in turn led to authorization of a master plan for
the water system. In preparing the master plan, the town was forced to answer certain
conceptual questions concerning whether new systems would be allowed and what would be the-
operational nature of the existing systems in the future.
Also in 1990, the town-owned Deny Waterworks bought three systems. Since then developers
have turned another three systems over to the town. Four systems are operated as small satellite
systems by the Deny Waterworks. Each satellite system has its own well(s), storage facilities,
and distribution system. (The other two systems are now connected to the core system.) The
waterworks also operates a core system of 3,600 connections serving the downtown area. It
buys water from the nearby city of Manchester. . ..'-.-.
In 1992, Deny Waterworks terminated its O&M contract because managers felt they could do
the job cheaper, and without the contract they would have better control of the system.
Thirty small drinking water systems in Deny remain privately owned. The city's goal is to own
them as well, then physically connect the systems with Deny's where it makes technical and
economic sense to do so.
> • . .'''•'.•.
The Deny Waterworks also wants to ^^ ^ its systems charge the same rate for water.
Currently, customers served by the core system pay $12.36 per quarter for their first 500 cubic
feet of water and $1.73 for each 100 cubic feet after that. Customers of the satellite systems
now pay the same rate.
i Restructuring Small Drinking Water Systems — 41
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Muttifaceted Restructuring
Case Studies
Homestead Municipal Utility District, El Paso, Texas:
Internal Change Leads to Series of Restructurings
Obtaining professional management was the key to
Texas water systems. That successful restructuring has paved the
wwd systems to be restructured into public ones that will be acquired by El Paso County and
managed by the Homestead MUD.
Developers built two of the Homestead Municipal Utility District's ; drinking water jystemsjn
the early 1980s. During that decade both systems were expanded and merged with htde concern
for water quantity or system integrity, and major problems resulted, m July 1992 -the 82?-
Snn^tionTstem, ' which served only colonias, failed (Colonias > are econoimcally
disadvantage, low-income minority communities that qualify for special Pr°S*ms ™ **• tfate.)
The state took Homestead MUD to court, and the resulting- settlement prohibited additional.
conations to the system. The settlement also stipulated that Homestead MUD would undergo
an audit* by the Community Resource Group and would follow any recommendations resulting
from that audit. . .
One recommendation was that Homestead MUD hire an outside manager who had no ties to the
developers who built the systems that became Homestead MUD. Hiring an outside manager was
key to the restructuring of this system. So long as the system was poorly managed, funding
agencies and regulators were reluctant to work with the system to correct its problems. With
a qualified manager on board, however, they were more willing to act as partners in the
system's restructuring. • . .
The new manager had his hands full. His system was in terrible shape; the state's list of
required improvements ran to 29 items. Debt-ridden and incapable of meeting secondary water
'mrality standards, the system also was plagued by insufficient well capacity, inadequate storage,
and pumping and other problems. He set to work on getting control of the budget and reducing .
• overhead ' He paid the bffls and obtained loans and grants from the Fanners Home
Administration (FmHA) to -pay off some of the debt, install elevated water storage, and fund
other improvements. .
Most of the water system's problems, except the distribution network, had bee. id ealt wtti _by
late 1994. The moratorium on new connections will remain in place until the FJPaso Public
Service Board runs a 24-inch pipe 7 miles to bring water to Homestead at a cost of $6 million
The county plans to obtain $3.2 million from the Texas Water Development Board (90 percent
grantfunds, 10 percent loans) to -replace-the distribution system in Homestead scolomas. These
Site funds are available only to correct problems with water systems that serve colonias; the
funds are not available to all water systems. The Texas Water Development Board Texas
Natural Resource Conservation Commission, and FmHA proposed that all the water systems in
me area should be publicly held so they could qualify for loans to fund improvements. As a
result, 15 privately owned drinking water systems and two colonias serving a total population
in excess of 5,500 that lack water service in the Homestead area will be purchased by El Paso
• ' , . ••'• . . Restructuring Small Drinking Water Systems -r- 42
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Mult/faceted Restructuring
Studies
County and operated under a contract by Homestead. Homestead also will buy water from the
Service Board and sell it to these systems.
'Although water bills as high as $100 a month were not uncommon hi Homestead,, current bills
average 60 percent of what they were prior to 1993. Thanks to the financial support it has
received, Homestead MUD has restructured internally to provide improved service and safe
drinking water without huge increases in water rates.
Restructuring Small Drinking Water Systems —, 43
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Case Studies
flHtftf MhMV «» reg . **'***
/"r Ofe Wortfc Cto»Si«a Astern, Jtotovflfe ttm«* » .MOW*** restructuring.
to 1987 the North Carolina town of Rolesvffle decided to contract out the <*««*» .
changing needs.
' its first restructuring, Rolesville contacted Crosby Water and Sewer Inc. in nearby Wake
«Ss wells, operate the chemical treatment -apparatus, coUect monitoring
to to te town's conttact lab, and read and install watermeters. Since
and Sewer Service has closed several wells because of high monitoring
^ld. Crosby stm maintains one well for Rolesville, but the town now
buys finished water from Wake Forest. RolesviUe handles its own billing.
Initially contracting out for O&M was the more cost-effective than emptying a certified I .
oS ^^the RolesviUe system. As Crosby closed wells and reduced the scope of ite
S^^KfeNffle, the town's payments.to Crosby also declined. In 1994, Rolesvilk = paid
™$?W per monm, which does not include the cost of purchased wa^^^F^
•Die average water, bill in Rolesville is $25 per month; the minimum monthly bill is $11.10 for
, 2,000 gallons-of water.
Restructuring Small Drinking Water Systems - 44
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