Economic Report Reveals Proposed Public Regional Water District Prevents 14-percent Water Rate Increase
July 28, 2010
Economic Report Reveals Proposed Public Regional Water District Prevents 14-percent Water Rate Increase
Creates $33 million annual economic impact
Cincinnati, OH – The University of Cincinnati’s Economics Center for Education and Research has completed an economic analysis outlining potential benefits to the City of Cincinnati, its citizens and regional ratepayers if Greater Cincinnati Water Works (GCWW) is transitioned to a public regional water district.
The study revealed that if GCWW is able to transition to a regional water district and expand to serve more people, it can prevent rate increases 14-percent higher than planned, saving customers $23 million over the next 10 years.
The proposed transition of GCWW to a public regional water district would allow it to expand, spreading operating costs over more people and keep water rates low.
“Ohio law limits the extent to which a municipally-owned utility, like GCWW, can expand,” says Cincinnati City Manager Milton Dohoney, Jr. “A public regional water district would not be bound by the geographic limitations outlined in Ohio law including the Ohio Constitution."
If GCWW is transitioned to a public regional water district, the City of Cincinnati would receive an average annual payment of $15 million for the transfer of assets. The annual payment can help the city’s budget and be used for infrastructure projects that will, according the economic impact study, directly contribute to the City’s economic vitality including:
• $33.75 million in annual economic activity
• 300 new jobs
• $11 million in annual earnings from the 300 jobs
• 40 to 80 additional jobs generated from private business growth
• $135,000 a year in Cincinnati earnings taxes
“When we looked at the issue of a public regional water district, we approached it by asking whether expansion makes good economic sense,” says George Vredeveld, director of the UC Economics Center for Education and Research. “The analysis revealed that expansion will keep rates lower, create jobs and have a positive and lasting effect on the local economy.”
The study also revealed that expansion over the past 10 years has saved GCWW customers $30 million. (see attached map). That savings generated a $48 million economic impact in Greater Cincinnati.
“The economic analysis clearly shows that when we can spread the costs of delivering high quality water over more people, the rates remain lower. The water district would allow us to do that, and the city would maintain majority oversight of the new district,” says Dohoney. “It also provides a way for the city’s budget to receive money from the utility, which we can’t do now, keeps rates low and has the potential to grow our economy and increase employment in our region. The report concludes all those benefits are real.”
Key findings in the report include:
• Expansion has resulted in $30 million in customer savings over the last 10 years, and could produce another $23 million in savings over the next decade if expansion is allowed to continue under the public regional water district structure.
• The $30 million saved by GCWW customers from expansion over the last 10 years has produced a $48 million economic impact in the Greater Cincinnati region.
• The $15 million annual average payment to the City of Cincinnati for the transfer of GCWW facilities would generate a $33.75 million economic impact annually in Greater Cincinnati and create 300 permanent jobs and $11 million in annual earnings.
The City of Cincinnati is holding a public meeting about the proposal to transition GCWW to a public regional water district tonight at 6:00 p.m. at the Cintas Center on the campus of Xavier University. The meeting will allow city residents and GCWW customers to comment about the proposed plan.
Next, the City will submit the plan to the court for approval. Comments frm the public meeting will be made available to the court. If court approved, the plan will go to voters for consideration. In November of 2009 Cincinnati residents approved Issue 8, which was a vote to vote. The passage of Issue 8 requires that a vote of the citizens of Cincinnati be held to decide the transfer of Water Works to a public regional water district.
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For more information or to view a copy of the report, please visit www.cincinnatiwater.org.
Contact:
Michele Ralston, GCWW, 513.591.7972, michele.ralston@gcww.cincinnati-oh.gov
George Vredeveld, Economics Center, 513.556.2950, vredevgm@ucmail.uc.edu
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