Massachusetts Water Resources Authority


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February 11 , 2004

MWRA Proposes FY'05 Water and Sewer Assessments to Communities

The MWRA Board of Directors today approved a preliminary Fiscal Year 2005 budget that includes a 4.7% increase in the combined water and sewer assessments to member communities. The $501.9 million budget will now be transmitted to the MWRA Advisory Board for its review and comment before the Board approves a final budget in June.

The rate increase is necessitated by the continued rise in MWRA’s capital costs from large water and wastewater construction projects mandated by federal requirements and federal/state consent orders.

Following on the heels of the successful Boston Harbor Project, the MWRA’s Integrated Water Supply Improvement Program has passed major milestones with the opening in November of the 17.8-mile MetroWest Water Supply Tunnel and Norumbega Covered Storage Facility. The new Walnut Hill Water Treatment Plant is scheduled to come on-line in early 2005, completing the $1.8 billion modernization of the water system and ensuring system reliability and security for future generations.

Debt service on these major projects now accounts for 60% of the MWRA’s budget. The attached figure shows how the debt service costs have risen over time. Up until last year, MWRA communities received significant state assistance on debt service from the Sewer Rate Relief Fund. After the elimination of $47 million in assistance to MWRA for FY2003, the legislature restored a small program that should provide about $4 million in FY2004. However, the Governor’s H1 proposed budget does not include any debt service assistance funding in FY2005.

MWRA has continued its efforts at keeping costs down over the last few years, particularly in light of last year’s budget shortfall. We have continued to consolidate our facilities; reduce outside professional services contracts; and lower energy and chemical expenses. In addition, MWRA staffing levels continue to decrease – 25% over the last six years - through early retirement programs, attrition and layoffs. Direct operating costs in the Proposed FY05 budget are lower in real dollars than FY99.

MWRA has not sacrificed the operations of the water and sewer systems to achieve these savings. Maintenance spending will be increased to continue our record of uninterrupted service to our customer communities and prevent costly repairs down the road.

Taking advantage of lower interest rates, MWRA has both refinanced existing debt and obtained new low-cost funds. In FY2003, MWRA refunded $830 million, over one-third of our existing debt, to save $204 million over the next 10 years. Wall Street bond ratings remain strong, keeping borrowing costs low.

MWRA’s capital program still has far to go, with $1.9 billion in projects between now and 2014. These expenditures reflect the ongoing need to make major improvements to the systems to comply with new regulatory requirements. Nearly 80% of the cost is for projects mandated through court orders or consent orders, like the completion of the new water system improvements and the continued construction of the combined sewer overflow program. MWRA has also deferred non-critical projects and is working with the Advisory Board and regulators to make sure that all projects make both fiscal and environmental sense.

Once the Advisory Board completes its 60-day review and comment, hearings will also be held to solicit public comments. The final budget approved in June will incorporate changes resulting from the Advisory Board's recommendations and the Board's budget deliberations.

For the combined 4.7% increase the average sewer assessment increase is 3.2% and the average water assessment increase is 8.7%. Each MWRA community sets its own water and sewer rates for residential and business customers. Rates vary considerably among communities due a variety of local factors.

As always, preliminary assessments for individual communities may be higher or lower than the average sewer and water assessments. Water assessments to specific communities are based on each community's share of water use in calendar year 2003. Sewer assessments are based on a community's shares of average CY01, CY02, and CY03 wastewater flow, census and sewered population, and high strength industrial user volume and loading contributions.

Proposed budget information can be found on the MWRA’s website at