The Select Board – January 7th – Working Session (Water Infrastructure)

The Select Board holds a Working Session to discuss future water infrastructure plans.

The Select Board convened on Tuesday, January 7th, at 6 p.m. for a working session focused on water infrastructure. Chair Patrick Holland opened the session and welcomed both the DPW Director and the Town Manager to present. Jayne Wellman participated virtually, with Mark Kratman joining the session later. The rest of the board members were present for the discussion.

Water Infrastructure Presentation

Town Manager John Curran began the presentation alongside DPW Director Kevin Hardiman.

Curran detailed the current debt status and forecasts, including authorized but not yet issued debt for initiatives such as water meter installations and school upgrades. The town anticipates a rise in debt over the next ten years, particularly with the proposed annual expenditure of $5.4 million for water distribution improvements, previously voted on by the Select Board. With this, the projected debt service is expected to rise from around $10 million in FY 2025 to approximately $15 million by FY 2035.

To illustrate the potential impact, Curran explained that overhauling the town’s infrastructure over the next 12 years, at a cost of $170 million, could raise the debt to $36-37 million by 2035. A hypothetical 35% water rate increase would be needed to cover these costs. To avoid this, he stressed the importance of the Select Board creating a comprehensive water infrastructure plan, which should include alternative funding sources, a timeline for pipe replacements, and project priorities.

Curran discussed the potential $700,000 annual revenue from the hospital being connected to the town’s sewer system, which could support around $7 million in debt service. The plan is to gradually increase debt over several years, adding $5 to $10 million annually. However, the funding won’t be available until 2027 due to project timelines, which could allow for reducing the initial debt by about $1 million in the first five years. Additionally, the town will need to plan for extra costs, such as hiring project managers.

Hardiman clarified that although the town had applied for support from the State Revolving Fund (SRF) program, it is only being considered due to the presence of lead service lines. “I haven’t found any SRF funding that we would be eligible for solely to replace aging water lines,” he explained.

Curran stressed the importance of securing low-interest loans, like SRF loans, which are more valuable due to rising interest rates. He recommended pursuing available SRF funding and hiring an expert to assist with the application process, relieving the current team’s workload.

Hardiman outlined the town’s capital plan, focusing on replacing aging pipes. He noted that while there’s no inherently “wrong” type of pipe, some materials are better suited than others, with the benefits depending on choosing the right materials at the right time. The planning process involves evaluating roadway conditions, determining if repaving is necessary, and considering any additional work needed.

He also mentioned that he typically plans for a four- to five-year horizon, as pavement conditions and priorities can shift. While the town has detailed maps of pipes that need replacing, priorities are adjusted based on factors like breakages. This flexibility allows the town to update its plan to maximize funding and ensure efficiency.

Sewer Debt and Financial Impact

Holland inquired about the sewer debt and its impact on the town’s finances.

Curran confirmed that sewer debt, will experience a substantial decrease in the coming years. The debt is expected to drop from $8.7 million in fiscal year 2027 to just $873,000 by fiscal year 2030.

Wellman inquired about the percentages of the budget allocated to sewer debt. Hardiman explained that in the FY 2024 budget, sewer debt accounted for 50% of the overall budget. However, this is projected to decrease to 15% by FY 2030 and further drop to just 4% by FY 2031, reflecting a significant reduction in sewer debt over the next five years.

Curran explained that half of the sewer debt is on the levy and noted that any increase in water rates would not directly apply to sewer rates, as they are funded by separate budgets.

Holland added, “the taxpayers need some type of relief”, noting that while the town appreciates newly visible equipment, infrastructure is often overlooked being beneath the ground, and it’s only when problems arise that the situation becomes urgent and visible to everyone. Mackey echoed this sentiment, stating, “We need to stay up with all of our equipment, but the infrastructure is in dire need of some love.”

Wellman expressed, “I look forward to more discussion on rate growth and what that will cost, and whether we want to handle all the borrowing within the enterprise fund or allocate some to the general fund.” However, she made it clear that she does not support using the general fund for this purpose.

