MSD Consent Decree Could Be Getting More Expensive

Feb 13, 2020

The Hamilton County Commissioners and Metropolitan Sewer District (MSD) officials had a testy exchange Thursday afternoon about projects in the second phase of a federal consent decree to reduce sewer overflows during heavy rain events.

Commissioners were surprised to learn the price tag for the Phase 2 work has increased by nearly $1 billion in the coming 10 years. They just found that out even though MSD had the information when the county was discussing MSD's budget in December. County officials say early estimates show that could lead to sewer rates increasing by 70%, which they say is not affordable for ratepayers.

The commissioners are also upset the county, as a stakeholder in the sewer district, wasn't involved in creating the report MSD sent to federal and state regulators in January.

Commission President Denise Driehaus said that was frustrating.

"I'm disappointed that this was offered to the regulators as an alternative 2A without our knowledge, and we don't find out other than being copied on it," Driehaus said. "That's not a good way to do business."

MSD created the report after federal and state regulators issued a plan for the projects and a schedule for completing them as part of the consent decree.

Last summer, regulators issued a $938 million proposal that would run for 10 years, after the city and county couldn't agree on a proposal.

In 2018, the city, as the manager of MSD, sent one plan, and the county submitted another. The city's 10-year plan had a price tag of $793.3 million.  The county's plan was for five years at $450 million.

Regulators said the lack of a single plan violated the decree, so they issued their own proposal.

MSD did it's work to show there were deficiencies in the regulators plan, and that those projects and schedules "could not be realistically implemented."

"The regulators really wanted to understand what the problems were with their proposal," said MSD Director Diana Christy. "They wanted us to provide that information to them, and they had requested meetings on multiple occasions."

MSD found that for $938 million, the agency could only complete 80 proposed projects, not the 155 regulators had included in their plan.

MSD officials say the report they prepared was not an "alternative" plan, even though their lengthy written document references that in a couple different places.

Commissioner Stephanie Summer Dumas asked Christy why the city submitted a Phase 2 plan separate from the county.

"Because the city is a co-defendant to the consent decree and had just as much responsibility to submit a plan as the county," Christy said.

Driehaus said the regulators recommendations are not affordable.

"I would expect that the city and the county would come together and say we need to fight what is in front of us by way of the regulator's report; we should open up the consent decree and do this," Driehaus said. "Because my then secondary read of all this information is that the numbers that we've been dealing with over the past number of years to come to the phase 2A, your numbers haven't been correct, and so our numbers haven't been correct."

Commissioner Victoria Parks is also upset with the report.

"I think that you ought to call the judge, and just tell him that you have no intention of operating, in dealing with us in good faith, so that we can stop wasting our time, his time and our citizens' money," Parks said.

Parks is referring to the federal court judge handling the wet weather consent decree, and the ongoing battle between the city and county concerning the operation of MSD.

That judge ruled, and an appeal's court upheld, that the county is the "principle" of the sewer district, responsible for setting rates and budgets. The city is the "agent" operating the utility.

A 1968 agreement set up that arrangement, and it expired in 2018, but the judge has ordered the parties to continue it.

The two sides had reached an agreement in 2017 for a five-member citizen board to handle major policy decisions for MSD, including hiring the director. But that plan fell apart when Ohio lawmakers failed to approve legislation to allow MSD employees to work for Hamilton County but remain in the Cincinnati pension system.

County attorneys said there are two matters pending before the federal judge for decisions: One would order the city to adopt the county's Phase 2 consent decree plan. The other would make the senior management of MSD county employees, who report to the county commissioners. Other MSD employees would remain city employees.

County commissioners are expected to further discuss the Phase 2 consent decree projects with MSD in an upcoming meeting.