Birmingham Water Works

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The Birmingham Water Works is a public utility supplying drinking water to 750,000 customers in Birmingham, most of Jefferson County and parts of four other counties. The system, established in 1951, delivers 100 million gallons of water per day over 3,858 miles of main pipes. It has been recognized as one of the top five water systems in the United States and rates consistently high in water quality.

History

Elyton Land Company

The city's first water reservoirs, pump stations and distribution systems were constructed and maintained by the Elyton Land Company. In 1888 the city signed a 30-year contract with the American Waterworks and Guaranty Company of Pittsburgh, Pennsylvania to maintain and operate the municipal water system, with individual users paying a relatively high fixed fee. Over time complaints about the fee and quality of the system arose. In 1900 Mayor Mel Drennen called for ending the contract and putting the system under public control. He had the support of the Birmingham Board of Aldermen and the Birmingham Board of Trade, but was opposed by the Birmingham News and the Commercial Club of Birmingham.

By 1903, however, the Commercial Club changed its position, claiming that the slow expansion of water service was to blame for failed recruitment of new industrial plants. A joint committee of the Commercial Club and Board of Trade recommended that both Birmingham and Jefferson County should pursue public water utilities. In January 1907 a newly-formed Birmingham Municipal Ownership League promoted a public referendum for a $3 million bond issue to purchase or construct the necessary plants and infrastructure. Voters were promised lower rates and a petition with more than 750 signatures was delivered to the Birmingham Board of Aldermen. At this time, though, the board declined to pursue the matter. A new committee began approaching members of the Alabama State Legislature to lobby for a bill allowing the city to operate both a water system and an electrical utility. The News publicized the benefits that came to other cities that had shed their private water contracts and labor groups applied additional pressure at City Hall. Negotiations with the American Waterworks and Guaranty Company began in 1912, but after a series of threats, the only result was a new 25-year contract with lowered rates, which was overwhelmingly voted down in a public referendum. The Board of Aldermen passed a resolution attempting to set its own rates, but the company ignored the move and filed a federal suit. The Municipal Ownership League joined with the Birmingham City Attorney to prepare a series of countersuits, even encouraging individual customers to take legal action. A Water Consumers Protective Association was formed to organize public opposition. Various suits proceeded in the courts, resulting in a settled agreement by which rates would be lowered and a joint appraisal committee would determine a fair purchase price for the system. Subsequent disagreement arose about whether to pay the asking price or use bond money to construct a new system from scratch.

Public Corporation

The City of Birmingham purchased the water system in 1951 and established an independent Waterworks and Sewer Board of the City of Birmingham to govern its operation. Ownership of the system's assets were then transferred to that board.

From the 1950s until 2017 the Water Works also collected payments for sewer fees under contract to the Jefferson County Sewer System. In December 1986 ownership and operation of the sewer system was turned over to Jefferson County.

Birmingham Water Works acquired the water system developed by the city of Moody in St Clair County in 1992.

In 1997 a legal complaint filed by John Rockett and others, alleging that the Water Works Board misused public funds, reached the Alabama State Supreme Court, but it was dismissed.

Bell Plan

In 1998 Mayor Richard Arrington and the Birmingham City Council developed a plan to sell the assets of the Birmingham Water Works to private investors in order to generate a capital improvements fund to benefit Birmingham City Schools. To further that plan, the Water Works Board voted on September 2 of that year to transfer its assets to the City for $1. Despite a $2 million public relations campaign headed by Edmond Watters of Strada Professional Services, voters rejected the proposed plan in a November 1998 Birmingham Water Works referendum.

After the referendum, Council president William Bell introduced another proposal, dubbed the "Bell Plan" to borrow against the Water Works assets in a $200 million bond issue to fund school construction. As part of the deal, the city borrowed $185 million to retire the water system's debts, with that loan secured by future water revenues. Donald Watkins, then with the Chapman Company of Baltimore, Maryland, and Porter, White & Co. were commissioned to structure those deals.

Despite serving as interim mayor and running as the incumbent, Bell lost the 1999 Birmingham mayoral election to challenger Bernard Kincaid, partly on the perception that Bell's financial schemes were corrupt. Kincaid proposed operating the Water Works as a city department, but the City Council did not approve the proposal. Instead the Council negotiated for the Water Works to buy back its assets for $471 million ($275 in assumption of debts, and $196 million in cash). The sale was approved by the council in July 2000, over Kincaid's veto.

In an attempt to scuttle the sale, Kincaid filed a lawsuit claiming that when the Water Works' debts had been assumed by the city, that the independent board no longer met the legal requirements to continue. Then Attorney General of Alabama Bill Pryor acted as defendant in the suit on the basis of representing the public interest, and also filed countersuits against the mayor and City Council. Those suits were settled in an agreement dated January 29, 2001 under which the Water Works agreed to formally protect its landholdings under a permanent conservation easement. It also clarified that the Birmingham Water Works Board was entirely independent of the city's government and not under the authority of the Alabama Public Service Commission, but that the State, through the Attorney General's office, could take enforcement actions on behalf of ratepayers for a 50-year period.

The City of Birmingham and Birmingham Water Works Board signed an "Acquisition Agreement" on February 23, 2001.

Public Authority

The Birmingham Water Works began operating under an independent board in 2001, and since that time water service rates have doubled. The growing reputation for misuse of funds and the awarding of non-competitive contracts led to efforts in the Alabama State Legislature to "reform" the board in 2016. Representative Paul DeMarco and State Senator Jabo Waggoner sponsored controversial legislation, which was debated at length before a compromise version was passed and signed by Governor Robert Bentley in May 2016. The Board filed a legal action in opposition to the law, but that suit was dismissed by Judge Robert Vance Jr.

