To: Mayor Bauman, Common Council members and Water Utility

From: TLNA Council

Subject: Lead Pipe Replacement Program

Dear Mayor,

On behalf of our membership, particularly those homeowners on fixed or lower incomes or with disabilities, we encourage you to support the recommendations outlined below as part of the lead pipe replacement program. The recommendations were developed after contacting staff and/or reading literature provided by the Madison Water Utility, Madison Planning Department Building Inspection (Plumbing Section), Wisconsin Department of Commerce Plumbing Regulation, Wisconsin Department of Natural Resources Water Supply program, Wisconsin Department of Health and Social Services lead paint removal program, plumbers doing lead pipe replacement in Madison and neighbors who have had lead pipe replaced in their homes.

We believe the replacement of the lead pipes is ultimately in the best interest of the citizens of the city, especially our young. However, as the water utility staff have said at public meeting and, to our knowledge, every credible news and science report on this matter indicates this is not an eminent public health crisis. The water utility has at least ten years to address this issue and prudent planning could provide several cost effective and equitable means of minimizing the burden on homeowners and water utility customers.

We have crafted the following recommendations with the intent of keeping overall costs down and encourage the Mayor, city staff, Common Council and Water Utility to consider and implement the following.

1. Recommend reimbursement rates of 100% for all homeowners. Reimbursements for lead pipe replacement to non-profits facilities, such as community centers, are encouraged too. If the ordinance passes with a reimbursement rate less than 100%, a reimbursement rate of 100% should be considered for cases where significant hardship may be involved, e.g., seniors on fixed incomes.

The only other alternative (i.e., orthophosphate treatment) proposed does not appear to be financially prudent because of the need for continual treatment. The cost of this option would be borne by all water utility users. In the long run, lead pipe removal is the least expensive option for all parties and reimbursement appears justified.

2. Recommend low or no cost city loans are made available to qualifying low income homeowners. If current city loan programs need to be modified we encourage appropriate changes be made.

3. Recommend staff re-evaluate the street replacement and repair programs to focus on areas of the city where significant numbers of lead pipe replacements are likely to occur. This may help reduce the cost for both activities.

4. Recommend replacement activities be coordinated so homeowners/utility customers pay the lowest possible cost associated with lead pipe replacement. This approach would reduce replacement costs for homeowners as well as reimbursement expenses for water utility customers. For example, bidding could be done on a block by block basis to obtain competitive group rates. If city/utility staff cannot undertake this coordination activity perhaps neighborhood associations, community centers or other entities could act in this matter. The water utility could aid this effort by providing information needed to get truly competitive bids (e.g., lists of available contractors/plumbers, technological changes in pipe replacement techniques and bidding specifications). It is imperative water utility staff clearly and openly communicate with the affected parties on a timely basis to make this an effective effort.

5. Recommend individual homeowners not be required to replace lead pipes at the sale of their home. Why? Plain dollars and sense. Let's assume a 100% reimbursement rate has been put into effect. Currently, individual home lead pipe replacement costs average approximately $1,900. A recent group rate replacement during street reconstruction in our neighborhood resulted in costs as low as $1,200 per home. The $700 difference is a substantial savings for both homeowner and the water utility. This could result in millions of dollars of extra cost to the homeowners and water utility if the most cost-effective approach is not selected.

6. Recommend reimbursement rates apply, as currently proposed, to lead pipe replacements occurring from 1992 to the present. A number of our neighbors recently replaced their lead pipes in anticipation of this current ordinance debate. It would be unfair to not reimburse them for their investment.

7. Recommend US Senators Feingold and Kohl and the US Representative Baldwin are contacted to encourage regulatory flexibility and seek federal dollars to aid in any cost sharing or loan programs. A similar pitch should be made to state legislators.

8. The Department of Natural Resources Water Supply program supervisor and Secretary George Meyer should be contacted and strongly encouraged to provide flexible regulatory oversight on this issue. The Department of Natural Resources has invested millions of dollars to study and improve water quality in the Madison chain of lakes. The potentially adverse effects of added phosphorus loadings to our lakes from the orthophosphate option ought to offer the Department plenty of incentive to be flexible on the lead pipe removal approach.

The financial implications of the reimbursement options need to be carefully considered. Homeowners with lead pipes will be paying the replacement cost minus any reimbursement payments. However, they will also be paying the rate base increase required for the reimbursement schedule chosen. Two examples make this point:

A. Under the currently proposed ordinance with a 50% reimbursement rate and an assumed efficient group rate charge of $1,200; the homeowner would pay $600 plus $200(~$10 every six months over the ten year program on their water bill). This results in a total cost of $800 and an effective reimbursement rate of 33%.

B. If the reimbursement rate were 100% and we assume a group rate charge of $1,200; the homeowner would pay $400(~$20 every six months over the ten year program on their water bill). This results in an effective reimbursement rate of 66%.

The effective reimbursement rate is even less for homeowners with replacement costs in excess of $2,000 because of the currently proposed $1,000 maximum cost share. In all these scenarios, it is obvious the replacement costs per household is a critical factor. It is vital that this cost be kept to the absolute minimum.

We are also concerned about the effects of this ordinance on home values in affected areas. We believe there will be a loss in value which should be reflected in housing assessments. We have contacted the Assessor's office (Jeff Haemann) to enquire and we intend to review their intentions in this regard.

If we can be of further assistance in this matter please feel free to contact our association.