Talk about the $2 billion-plus price tag for Omaha's massive sewer system overhaul with anybody involved and you'll hear the same words.
Pain. Burden. Hardship.
Business owners, elected leaders and planners will tell you it's crucial to spread out the responsibility for the 18-year, federally mandated project.
According to a group of major industries threatening to cut jobs or leave Omaha, there is about $149 million in pain to redistribute. For now, those 19 manufacturers — packing plants, a bakery and a cereal company, among others — are responsible for 5 percent of a bill they estimate will reach $3 billion, with financing costs included.
But they'll argue today to a mediator and the Greater Omaha Chamber of Commerce that the burden is substantial enough to force them to lay off hundreds of workers and move out of the city.
Though together they are responsible for nearly 10 percent of the flow into the city's sewers, the businesses say they are not the main cause of too much sewage and stormwater ending up in rivers and streams.
They say that it's a shared responsibility and that the cost should be, too. Their proposal would have them paying the same flat rate as all or most of the 13,085 commercial users in the city, from shoe shops to restaurants to real estate offices.
By their measure, the industrial users' share of the burden would drop by a full 99 percent, from $150 million to about $1.1 million.
Julia Plucker, an attorney representing SaveOmahaJobs.org, a coalition of 11 of the industrial sewer customers, said that although the proposal is substantially different from the city's approved funding plan, it's not an effort to dodge the bill.
“We don't want to pass the buck,” she said. “We want everybody to pay their fair share.”
Mayor Jim Suttle says that although he is willing to listen to the group's ideas, he doesn't see things the way the group does.
“They need to be good neighbors,” he said of the companies in the coalition. “They're part of the neighborhood called the Omaha metropolitan area, and they need to join the other neighbors in finding a solution to this,” Suttle said.
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A rate plan approved by the city in 2009, and extending through 2014, calls for annual increases for different groups of users. Residential customers will pay 63 percent of the total cost, with average rates rising from about $24 to about $37 per month by 2014 and likely about $50 by 2017 — about double what those customers pay now.
Neither businesses nor the city wants to further drive up residential rates. There's also not much interest in changing rates for bulk customers — other communities, such as Bellevue and Papillion, which will pay for 9 percent of the project — or from “large industrial” users, like hospitals, that will pay 3 percent.
The dispute comes over the rest of the pie, which currently has industrial users paying 5 percent and all other commercial accounts paying 20 percent.
The more than 13,000 businesses in the commercial category account for about 33 percent of the flow into the sewers.
All users will feel the rate increase, but for the industrial customers, the increase is particularly fast and steep.
If the total cost of the project is assumed to be $3 billion — a number the chamber has used — the top four users will pay more than $17.8 million apiece over the course of the project, with the largest of them tapped for close to $40 million.
Henry Davis, president and CEO of Greater Omaha Packing Co., said his bill last month was $9,700. Audie Keaton, president of Skinner Baking Co., has said he's looking at paying $14 million over time and is weighing offers to move his operation and its more than 400 workers out of Omaha.
Davis said the city needs to take that threat seriously, both because of the potential loss of jobs and because one big sewer user leaving means that more money will have to come from somewhere else.
“The fact that Skinner Baking is ready to leave says we need to do something now,” Davis said. “Once somebody leaves, the whole formula is going to tumble down on itself.”
Suttle said he's listening to the businesses' concerns and has been for years.
He has met with Davis, Keaton and other company leaders, toured their plants and brainstormed ways to reduce their sewer use. Together with Marty Grate, the city's environmental services manager, and others in city government, Suttle has come up with a handful of alternative funding plans.
“It's disingenuous to get scare tactics in here,” Suttle said. “There are a lot of costs associated with every business. ... We know they have to manage their expenses, but, likewise, we have a system to run.”
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The problem isn't new, or unique to Omaha.
Across the country, more than 770 cities are paying millions — or billions — to comply with U.S. Environmental Protection Agency requirements. The direction to update sewer systems has come without a direct source of funding, leaving individual communities to sort out the funding.
Omaha's planning got under way in 2005, and a construction timetable was submitted to the state in 2009. The city and the Nebraska Department of Environmental Quality, Omaha's monitor on the project, signed an agreement that said the work would be done in 2024. After last year's flooding, the timeline was extended to 2027.
Three years ago the cost of the work was estimated at about $1.7 billion. In today's dollars, Grate said, the cost is closer to $2 billion.
Throw in the financing costs, and the number is even higher. Grate said that although he can't say the Greater Omaha Chamber's $3 billion estimate is on target, it's not out of the realm of possibility.
Local officials have made several efforts to drum up funding. Suttle has traveled to Washington, D.C., to push for federal help. State lawmakers passed a bill that allows Omaha, with City Council and voter approval, to boost its sales tax to help fund the work. So far, neither effort has resulted in money for the project.
The city's most recent proposal would shift a bigger chunk of the cost away from the industries. Instead of the 50-50 split between a flat user rate and usage-based charges, it would have put 75 percent of the calculation as the user fee and 25 percent based on use. That would have meant bigger bills for most businesses — up an average of about $51 per month — but a considerable drop for the industries.
Plucker said her group rejected that idea because it still used flow amounts in the rate calculation. She said that's not fair because it doesn't take into account the amount of runoff created by businesses, such as large chain stores, with large parking lots. The problems with the current sewer system occur after a rainstorm, when runoff creates a bigger flow rushing toward the river — even if the industries are closed.
Still, her group is not asking the city to impose a stormwater runoff fee that some cities are using to pay for their sewer projects.
Grate said calculating the rates based on runoff just isn't how things work here.
“It's logical,” he said. “It's just not typical.”
City officials also questioned whether the industries' proposal is legal, saying it wouldn't meet state requirements that rates be “fair and equitable.”
“I'm willing to listen and we ought to discuss it, but we have no legal foundation to stand on this idea at the moment,” Suttle said.
The results of today's mediation session are expected to be shared with the city later this month.
Plucker said she thinks the meeting might be too little, too late. But Suttle said he's ready to see what happens and talk again about redistributing the burden.
“I applaud (the chamber) for this idea of bringing in a professional mediator, to find all the issues, chalkboard them, find the middle ground,” he said.
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