In 2002, 2006, and 2022 former meter reader Fred Randall led petition drives to force the Birmingham City Council to either take over the Water Works, or put the matter up to a public referendum. Each of those efforts was opposed by BWWB attorneys, and each was dismissed by Jefferson County Circuit Court judges as proposing ordinances incompatible with the Council's powers.

Until 2009 the Water Works owned 3,200 acres of undeveloped property bordering the Locust Fork River in anticipation of constructing another reservoir. The board eventually determined that the project was not feasible, declared the land to be "surplus", and sold it for $4.5 million to Jeffrey Palmer. Palmer made a $500,000 donation to the H2O Foundation and agreed to accept contract stipulations preventing clear-cutting, coal-mining, landfills and hazardous waste storage. He agreed to maintain a 50-foot buffer around all tributaries on the land, and also indicated he would create a conservation easement on the land abutting the river. Despite those protection, the Cahaba River Society and Cahaba Riverkeeper have argued that the sale violated the utility's 2001 consent decree.

On February 12, 2009 the board approved a $329 million expansion plan to cover capital projects over the next 12-15 years. The plan called for a new pump station on the Black Warrior River, about three miles south of Bankhead Lock and Dam, and two pipelines, adding 60 million gallons per day to the system's capacity. The expansion was proposed to accommodate projected demand through 2075. At the same time, the system began a switch-over to SAP enterprise application software, the implementation of which cost more than $10 million and was still causing major problems when it was applied to customer billing in 2017.

In 2010 the Board hired Raftelis Financial Consultants to report on the feasibility of the system acquiring the Jefferson County Sewer System out of a possible bankruptcy. The report recommended against the purchase, concluding that rates would have to be increased too much to be worthwhile. Four years later it asked Raftelis to evaluate a proposal to sell off the Moody water system.

In 2011 the utility approved the first of several bids to replace aging water mains throughout its service area. In 2021 the utility was awarded a $147 million low-interest loans from the U.S. Environmental Protection Agency's Water Infrastructure Finance and Innovation Act (WIFIA) program. The loans are expected to fund rehabilitation projects at the Lake Purdy Dam and to repair and replace storage tanks and water mains. The Birmingham Water Works was awarded $43.5 million from the 2021 American Rescue Plan Act and the 2022 Bipartisan Infrastructure Law through the Alabama Department of Environmental Management to replace lead pipes in its water distribution system.

By 2019 the utility was carrying $957 million in public debt, despite having raised water usage rates every year since 2012. That same year, board member Sherry Lewis was convicted at trial of violating the 2010 Alabama Ethics Law.

2021 lawsuit

On March 8, 2021 the Cahaba River Society and Cahaba Riverkeeper jointly filed a civil suit in Jefferson County Circuit Court seeking a ruling that the utility had failed to establish the conservation easement required by the 2001 settlement agreement.

Attorney General Steve Marshall filed a motion to intervene, claiming that his office, not the courts, had sole authority to enforce the terms of the 2001 settlement for the benefit of ratepayers, and that his office was satisfied with the utility's compliance. That motion was granted by the Circuit Court on June 2, after which the plaintiffs appealed. The Alabama Supreme Court overturned the circuit court's ruling on February 25, 2022, finding that while the Attorney General's office did have a contractual right to enforce the terms of the 2001 agreement, that it was not an exclusive right.

The suit was returned to the Circuit Court, where the parties agreed to a new settlement agreement strengthening the Water Works' duty to protect 7,000 acres surrounding Lake Purdy, the Cahaba River and the Little Cahaba River from development through the establishment of 75-year "watershed protective covenants".

Billing controversies

In December 2021 three employees of the billing department were fired with an allegation of falsifying documents. One of them subsequently told a news reporter that managers had instructed them to change billing dates and that they had reported the issue before being terminated. That claim was supported by copies of emails obtained by WBRC-TV.

In August 2022 the Water Works Board contracted with Underwood Financial Consultants, headed by former general manager Mac Underwood, to help it resolve problems with consumer billing which had been occurring since January and affecting around 6.5% of customers. A shortage of meter readers had led to many customers not receiving bills and later being billed for longer service periods at estimated rates of usage that were far higher than actual usage.

Later that month a pattern of improper purchasing agreements was uncovered. The purchasing manager and two other employees in the purchasing department tendered their resignations together on August 24.

2022 AFFF suits

In November 2022 the Water Works filed a civil lawsuit against several manufacturers of Aqueous Film-Forming Foam (AFFF) in the U.S. District Court for the District of South Carolina, alleging that per- and polyfluoroalkyl substances (PFAs) in those products, used in firefighting, introduced toxic substances into drinking water sources, requiring extra expense to mitigate. The board voted to drop the suit in March 2023. The City of Birmingham had already filed a similar suit, regarding AFFF used at Birmingham-Shuttlesworth International Airport, in 2021.

Leadership

Board

The Birmingham Water Works Board consists of nine members, who can serve no more than two four-year terms. Six of the members are appointed by the Birmingham City Council, one by the Jefferson County Mayor's Association, one by the Shelby County Commission and one by the Blount County Commission.

From the time the independent board was created in 2001 until it was modified by the Alabama State Legislature in 2016, the board had five members which were appointed to staggered six-year terms by the Birmingham City Council.

General managers

Facilities

Current

Former

References

External link