WHAT’S IN STORE FOR WATERWORKS?

Voters have the final say in September on whether the Newton WaterWorks operations will be managed by city council rather than its board of trustees, the latter of which has governed the utility for approximately 60 years. The board first approached council members about the change in governance in April.

Following council’s approval of a special election on Sept. 13, residents will be asked the following question: “Shall the Newton WaterWorks Board of Trustees be dissolved and the city council of Newton, Iowa, in the county of Jasper, Iowa, assume the obligations of managing and controlling the Newton WaterWorks?”

If residents allow WaterWorks to be governed by the city council, Newton City Administrator Matt Muckler said it would likely become its own division under the public works department. Operations of WaterWorks would be handled by public works director Jody Rhone. Office staff would likely transfer to city administration.

There is a concern the addition of WaterWorks will be a lot for the public works department to handle, considering its fair amount of divisions already.

However, Muckler has confidence in Rhone’s abilities. In the future, provided the vote passes with more than 60 percent of voters in favor, the city could have the opportunity to combine WaterWorks and water pollution control into a separate department. But these ideas are not set in stone.

WaterWorks has a total of 15 employees: seven of which are treatment plant staff, five are distribution staff and three are office/administration staff. The city has 110 employees total. Muckler said one of the most frequent questions he gets asked is: “I thought Newton WaterWorks was already part of the city?”

Well, technically speaking, WaterWorks employees are considered part of the city. When there are employee recognition events, the city invites WaterWorks staff to participate. However, the operations and expenses are not handled by the city council but rather the board of trustees.

“These folks are already city employees,” Muckler said. “Their budget is part of our budget. So the budget we turn in to the state has WaterWorks’ budget as part of it. When we get audited, their budget is part of that. They do a separate audit as well. The difference is they’re governed by a board.”

Which means Lloyd Dale “LD” Palmer II, the former general manager of WaterWorks who died in early January, did not report directly to the city administrator. Instead, he reported to the Newton WaterWorks Board of Trustees, much in the same way the library director reports to the library board.

Unlike the library, WaterWorks does not operate with a portion of the city’s general funds. Instead, it runs off of revenue collected from water rates.

Brett Doerring, an eight-year member of the Newton WaterWorks Board of Trustees, said there are three main sources of revenue the utility collects from: bulk sales of water to individual customers, sales of water to residents of Newton and sales of water to Iowa Rural Utilities Association, also called “Rural Water.”

“Rural Water is the largest purchaser by far — considerably more than the residents of Newton,” Doerring said. “They’re privately owned, like an insurance association. Their members are the owners. They sell water as far south as Marion (County) and Mahaska County and as far north as Dubuque.”

Through a system of pipelines, Rural Water transports water from south central Iowa to northeast Iowa, Doerring said. In a surrounding area around Newton, the water produced at WaterWorks and sold to Rural Water is probably going in a 60-mile radius, and is primarily for rural residents.

“They do sell water to some smaller towns like Baxter, for example,” he said. “Baxter got out of the business of producing their own water and chose to buy it from Rural Water. They got a number of smaller towns where they are the water provider … Rural Water has been a wonderful partner to Newton WaterWorks.”

Doerring said Newton’s water rates are as low as they are because of Rural Water’s high volume of purchases. Newton uses roughly one-third of the water produced at WaterWorks, and Rural Water uses two-thirds.

WATERWORKS BOARD HAS BEEN PUSHING FOR MORE IMPROVEMENTS

Before the board asked for the city’s assistance after Palmer’s unexpected passing, WaterWorks took a hit when a longtime employee retired. Although the board had begun succession planning, it was too much to bare. The city was then approved to be the interim manager of WaterWorks for 90 days.

“We said, ‘OK, at the end of 90 days we’re going to assess where we are and determine is this working, does it make sense, should we look at moving down the path with the city or do we look at moving down a different path like another owner or remaining independent and hiring our own director?’” Doerring said.

Between the general manager’s death and the retirement, WaterWorks lost about 96 years of water experience in a 12-month period. Muckler said that is tough for any organization. Losing so much institutional knowledge makes it difficult to move forward, but WaterWorks leaders have stepped up to the challenge.

As the interim manager, Muckler said he has been trying to keep the organization moving in the same direction it had been under Palmer’s leadership. He’s not making a ton of major changes because of the election. One big decision may be to revisit what type of meter technology will WaterWorks have.

“We have a lot of old meters out in the system,” Muckler said. “They need to be replaced. There’s no technology, whether it’s cell readings or a tower where you’re picking up readings so we don’t have to send people out meter reading every month. There’s technology where residents can look at their water usage.”

For the past few years, the board of trustees has been pushing for more capital improvement planning — even before the city stepped in as an interim manager.

WaterWorks mainly operates out of its treatment plant and its distribution shop. Muckler said the treatment plant is the biggest facility, and there is some work that needs to be done in the future. The city has looked at adding some of those items to the capital improvement plan, along with other improvements.

“Somewhere down the road we’re going to have to get new transmission lines from the plant into town,” Muckler said. “The plan is located just south of town. So the lines that run in between the plant and the town need to be replaced, $12 million. We need a new Jordan well, $5 million.”

Other maintenance needs would be to replace four-inch mains and older lines. Muckler said like any utility there are going to be constant investments to maintain standards, like the city’s water pollution control plant. The board of trustees has been moving towards more CIP action but never reached that point.

Muckler said the WaterWorks crews are already working through water main issues. Interestingly enough the extreme dry conditions has caused a lot of main breaks — about one per week for the past several weeks. From a financial standpoint, Muckler suggested WaterWorks is going strong.

