Framingham Mayor Hides Big Problems in the Water & Sewer System

The Mayor's new rate scheme shifts the cost of critically needed maintenance onto tenants and guarantees a financial wreck in 3 years.

On Monday November 18, 2024, the Mayor held a public hearing on water & sewer rates. The notice published prior to the hearing read as follows:

“The City of Framingham hereby notifies residents and businesses of a Public Hearing to be held TONIGHT, November 18, 2024, at 7 p.m., located at Framingham City Hall, Blumer Room, 150 Concord Street, regarding proposed rates, as well as amendments and changes for water and sewer services, including a "Ready to Serve" fixed fee, an updated irrigation rate, revision of the Multi-Unit Dwelling (MUD) Factor policy, and modifications to the tier structure which are proposed to become effective January 1, 2025.

Ready to Serve Fee - fixed fee, based on meter size

Irrigation Meter Rates - increase to irrigation rate per 100 cubic feet

Amend Multi-Unit Dwelling (MUD) Factor Policy - The MUD adjustment to be limited to condominiums only

Tier Structure change - five-tier structure reduced to four tiers

Rates - 4% increase”

The meeting was posted on the city portal, with no further information.

That left the community with no information to inform their input to the public hearing. There were no answers for simple questions:

1.      What is this Ready to Serve Fee?

2.      What is the new irrigation rate?

3.      Why is the MUD factor policy being changed and who will that effect and by how much?

4.      What is the new tier structure, complete with ranges and rates?

5.      What does a 4% increase in those rates mean for the average water bill?

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Note:

Dividing the total water use of a housing complex by the number of dwelling units to figure the average water use by a unit is called using a Multi Unit Dwelling (MUD) factor. If the MUD factor is applied, the average water & sewer cost per dwelling unit will be the same as for a single family. If the MUD factor no longer applies to rental buildings, a 200 unit building will appear to be one huge user of water and that makes it much more costly. [A chart later on illustrates this well.]

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Even at the public hearing, although the Mayor was pressed for more information, only the new tier structure was disclosed, with new consumption ranges, but no information on the actual rates.

No one really had a clue what the new scheme meant, who it affected and by how much, or why the changes were needed. That was a total public hearing failure.

Just 3 people turned up to deliver their puzzled input.

Rarely has a public hearing been held with so little information available to the public. The whole point of a public hearing seems to have been lost on the Mayor.

Finally, today, 4 days after the hearing, the background information needed was posted on the city website:

The Mayor’s Message

Water and Sewer Rate Study Report – a consultant report commissioned back in the spring and long overdue

Analysis of this new information provides a very disturbing picture of the state of the water & sewer system, the inequitable way in which the burden of its increased costs is being distributed, and the fundamental structural financial problem the water & sewer system has, which is not solved by the Mayor’s new scheme.

Bottom Line

1.      Single family and condo homeowners will receive relatively small rate increases, but tenants across the city will be very adversely impacted. The water & sewer cost per rental unit will be higher than that for homeowners by as much as 133% or $370/quarter. [See chart below]

2.      There are 3,000 multi-unit rental buildings across the city and 1,500 have been experiencing those big cost differences, noted above, already. But through inconsistent application of the MUD (Multi Unit Dwelling) factor, 1,500 of the buildings have been billed at the same per rate as single family houses and condos. That is going to change with the removal of the MUD factor from those buildings. Half the tenants in the city are about to be hammered by huge water cost increases which landlords will pass on to them as rent increases. The other half have already been hammered and have suffered silently with no advocacy on their behalf.

3.      Water & sewer system maintenance has been sorely neglected in the past and, according to the consultant report, must be addressed by an added investment of $50 million/year to reduce the maintenance backlog, which stands at $200 million or more. This is the key cost driver causing financial stress, as the new debt service on that investment increases by $2.5 million each year.

4.      The rate structure changes, the Ready To Serve fee, and the MUD factor policy change will inject an additional $8.3 million into the Water & Sewer Enterprise Fund and will keep the fund afloat for 3 more years, at which point the debt service, increasing at $2.5 million/year will pretty much wipe out the added revenue, and we will be back in the same financial situation which triggered all the new changes.

The following chart shows the quarterly water & sewer cost per rental apartment for different building sizes and an average water use per quarter of 14 HCF, where HCF = one hundred cubic feet. This is for the case where, as the Mayor plans, the MUD factor is no longer applied to rental buildings. Note that the average quarterly cost for a condo or single family owner is $275.

Details on the state of the water & sewer system and the Mayor’s plan to punish tenants financially were provided in prior articles:

Framingham's Sewer System Is a 'Ticking Time Bomb Underground'

Framingham Mayor Aims To Make Tenants Pay for the Water Billing Mess

There is one other point to make.

In the Mayor’s Message, the following statement is made:

"The water and sewer operations in Framingham are structured as an Enterprise Fund. This model ensures that the costs of providing services—such as personnel, maintenance, and infrastructure investments—are covered by user fees rather than general tax revenue."

This would lead a reader to conclude that the only way to solve financial problems in the Water & Sewer Enterprise Fund is through rate increases. However, this is not true, as the state law, MGL Chapter 44 Section 53F 1/2 makes clear:

"The city or town shall include in its tax levy for the fiscal year the amount appropriated for the total expenses of the enterprise and an estimate of the income to be derived by the operations of the enterprise. If the estimated income is less than the total appropriation, the difference shall be added to the tax levy and raised by taxation.​"

This is also affirmed in the state manual on enterprise funds: Enterprise Funds: A Best Practice.

An alternate scheme to that of the Mayor, which does not punish tenants, spreads the cost burden of maintaining the water & sewer system fairly across the community, and does not get us back into a financial fix in 3 years, is to solve the problem by adding 1.25% to the tax levy. That translates into the $2.5 million/year in additional revenue which is needed.

That tax levy increase would need to remain in place until the water & sewer maintenance backlog is retired and then adjusted accordingly. It will likely take at least 4 years to get the maintenance backlog under control.

One final thought.

The Mayor should concede that the original public hearing was a failure and hold a new one, with full information provided ahead of the hearing on all the changes planned.

Prior to that hearing, the city should notify every rental apartment building owner what their water & sewer bill increases are estimated to be in the new scheme.

Further, in the public hearing notice, it should be made clear for tenants how the new scheme will affect them, by raising water & sewer costs for their apartments and thus their rents.

That way the Mayor would get some solid input on how he is making life difficult for tenants in the city, who make up 45% of Framingham households.