Great Barrington — While the fair market value of Housatonic Water Works’ (HWW’s) infrastructure is $2.3 million, if the town were to acquire the company’s infrastructure, it would have to invest at least $33 million in repairs. This is according to consultants from DPC Engineering LLC of Longmeadow and Harwich Port, Mass., who presented their report at a public information session on Monday, October 28. The session was presented at a special Selectboard meeting held at Monument Mountain Regional High School.
At the beginning of the meeting, Selectboard Chair Stephen Bannon said that the report allows the town to determine how much it would cost for it to potentially purchase and operate HWW’s water system. Bannon emphasized several times that the Selectboard would not be making a decision at the October 28 meeting but that residents would more than likely make a decision at a future town meeting.
Back in January, the town hired DPC Engineering in order to evaluate the potential operation and acquisition of HWW. According to Town Manager Mark Pruhenski, completion of the report was hindered due to multiple delays with HWW not providing data requested by DPC Engineering.
At an informational meeting held by HWW on October 16, Treasurer James Mercer said:
We have provided all the information that we could provide to the town of Great Barrington. They were looking for updated financials. Those are in our annual return, which is public information. When the town mentioned that we were not cooperative, what they were referring to is the fact that we will not provide personal information on customers, their individual names, addresses, and usage. We provide the total usage, the total revenues, and those are in our annual return. The MassDEP annual statistical report shows the number of gallons that are pumped every year, so they have all the information they need.
At the October 28 meeting, Dave Prickett from DPC Engineering confirmed that the company did not receive detailed customer data, including parcel-by-parcel information for HWW customers from the company. He explained that this led DPC Engineering to “make some broader assumptions” when it came to calculating the potential rates for customers if the town purchased the company. “What we often like to do when we have detailed data to show where things are at the median [of water usage] and for people who are at the lower percentile [of water usage], who oftentimes are seniors not using a lot of water,” Prickett said. “But in this case, we’ve made some broader assumptions. The goal [of the report] was to develop what might happen, or what might this look like if the town were to become the owner and operator of the water utility.”
According to Prickett, the study looked at three potential options: HWW continuing to operate as an independent company, the company purchased and operated by the town through HWW customers, and if the company being purchased and operated by the town through its general fund.
Back in June 2021, the town hired Dallas-based company AECOM to conduct a water-system evaluation. Prickett said that DPC Engineering used the evaluation to determine that a capital improvement project for HWW’s infrastructure would cost $33.6 million in 2024, adding a four percent increase over time on top of AECOM’S original estimate of $31.1 million to reach that figure.
Factoring in the infrastructure costs and the fair market value cost, DPC Engineering estimated that HWW has a negative net value of $31.3 million. “[Buying HWW] is kind of like buying a house,” Prickett said. “If you are buying a house that needs a whole lot of work after you buy it, you want to weigh the pros and cons relative to whether or not that investment is worth it.”
Prickett said that the company used data from both AECOM’s report and the Department of Public Utilities rate case settlement made with the company in July. “We believe that there are more pipe capital needs than [what] is currently projected under the DPU settlement,” Prickett said. “[With HWW] you have 17 miles of pipes. From our perception with the existing utility, there are a lot of old and undersized pipes, and that makes water distribution very challenging. There are also some treatment needs that obviously are important to resolve. Some of the challenges that have existed over the past years and with old pipes and undersized pipes come fire flow protection challenges. So obviously, in the horrible event that there is a fire or the fire department needs adequate water and pressure, it’s really hard to pull those pressures through small and undersized pipes because you just can’t get what you need.”
Prickett said that the report also took into consideration potential funding through the USDA and the State Revolving Fund. “The town’s [potential purchase] brings a significant enhancement relative to financing, being able to possibly get grants, and being able to get long-term, low-interest loans,” Prickett said. “Those are likely things that Housatonic Water Works cannot do on their own because they’re a private entity. On the flip side, one challenge is that anytime the town bonds a project, whether it’s wastewater, infrastructure, or if it’s the consideration of a water capital plan, those bonds have impacts on the town’s overall bonding limit, bonding capacity, and their bond rating.”
Prickett said that the town outright purchasing HWW could also limit the town’s flexibility for future infrastructure needs, negatively impact its debt ceiling, and consume a significant portion of its bonding capacity.
“The [town] is not in the water business,” Prickett said. “Establishing a water business is kind of like when a company takes on a whole new service line: It could go really well or it could be really hard.”
Prickett said that, no matter what is decided by the town, there would be steep cost increases for HWW customers all due to robust capital needs. He added that a creation of a town-owned water company would likely result in higher annual costs for HWW customers at least until the fifth year of a town-owned utility.
During the public comments portion of the meeting, Bannon said that there is “no easy answer or magic answer” to the situation. “One of the dilemmas is that there are residents of Great Barrington proper who are on the Great Barrington Fire District [Water Department system],” he said. “They already pay for water. To ask them to pay twice [for water] may be a dilemma going forward. It’s something that we haven’t figured out. The bottom line will be that it will be a town meeting vote for all residents of Great Barrington. We have to figure out a way to start the process of fixing up Housatonic Water Works.”
Bannon said that the town would seek federal and state grants in the process of any acquisition plan of HWW. “But those haven’t been figured in [the process] because none of them are guaranteed,” Bannon said.
When asked if HWW customers residing in West Stockbridge and Stockbridge would be part of a potential company acquisition, Bannon responded that “it’s premature to even talk about that.”
“I feel that buying a water company from the Mercers is about as ridiculous as buying a dump from the Mercers, and we all know how that worked out,” said Housatonic resident Jim Bailly. “That being said, why aren’t the Mercers being held accountable?” Bailly asked. “I think before we even consider a purchase, I think it’s important that that water system is functioning correctly. I don’t think that the town should consider looking at buying this system until the Mercers are held accountable for what they are doing.”
“If there is going to be any acquisition, [the Mercer family] shouldn’t get away with anything,” added Selectboard Vice Chair Leigh Davis, who is also the Democratic nominee for state representative in the 3rd Berkshire District. “I personally don’t think they should get a dime,” Davis said. “I’m going to be fighting as hard as I can to make sure that we can hopefully acquire this and not spend a penny for it. Whether that comes from congressionally directed spending, which is basically an earmark from the federal government, from help from the state, or ensuring that Housatonic Water Works avails of the State Revolving Loan, which they can be—they could have been having money from the state years and years ago.”
“I just want to make sure that this is clear to everybody: No one wants to pay for a dilapidated, neglected water system where [customers] have to wash their babies with brown water,” said Selectboard member and HWW customer Eric Gabriel. “At the end of the day, how long do we want that problem around for? How long are we going to sit in denial that the present owners are actually going to fix anything? Sometimes you have to rip the Band-Aid off and deal with the pain to get things to where they need to be. I’m not suggesting that we give them a wheelbarrow full of money. I’m just saying sometimes there’s actions that have to be made to get the problem solved. Sometimes you might have to give some capital. Sometimes you might have to spend years in court if we want this done quickly, or quicker than the projections of doing nothing. That’s just something I need everybody to consider.”
