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City considers taking on water utility for county grounds

May 14, 2014

Looking at a potential, estimated annual net income of about $107,000, the city of Wauwatosa is considering taking over management of the water utility on the Milwaukee County Grounds, currently operated by the county.

But members of the Budget and Finance Committee, who considered the idea Tuesday, May 13, said they were concerned about taking on responsibility for aging infrastructure and needed more details about potential hidden costs.

"Wauwatosa shouldn't have to lose a dime on this because we're carrying the burden," Alderman Dennis McBride said.

Milwaukee County purchased the grounds, near Highway 45 and Watertown Plank Road, in 1852, and for many years the primary users of the county's water utilities were county institutions. But now, the grounds also host the Milwaukee Regional Medical Center, a We Energies plant and Innovation Campus. In addition, there are 156 Wauwatosa residences served by the county utility.

"The water utility really stands out as a potential anachronism," said Rob Henken, president of the Public Policy Forum, which put together the report. "Fundamentally, when you think about the core mission of county government and municipal government, water utility is typically a municipal function. We have a county utility that is an island surrounded by city water mains."

City and county officials asked the Public Policy Forum, a non-profit independent research organization, to look at the potential transfer in 2012. It's not a new subject. Wauwatosa Water Superintendent Jim Wojcehowicz said officials have been kicking it around for at least the 12 years he's been there.

"Milwaukee County really doesn't belong in the water utility business," Wojcehowicz said. "It's not run like a water utility; it's run like an if-something-happens-we'll-respond-to-it."

Although the report found the county would not see a net fiscal impact directly from the transfer, it would have to absorb about $910,000 in its budget due to certain county costs previously covered by revenue from the water utility.

Henken said the biggest winners of an agreement could be the Medical Center and We Energies, which could see more attention if the utility was city-run and lower utility rates because of a reduced cost of running the utility under city management.

"(The county) has so many competing needs, so what happens if they do not take care of this infrastructure?" Henken said.

McBride said he hopes representatives from the Medical Center and We Energies participate in a task force with city officials and county officials to consider the transfer. The Budget and Finance Committee tasked City Administrator Jim Archambo with "exploring the possibility" of creating such a task force.

Finance Director John Ruggini said he thought the Medical Center and We Energies should contribute money to make the transfer affordable for the city. The report estimated We Energies, for example, would save about $400,000 annually if city and county utility rates remain constant.

"This is extremely, extremely complicated, and I think it's only possible if the hospitals and We Energies enter the negotiations and share some of the cost, because they'll be getting some of the benefit," Ruggini said.

City officials were especially worried about unforeseen costs associated with maintaining decades-old infrastructure. Henken said the county has rehabilitated two of the water towers in the past five years and added a third in 2012, and it has already allocated money for renovating the south reservoir. But, he said, the biggest challenge could be a 100-year-old, deeply buried line under North Avenue, which serves as a back-up to the primary Wisconsin Avenue line.

"I'd be hard-pressed to sign off on taking aging infrastructure when we haven't addressed the aging infrastructure we already have," Alderman Joel Tilleson said. "I remain tepid at this point."

But all committee members agreed it was worth finding more information and voted unanimously to explore the creation of a task force.

More online

■ The full report by the Public Policy Forum can be found at PublicPolicyForum.org.

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