By Scott Halasz
XENIA — Facing the reality that Greene County could walk away from its water contract with Xenia in two years, city council Thursday agreed negotiate a lower surcharge rate with county officials.
Currently charging a 50 percent surcharge for supplying water sold to county customers in Shawnee Hills, Cedarville and Wilberforce, the city will explore reducing the extra charge to 20 percent providing the county agrees to that number and at least a 20-year contract when the current deal expires in June 2018.
The 7-0 vote keeps alive for now the hope that the city will retain perhaps its largest water customer despite the county informing the city otherwise.
On Aug. 26 the county sent a letter to the city and council members informing them the county will not renew the contract, a move that could cost the city more than $700,000 annually while helping the county stabilize its own rates by constructing its own system and hooking into the North Beavercreek Water Treatment Plant.
County Administrator Brandon Huddleson made no promises that the board of commissioners would be willing to come back to the negotiating table.
“I will do my best to have conversations with (the commissioners),” Huddleson said. “We were certainly leaning (toward leaving) before this meeting. I will certainly entertain discussions with (City Manager Brent) Merriman.”
County officials were unhappy with the surcharge and the financial strain it has on the county.
“You have still failed to provide any reason for the surcharge, at any level, other than the city’s dependence on it as a rate subsidy for the rest of the customer base,” Huddleson wrote to Merriman in an email dated Sept. 8. “The City does not own, repair or service the lines, valves, meters, towers, pumps, etc. in the system. The cost to provide water to the County is arguably less than the balance of your customers for this reason. The number is arbitrary and by your own words, provides a ‘profit margin’ for the city. We cannot and will not continue to pay a premium for water at the expense of our customers simply so the city can profit.”
According to county documents, the county paid $713,520 to the city for water in 2015 but collected only $633,358. With debt service and personnel costs, the county had a $203,614 deficit.
At 20 percent, the county would most likely break even, Huddleson said. With its own system, the county would be in the black.
“We’ve run the numbers, its advantageous for us financially to make a change,” Huddleson said. “The county is looking out for the best interests of their customers.”
The vote by council was not the proverbial slam dunk. Council President Mike Engle admonished the county for how it negotiated.
“This was nothing short of demands place on the City of Xenia,” he said, adding that there were “no real negotiations.”
Mayor Marsha Bayless called the 20 percent option the “lesser of two evils.”
Vice-President Wes Smith said the city has been “disrespected” by the county.
If the county approves a 20 percent surcharge, the financial impact to the city would be around $100,000 annually, Merriman said. But it isn’t just about money, he added.
“The problem we have … it’s not just about the reduction of the surcharge,” Merriman said. “The water utility that we have is one of the few competitive advantages we have …. from a development standpoint.”
He said if the surcharge is continually reduced, there will be no incentive for businesses to locate inside the city limits.
“It really undercuts us from an economic development situation,” Merriman said.
Should the county decide to build it’s own system, it will cost around $5.5 million for installation, which will be financed, Huddleson said. It would also install an additional million gallon per day well at Beavercreek’s Rotary Park using water capital improvement funds and a similar well at Jacob’s Landing, which would be financed at $1 million.
Central State has expressed interest in hooking into the new system, which would provide more income to the county and take away around $100,000 annually from the city, based on the 2015 bill.
Contact Scott Halasz at 937-502-4507.