Decision on one Des Moines metro regional water utility has morphed into the possibility of two
Des Moines Water Works is ready to move forward with its framework for a central Iowa regional water utility, but it doesn’t yet know which cities and water departments will join its cause — or if it will work at all.
The vision of a regional water utility, which would include Des Moines' and the nearby suburbs' water utilities, is simple enough: With everyone working together, water delivery across the metro would be more efficient and cheaper in the long term.
Each utility, however, has its own ratepayers, and some of the suburban water officials worry that costs from regionalization could flow down to their customers.
“There is no zero-risk option,” said Ted Corrigan, interim CEO and general manager of Des Moines Water Works.
In particular, he's waiting to see if there will be two central Iowa water utilities. Will West Des Moines Water Works pursue a separate regional utility — and if so, which other cities would join it?
“It’s kind of the elephant in the room,” said Diane Munns, chair of the Des Moines Water Works Board of Trustees.
In late January, Corrigan led a meeting with representatives from central Iowa utilities and cities outlining the next steps toward creating a regional water utility. He told them the “ball is in your court.”
Some in the room were skeptical.
“As a general manager of a utility, (I'm) going to do what's best for Urbandale in the long haul,” said Dale Acheson, general manager of the Urbandale Water Utility.
Under the framework of the Central Iowa Water Works regional model released in September, a regional board would oversee the network’s distribution of drinking water and make long-term plans for the involved communities.
It would also set the base water rates for the participating communities, while the individual boards would determine their individual retail rates, which is what consumers would actually pay.
Two regional water works?
West Des Moines Water Works is deciding between three options: Join Des Moines’ regional venture, form a similar utility with other western suburbs, or join a regional utility with cities and utilities farther west — namely, Van Meter and Waukee.
Christina Murphy, general manager of West Des Moines Water Works, told Corrigan during the meeting that her utility likely couldn’t make a decision until it receives reports from consultants on the other regionalization options in the spring.
“Our goal all along is to make sure we make the best decisions for our ratepayers,” she said.
The potential for a regional water utility separate from Des Moines has others on the fence, too. Waukee, one of the metro’s fastest-growing cities, is deciding between the Des Moines regional utility and the potential western suburbs contemporary.
“Waukee is experiencing significant growth each year, which requires city officials to ensure that there is a plan to meet the community’s long-term water supply needs,” city spokeswoman Summer Evans said in a statement. “The city is considering all options available to meet these needs.”
Urbandale is in the same boat. Acheson said the city could have up to four options: join the Des Moines region; join the West Des Moines region; tap its own water source; or do nothing and continue buying water from Des Moines Water Works.
“It’s very complicated,” he said.
Corrigan has said that in some ways, Des Moines Water Works is already a regional utility because it sells more than half the water it produces to other metro cities.
He told the people gathered for the January meeting that Des Moines Water Works would need a “critical mass” of participants to move forward with a Des Moines-led regional utility.
He has yet to define a specific number, but said it would need to include “utilities serving a significant majority of the regional population.”
Finances, governance at play
Like West Des Moines, Altoona produces most of the water it distributes. There, the cost to the ratepayer is the primary decision driver, said Councilman Vern Willey II, who’s also the city’s former water superintendent.
“If it doesn’t work for us financially, we’ve got to be out,” he said.
While having enough quality water is the highest priority, the financial side is also worrisome for Urbandale. According to a 2018 financial analysis, the water it purchases from a regional utility with Des Moines Water Works would be more expensive than the current status quo for the next 15 to 20 years, Acheson said.
Those extra costs would likely be passed down to customers, but Acheson did note that Urbandale would begin to see the financial benefits decades later.
According to an October 2018 analysis, the formation of a regional utility would save $64 million in capital investments, building or updating water infrastructure, when compared to what the current collection of utilities would need to spend. A regional utility would also spend less on everyday maintenance.
Jason Mumm, a consultant with FCS Group, told the water representatives in 2018 that the benefits of regionalization would exceed the costs by $327 million.
When asked how regionalization could affect Ankeny's ratepayers, Mayor Gary Lorenz said water isn't "going to get any cheaper" and the central Iowa region should work together to make sure each community has enough access to water. Water rates will go up everywhere if the metro splits apart, he said.