Ryder concurred, declaring, “The intent of an enterprise account was created specifically to be self-funded,” and highlighted the challenges of shifting sewer debt to the tax rate in the past, which delayed the return to a self-sustaining model. He stressed the importance of evaluating how the decreasing sewer debt will affect sewer rates, noting that 47% of the sewer operating budget is tied to debt.

Ryder suggested using the savings from the decreasing sewer debt to fund water infrastructure projects, proposing that the town maintain the same overall rate for residents. This would provide ratepayer relief while addressing critical water infrastructure needs.

While acknowledging that $170 million for infrastructure is a significant amount, he believed that careful planning and leveraging savings from sewer debt reduction could help achieve a more manageable figure to address both water and sewer infrastructure needs.

Mackey interposed, stating, “If we start looking at more than a 12 or 15 year plan now, we have more [pipes] aging out, and we’re never going to get ahead of it. My argument from the beginning was I don’t want my kids dealing with the same brown water, water main break consistent issues.”

He stressed that while addressing water infrastructure may be costly, it is a fundamental necessity. Mackey noted, that while he is typically conservative with spending, this is a problem that cannot be ignored or underfunded.

Exploring Funding Sources and Legislative Support

Holland invited Representative Robertson to discuss potential legislative support for water infrastructure funding.

Representative Robertson acknowledged the town’s financial challenges, including zoning and managing growth, while stressing the need to address infrastructure issues, particularly stormwater management. He noted the inadequate funding for municipalities and called for increased support for vital services like water infrastructure. Robertson discussed ongoing efforts with the state delegation to secure additional funding, using Haverhill’s water discharge plans as an example of the challenges in upgrading infrastructure. He also expressed hope that recent housing developments will highlight the need for improvements in essential services like water infrastructure.

Robertson also emphasized ongoing talks with federal officials and New Hampshire colleagues to address water infrastructure issues, particularly sewage overflow and aging systems. He highlighted efforts to involve the Army Corps of Engineers, aiming to secure financial relief for infrastructure projects without alarming residents about tap water safety. With uncertainty around the incoming administration’s infrastructure plans, Robertson suggested partnering with northern towns along the Merrimack River to seek federal funding for water and sewage improvements. This partnership could potentially access federal support aimed at reducing pollution and improving public health.

Kratman joined the discussion, apologizing for his late arrival. He noted that many communities are likely seeking similar funding, and while there is no specific program for this issue, he suggested that major transportation projects, like those along Route 38 in neighboring areas, could offer an opportunity for the state to assist with water infrastructure as part of these larger initiatives. He emphasized the need to incorporate these needs during the design phase and urged the delegation to focus on securing funds. Kratman also proposed collaborating with federal representatives to explore federal funding options, especially if state funds are unavailable.

Wellman added, “We should plan carefully to fund it ourselves in perpetuity.” She stressed that maintaining these systems is essential to avoid future financial burdens, pointing out, “We have these systems, and we can’t ignore them. Not funding them for 10 years, as the previous Select Board did, is why we find ourselves in this situation.”

Ryder underscored the need for creative solutions and legislative advocacy to secure funding for water infrastructure projects. He suggested hiring in-house designers and project managers to save costs and improve efficiency in water infrastructure projects.

Robertson reaffirmed his commitment to consistently filing with the State Revolving Wastewater Funds (SRFs) each year. He acknowledged the difficulties in securing funding, especially during the COVID-19 pandemic, and noted Tewksbury’s challenges with FEMA requirements and environmental mandates. Frustrated with the inconsistent handling of funding, Robertson assured that while past decisions can’t be changed, they are focused on addressing these issues at the state level. He also suggested funding smaller projects through earmarks and emphasized the need for collaboration to secure the necessary funding.

Before Holland closed the session, Mackey raised the question, “What’s our objective for our next working session?” Mackey proposed setting a deadline for all select board members to submit their questions in advance, rather than addressing them individually at each meeting, to help expedite the process.

Holland agreed, suggesting the first meeting in March to allow board members time to review and discuss their questions.