City’s Costly Water Overhaul

On a computer-generated wall map, Thomas H. Powers outlined the first steps in what promises to be the biggest investment in Chicago’s labyrinthine water and sewer system since Mayor Richard J. Daley built the enormous Jardine water treatment plant on the lakefront almost 50 years ago.

The map being developed by Powers, the commissioner of the city’s water department, represents a major focus of Mayor Rahm Emanuel’s 10-year plan: the subterranean web of aging and decayed water mains. At the same time that Emanuel is making deep cuts to City Hall’s out-of-whack, day-to-day operating budget, he is championing an expensive program that he promised would be the largest public-works initiative by any city in the country.

(This article is part the series The Bottom Line: Looking at Budget Pressures Facing the New Mayor)

The city has replaced about 30 miles of water mains a year in recent years. That pace is not nearly quick enough, given that Chicago put down about 75 miles of mains a year between 1890 and 1920, and that those pipes were not expected to serve for more than a century.

The department’s 2012 construction season customarily would begin in March, but it has essentially started already, Powers said last week, because the mayor demanded that his department more than double its work rate to meet the program’s timetable. In the next year, the city aims to rebuild 70 miles of water mains, the first stage in a 10-year effort to replace 900 miles of century-old tubing in the city’s 4,300-mile network.

“Barring any kind of crazy weather, we are going to work through the winter,” Powers said in his office at the Jardine plant near Navy Pier. “We have to, or we’re not going to make it. And I’ve been told in no uncertain terms that we are going to make it. I’m going to make 70 miles come hell or high water.”

High water is precisely what many people find gushing from buckled streets across Chicago after corroded water mains rupture. One such incident in August opened a gaping hole that swallowed an Acura sport-utility vehicle on a North Side street.

Last month aldermen cited the need to replace deteriorating infrastructure as they approved Emanuel’s plan to sharply raise water and sewer rates for the accelerated program of public works projects.

“If we don’t do this, our streets will sink,” Alderman Ariel Reboyras (30th Ward) said.

The plan to improve the city’s water-distribution and sewer systems could create about 1,800 jobs a year, winning Emanuel favor with a unionized work force that has often viewed his budget-slashing zeal with trepidation.

But the initiative also comes at a moment when the city’s water and sewer budgets have been increasingly hard-pressed to keep up with even the debts incurred when the city borrowed for its previous, less aggressive infrastructure-replacement efforts, according to bond-market analysts.

From Jardine and another plant on the Lake Michigan shore at 79th Street, tap water is pumped to about five million people across the city and in 125 suburbs. Revenues have risen over the past 10 years, thanks in part to rate increases from 2008 to 2010. Water and sewer fees generated almost $650 million for City Hall last year.

By cutting the payroll of the Water Management Department, the city has kept operating expenses stable at about $250 million a year. Another $225 million a year has been invested in upgrading the water system and sewers.

But the cost of servicing debt issued for those projects has grown sharply, eating up an ever-growing chunk of the revenues that the city gets from water customers. Debt-service payments from the water and sewer budgets will increase next year to almost $250 million, double the level of eight years ago, budget records show.

The situation prompted Fitch Ratings to downgrade the credit worthiness of the city’s water fund a year ago. The analysts cited “a gradual erosion of financial flexibility that has occurred in recent years, coupled with the system’s rising debt levels.”

Powers said city officials had crunched the numbers and stood ready to borrow more money to help pay for the intensified water and sewer replacement program. The city plans to spend more than $350 million on the water system and sewers next year, an increase of $130 million over 2011.

Most of the first year’s work will be paid for with additional borrowing early in 2012. As revenues from the higher consumer rates pour in, Powers said, the city will try to pay for much of the work as it proceeds.

Water rates will rise 25 percent next year, with further 15 percent increases in each of the next three years.

“It’s financially a responsible program,” Powers said.

From the two treatment plants on the lakeshore, tunnels buried as deep as 200 feet carry purified lake water to 12 pumping stations throughout the city. The city plans to spend some of the infrastructure money to convert the last four steam-powered pumping stations to run on electricity.

The pumping stations send lake water coursing through the water mains. The 10-year plan will supplant an average of 88 miles a year of mains that are at least 100 years old, at a cost of about $2 million per mile.

Sewer replacement, which costs $4 million a mile, will also increase next year, to 17 miles from 11 miles. The department wants to continue expanding its efforts to line sewers with resin, to better preserve them and forestall total rebuilding.

Powers said he had begun the process of hiring more laborers, bricklayers, plumbers, heavy-machine operating engineers and truck drivers.

About half of the work on water mains has been outsourced to private contractors, he said, while city employees perform about 70 percent of sewer-improvement work. Powers said he expected that ratio to persist as the workload increased to meet the mayor’s goals.

The waterworks plan was “something we have been howling about for years,” said Jorge Ramirez, president of the Chicago Federation of Labor. “It’s a good way to rebuild the middle class.”

Of the roughly 1,900 employees of the Water Management Department, more than 600 blue-collar workers are paid $40 to $50 an hour, with another 900 receiving hourly wages of $30 to $40, according to city payroll data.

Driven by the desire for such wages, as well as benefits, workers made the department a hotbed of patronage hiring and promotions in Mayor Richard M. Daley’s administration.

The department was also involved in bribery and time-card fraud scandals, while a heroin-dealing ring there in 2005 inspired some City Hall observers to jokingly suggest a new slogan to appear on water bills: “We put the H in your H20.”

Powers said that he believed there was room for improved productivity in the department but that he saw no reason to fear that corruption would spoil the mayor’s plan.

“Any company at all is going to have some problem children,” he said, “but by and large the work force wants to do the right thing.”

Water Main Breaks Across the City, Jan. 1, 2007-Oct. 27, 2011

Source: City of Chicago Department of Water Management

Improvements to Chicago Water Mains and Sewers

In recent years, city officials have replaced about 30 miles of old water mains each year. They also are reconstructing some sewers and lining others with resin to prevent further decay.

Water Management Department Payroll

Under the 10-year labor deals hammered out in 2007 by union leaders and then-Mayor Richard M. Daley, many Water Management Department workers are paid rising wages as well as good benefits. The workers who replace water mains and sewers include unionized plumbers, hoisting engineers, bricklayers, laborers and truck drivers.