Emanuel Ends Cheap Water Era's Drain on Chicago Finances as Pipes Burst

Author: Tim Jones and James Lawson, Bloomberg

Kenneth Coleman lives 2 1/2 blocks from Lake Michigan, one of the world’s largest, and struggles to understand why his water bill would more than double in the next four years.

Chicago’s proposed rate increase, the centerpiece of Mayor Rahm Emanuel’s push to create jobs while fixing a century-old utility, would end the long tradition of cheap water in the third-largest U.S. city. And it would force Coleman to pay up.

“I don’t like it, but there’s nothing I can do about it,” said Coleman, 49, a radiation therapist. “I see it irritating residents of Chicago, me included.”

Emanuel is pitching the increase as an economic stimulus bill whose cost would be shared by suburban water users. If approved by the City Council, the program would add 18,000 jobs over 10 years to both the municipal payroll and private companies hired to do the work, said Bill McCaffrey, an Emanuel spokesman. It’s a Chicago version of President Barack Obama’s plan to boost some taxes to pay for recession-proofing jobs.

Coleman joins a line of complainers stretching from coast to coast as utility companies, towns and cities propose or enact steep water-bill increases as pipes and sewer systems crumble. The rate boosts acknowledge concerns that have been ignored for years, partly because they are underground, water experts say.

“Cities, especially east of the Mississippi, where the infrastructure is older, are having their comeuppance now,” said Peter Annin, author of “The Great Lakes Water Wars.”

‘Super-Tight Revenue Times’

“Their water systems are more than a century old and people have put off the upgrading, and now they are breaking,” Annin said. “Mayors and city councilors in older urban areas are in a real spot because here we are in super-tight revenue times, and there is no more basic infrastructure need than the water system.”

Disintegrating sewer lines are at the core of Jefferson County, Alabama’s struggle to avert a record municipal bankruptcy. Under a proposed agreement with creditors, a sewer customer with a $600 annual bill would see it rise to almost $800 after the deal’s first three years.

Rates in Cleveland will soar 82 percent over four years for residents and 50 percent for suburban customers. Portland, Oregon’s combined average monthly sewer and water bill has jumped 83 percent in the past decade, and is projected to rise another 49 percent in the next five years. Residents in West Lafayette, Indiana, are protesting a proposed 60 percent boost in their bills.

Chicago residents pay the second-lowest average monthly charge for water and sewer service of any of the nation’s 50- largest cities, according to a 2010 survey by Black & Veatch, a Kansas City-based consulting firm.

Memphis Bargain

Memphis pays the lowest monthly charge, $10.14, followed by Chicago, at $12.17, based on 3,750 gallons of usage, the survey said. Seattle residents had the highest bills, $72.93.

Water rates nationwide rose twice as fast as inflation from 2001 to 2009, according to the Black & Veatch study, and a driving force behind the pressure was aging infrastructure.

The 51-year-old Emanuel, Obama’s chief of staff before quitting to run for mayor, has marked his first five months in office with the discipline and message control of a presidential campaign.

Yet even he couldn’t have planned this: A day after he held a news conference to promote his plan, a 91-year-old main burst on the city’s South Side, closing streets and alleys and flooding basements.

Century Old

“About a thousand miles of water line is a hundred years or older,” Emanuel said during the Oct. 14 event at a construction site where crews were installing about 1,600 feet of sewer main to replace pipes dating to 1886. “The work here, in my view, is essential for Chicago’s economic future.”

It’s also a way of generating more revenue without raising property and sales taxes -- the most visible and painful of increases -- for a city looking for ways to close a $635.7 million deficit.

This week all three bond-rating companies gave Chicago positive assessments. Fitch Ratings, Standard & Poor’s and Moody’s affirmed its general-obligation debt and sales-tax bond ratings, giving its credit a stable outlook.

Emanuel’s proposed 2012 budget, a $3.09 billion spending plan, includes 517 dismissals and the elimination of 2,000 vacant positions. A Democrat who took office May 16, he pledged not to raise property taxes, the city’s biggest income source.

Spoiled Residents

The water-rate increase amounts to an average of $120 per year, Emanuel said. Experts believe many residents have been spoiled.

“Chicago people are not paying for water,” said Robert Glennon, a professor at the University of Arizona law school and author of “Unquenchable: America’s Water Crisis and What to do About It.”

“We have to look at the component of the water bill,” he said. “There is no commodity charge for water; the water is free. People really are paying for the system and all of the infrastructure concerns.”

Some Chicago residents, like Jolly Campbell, 62, a registered nurse, said she can handle the increase. “He’s doing what he needs to do,” Campbell said of Emanuel.

Glennon said outrage over more expensive water is understandable because many Americans “think of it as air. However, air is inexhaustible, water is not.”

Original Article