“It’s going to be good for Ankeny if we can get this done, but I think it’s going to be good for everybody else, too," Lorenz said.
Corrigan said he'll listen to financial questions, but he doesn't know what water rates will be for different communities. After the January meeting, the involved cities and utilities formed a committee to examine individual concerns from each party.
“I am hopeful people are not looking at this as a purely financial decision. It’s really a philosophical, long-term stability decision,” he said.
The region's multiple water treatment plants, for example, would also provide extra redundancy layers in case one or more of them went offline. Proponents of regionalization say it would also prevent duplication of services across the metro.
Suburbs that receive water from Des Moines have long asked for a seat at the table. Lorenz noted that 60% of Des Moines Water Works' water is shipped outside the capital city, but the board is made up of exclusively Des Moines appointees.
“Nobody else had any input into that," he said.
Under the current framework, the Central Iowa Water Works board would hold between five and nine seats. Des Moines Water Works would get two seats, and the other “founding members” serving more than 25,000 people would each get one seat: Des Moines, West Des Moines, Urbandale and Ankeny.
Cities or utilities that surpass the 25,000 threshold at a later time, like Waukee or Johnston, would be "assigned" a seat on the board.
While the Des Moines Water Works board would still exist, Des Moines wouldn't hold the majority of the seats on the regional board. Central Iowa Water Works would also have the exclusive rights to purchase the water production assets from Des Moines Water Works and the other founding members.
It would have two one-year windows to purchase the assets: 2026 and 2031.
The January meeting was the first central Iowa regional meeting since fall 2018.
Corrigan said that was because the prospect of regionalization was nearly dead as 2019 began. Then Ankeny officials, including Lorenz, told Des Moines Water Works they wanted to look at a new regional proposal.
The Des Moines Water Works board then met in several closed session meetings to discuss its regionalization strategy, using a provision of Iowa Code that permits non-public meetings to discuss pricing strategy and other "proprietary" information.
The closed meetings came under scrutiny in the fall when Jack Hatch, then a mayoral candidate, called the ongoing talks a "Flint-like secretive takeover" of Des Moines' water utility.
“It’s been moving along steadily, but there were reasons why we didn’t bring the whole group together,” Corrigan said. “This seemed like the right time.”
Looking for a new CEO
The latest round of regionalization discussions have arrived as a search firm looks for the next CEO of Des Moines Water Works.
Bill Stowe, the most recent CEO, died last April after a diagnosis of pancreatic cancer. Corrigan has served as the interim CEO and general manager since.
The water works board in December voted to hire Colin Baenziger & Associates to conduct a nationwide search. The Florida-based firm conducted the most recent CEO search for Des Moines Water Works.
Corrigan on Wednesday said he intends to apply for the CEO job. According to the job posting, candidates have until Feb. 28 to apply.
The top candidates will be screened in March and interview in April.
Cownie appoints former campaign manager to water board
The Des Moines City Council on Monday unanimously approved Mayor Frank Cownie's appointment of Joel Aschbrenner, his former campaign manager, to the Des Moines Water Works Board of Trustees.
The appointment came after Cownie removed Dave Carlson from the water board early last month. In the Jan. 6 termination letter, Cownie said he was jettisoning Carlson because the mayor and the water board had lost "trust" in him, and his continued service on the board would "negatively" affect the regionalization efforts.
At a neighborhood meeting in September, Hatch revealed a previously confidential "terms sheet" on regionalization.
In a December email to the mayor, Diane Munns, chair of the water board, didn't name Carlson but said the disclosure of the regionalization documents in the fall "was a breach of trust and confidence."
Carlson, in an interview, said people outside the board had contacted him about regionalization, and they had provided him with their copies of the documents outlining the proposal. He said he showed a copy of the framework to Hatch.
Carlson alleged he was removed because he supported Hatch in November's mayoral election.
“I did not do anything wrong," said Carlson, who added that he never disclosed the strategies that were discussed in closed session meetings.
When asked by the Register, Cownie said he didn't remove Carlson in an act of political retribution.
"It has absolutely nothing to do with where he was on the election. That’s not the issue," the mayor said.
Austin Cannon covers the city of Des Moines for the Register. Reach him at firstname.lastname@example.org or 515-284-8398. Your subscription makes work like this possible. Subscribe today at DesMoinesRegister.com/Deal.