Sunday, July 22, 2001

Newport pushes to sell water works

By Terry Flynn
The Cincinnati Enquirer

        NEWPORT — City manager Phil Ciafardini has pushed to sell the city's water system for about three years, and with bids due Aug. 7, he believes the proceeds can provide financial assistance to Newport residents.

        In making his first full presentation of the 2001-02 city budget as well as the five-year projected budget during a recent city commission meeting, Mr. Ciafardini once again emphasized what he sees as a need to remove the water system from city control.

        “We expect to have bids for the water works by Aug. 7, and I hope to make recommendations to the commissioners by Aug. 13,” he said. “Right now we're still showing on the budget that we're in the water business for the next five years, but I firmly believe that is not in the best interest of our citizens.”

        The water works carries a debt of about $9 million and the last suggested sale price, which was rejected, for the facility was about $16 million. Several municipalities — including representatives from a California city, Cincinnati and Lexington toured the facility last month during a pre-bid open house.

        What the city manager is proposing to do with proceeds from the water works sale, if the city can get a strong offer, is establish a revolving loan pool that could be used for development or create low-interest loan programs for residential and commercial property owners.

        Commissioner Ken Rechtin said he doesn't want to talk about possible uses of funds from a water works sale “until we actually have something to talk about. We don't even have bids yet, and we don't know how much

        anyone is going to offer.”

        In 1998, the city administration and a majority of commissioners decided to sell the water works, but voters turned down the issue on the November ballot.

        Now, because of a change in state law, the commissioners can vote to sell the system without approval from the residents.

        The Northern Kentucky Water Service District offered to purchase the system in 1998, assuming the city's debt on the system and giving the city $7 million in cash. Whether the district will be forthcoming with a similar offer again isn't known.

        A water main break in October disrupted service to some 3,700 Cinergy gas customers in the city. Newport incurred about $116,000 in costs relating to that, and Cinergy has estimated the total cost of the outage and service replacement at $4 million to $5 million, though it is still unclear who is responsible for picking up the tab.

        If the water system is not sold, commissioners have indicated they will be forced to approve increases in water rates of as much as 50 percent to pay for necessary upgrades and repairs on the system.

        The average quarterly water bill would go from about $60 to almost $90 under the increase.

        Commissioners learned at the meeting that, thanks to Newport on the Levee and other developments coming on line in the next two to three years, the city can expect an average increase in operating revenues of 5 percent annually from fiscal 2002 through 2006.

        The general fund for 2002 is set at $14,788,510, while the projected budget for 2006 calls for operating revenues of $17,877,834.

        Mr. Ciafardini said in additionto Newport on the Levee — the riverfront entertainment complex that is scheduled to open Oct. 3 — additional revenue will be generated by the Hilton Garden Inn Hotel and high-rise office building to be constructed just east of the L&N Bridge, as well as the Park Place condominiums and South Shore Place projects along Dave Cowens Drive.

        Because of the new revenue sources available in the next few years, he told commissioners, the city does not anticipate any new taxes in the foreseeable future.

        One area where Mayor Tom Guidugli and the commissioners differ with Mr. Ciafardini is a proposal to build a $2 million public works facility on Lowell Street in the city's west end beneath the new bridge over the Licking River that would include a new police shooting range, a training room, and additional office and storage space.

        “I like the location a lot, but I have a real problem with spending $2 million,” the mayor said in discussing the proposal with Mr. Ciafardini and Police Chief Tom Fromme. “I think we need to take a long look at this. Our original estimate was about $1 million, and I think we should be getting closer to that figure.”

        The city commission plans to hold a public hearing and then take a first reading on the budget in early August, followed by a second reading to adopt the measure at the commission meeting two weeks after that.


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