GREAT BARRINGTON — If the town acquires Housatonic Water Works (HWW), or if the company is merged with Great Barrington’s own water utility, the new owner will be confronted with tens of millions of dollars in deferred capital expenses, an engineering firm told the selectboard.
Dave Prickett and Justin Skelly, engineers from DPC Engineering, gave the board the grim news last night during a presentation designed to address the value of the troubled system serving the Housatonic section of town, the costs of fixing it, the potential exposure for the buyer, and possible next steps.
Prickett said if town officials came to him and asked him what the system was worth, he would tell them, “I’d say get a dollar because I wouldn’t pay any more than that, knowing what’s coming down the pike.”
“I believe the liability is far too high to take on something at a price knowing what you have to do with it after you get it,” Prickett continued. “It’s like if you were buying a house and the house needed a new roof, new siding, and a couple of new bathrooms, you’d probably approach the deal slightly differently.”
See video below of last night’s Great Barrington Selectboard meeting. Fast forward to 9:35 for the discussion of Housatonic Water Works:
Click here to read an overview of the report prepared by DPC, which had presented a preliminary report to the board in 2017. Prickett emphasized that he and Skelly are not appraisers. They would, however, offer their “professional engineering opinion of the value of the system, what a capital plan might look like, and how it would impact customers and citizens of Great Barrington.”
The first number Prickett tried to come up with is what it would cost today to build the same HWW system from scratch. He estimated that cost at $55 million. All but $8.6 million would have to go toward replacing water mains in the distribution system. Most of the mains — 84%, according to a previous report — date back to the late 1800s. Construction of HWW’s water system started in 1888.
HWW serves 824 customers and a total population of roughly 1,400. The service area is the village of Housatonic and small adjacent portions of Stockbridge and West Stockbridge. The company’s facilities include a reservoir, Long Pond, one water treatment plant, one finished storage tank, and 16 miles of old piping consisting primarily of uncoated cast iron.
The selectboard has come under great pressure to do something because HWW customers have long complained of brown water coming out of their taps and the Great Barrington Fire Department has said the company’s fire hydrants have insufficient capacity for fighting a large fire in the village.
As a stand-alone utility, depreciation has pushed HWW’s value today down to a mere $5.8 million. A previous estimate of needed capital improvements pegged the cost at $31 million, leaving HWW with a negative value of $25.2 million — a figure Prickett called “an ugly number.”
As for imagining a path forward, Prickett presented two options: maintaining HWW as a stand-alone utility; or merging it with the Great Barrington Fire District, the quasi-public organization that provides public water to the bulk of the town.
If HWW were to raise its rates to pay for the needed infrastructure improvements, it would create an enormous imbalance in water rates between HWW customers and fire district customers in the rest of the town. By fiscal year 2042, for example, HWW customers would be paying $3,711, while fire district customers would be paying only $834. See bar graph below:
Combining the two districts would lower those long-term costs to HWW customers while increasing them for fire district customers to a point well above the state’s average water costs per customer.
North Plain Road resident Trevor Forbes said, given the options, HWW customers who could afford it might drill their own wells. Others who could not come up with the money for a well would be stuck with HWW.
“I would imagine that customers would look to alternatives under that scenario,” Prickett said.
If that happened, it would widen the inequity that currently exists between rich and poor, Forbes said, while further depressing the value of HWW’s system through the attrition of customers.
The DPC presentation follows a report last month from AECOM, an infrastructure consulting group, that recommended improvements to the HWW system that would cost more than $30 million.
Prickett suggested the selectboard needed to consider management options, hold discussions with HWW, the fire district, the town Department of Public Works and the state Department of Environmental Protection. Then the town should seek public input and legal counsel, he added.
Board chair Steve Bannon told the 47 people attending via Zoom that discussion on the topic would continue at the board’s Aug. 23 meeting.