“I think the financial position of the Newton WaterWorks is very strong in terms of very little debt, and they have a good cash position,” Muckler said. “I think what they have to look at in the future is … what are some of the big picture items we have to get our arms around and take care of.”

Per the city attorney’s advice, neither Muckler nor Doerring nor any city staff, council member or the board of trustees are permitted to advise citizens whether to vote yes or no on the ballot. The city has mailed out a facts sheet to residents so better understand why the matter has been put up to a vote.

Editor’s note: Several residents have reached out to Newton News about the upcoming special election deciding whether WaterWorks will be operated by the city council or its board of trustees. In addition to the story, we’ve included Q&As from Newton City Administrator Matt Muckler and WaterWorks board member Brett Doerring to answer some of your questions.

Will the city administrator’s salary increase if city council takes over management of WaterWorks?

Matt Muckler: No. I’ve been managing on an interim basis the WaterWorks since January of this year. During that time I’ve had an evaluation. The way my salary works is I’m evaluated annually by the mayor and the city council. There are some questions that are sent out to the council from our city clerk’s office, and that information is not only kind of a rating system on how I do things: Am I courteous to people? Am I respectful? Am I organized? Do I do budget well? All these different areas they’re grading me on. They’re also grading me on goal setting. So when they set goals they say, “Did Matt accomplish the goals that we set for him this year?” Basically, it’s a pretty intensive process that we go through, and that’s usually in the spring. Then the council makes a decision on what my salary is going to be based on that. My interim work was not a factor in my salary this year and I wouldn’t expect it to be next year if this (gets passed).

Will water rates increase if the city council takes over WaterWorks?

Muckler: I think that would depend. We would probably do a rate study. So they did not go up for this fiscal year. I think the board decided, hey, let’s wait and see what the residents say on this election and we’ll revisit that either as a board if the election is a no, or it will be the city council visiting that issue if that’s the way it goes … We need to go out and do a rate study and see what our rates are and see if that rate structure is going to be able to accommodate some of the maintenance and investments that they have to make in the system, and then you go from there.

Will taxes increase if city council takes over WaterWorks?

Muckler: No. This is a separate utility in the same way that the water pollution control plant is run. It’s run off of user fees. There are no property taxes that go into it. So there’s no impact on the property tax. And there’s no money that would be water money that would be spent anywhere else. That’s simply against the law. If people pay for their sewer service, all the money they pay goes into maintaining that system, whether it’s maintaining the plant or maintaining the collection system. Same thing for water. The water utility is going to run on water rates.

Will any WaterWorks employees be laid off as a result of the vote?

Muckler: No. No layoffs. I think it’s important for people to understand this is not a hostile takeover that’s been hatched by the city officials. This was something that the Newton WaterWorks Board of Trustees spent a lot of time working through, thinking about and ultimately asked the city to step in and help them, in the interim, manage the WaterWorks. I think after that initial period that we went through the first couple months. It was like, you know, this is working. Let’s extend it. So they came back and did another extension of that management with the city. They had two votes where they’ve approved asking the city come and ultimately it was the board that asked the city council to put this out on the ballot for voters. And I think that’s key.

Will the city be acquiring any debt from the council taking over WaterWorks?

Muckler: The Newton WaterWorks has $664,000 in revenue debt but that debt is already technically city debt and is shown in the city’s annual audit. This level of debt is very low for a water utility the size of Newton WaterWorks and would continue to be paid with water revenues regardless of how the vote goes on Sept. 13.

Is WaterWorks privately operated?

Brett Doerring: Since the mid-1950s, the WaterWorks has been run by an independent board of directors. The oversight has been run by a three-member board of directors. That board of directors is appointed by the city council. So it’s this quasi-privately run. I wouldn’t call it privately run but it was independently run from the city.

Did the Newton WaterWorks Board of Trustees consider any other owners?

Doerring: There was the possibility of a different operator, but No. 1 they really weren’t interested and No. 2 the process to go through that to kind of carve the WaterWorks out — while it’s independently run, it’s still connected with the city considerably. To carve that out was kind of a insurmountable legal option. That potential is there but it really wasn’t a viable option, I would say.

Did the succession planning play a large part in the board’s decision to ask council to take over WaterWorks?

Doerring: Not necessarily. Just prior to LD’s passing, Marty Hoffert had retired from the treatment plant. Marty had been in charge of the treatment plant for just over 50 years. We had great succession planning there. We had enough employees to have a succession plan. In LD’s case, quite honestly the guys who run the treatment plant or the guys who run the distribution, the administration part wouldn’t be something they would be interested in, or that they would be qualified for, for that matter. For office staff that makes it tough to have succession planning. With LD’s passing, had LD been able to say to us, “Hey, I’m going to retire in a month” or “I’m going to retire in six months,” then we would have had the option to do a search for an individual. With his untimely passing, we needed to do something quickly. The city was the obvious option for the interim. But that’s why the agreement was just for 90 days for the city to do it while we as a board saw how does this go with the city and does it make sense to go with the city or does it make sense to go out and hire a replacement, a water superintendent, for LD.

Didn’t the WaterWorks ask the city to extend its interim managing status?

Doerring: So it was for 90 days and then we would reassess. At that point we reassessed and said, “It looks like we want to go with the city.” But we had to check on an election and all that stuff. We just extended it for a month. And then we figured out OK the election has to happen on Sept. 13 and all this. So then we extended it to carry us through the election.

Contact Christopher Braunschweig at 641-792-3121 ext 560 or at cbraunschweig@newtondailynews.com