Tom Martin Q&A: Sewer plan to bring big changes in city development

Special to the Herald-LeaderNovember 3, 2013 

  • Tom Martin's Q&A

    Tom Martin's Q&A appears every two weeks in the Herald-Leader's Business Monday section. This is an edited version of the interview. To listen to the interview, find the podcast on Kentucky.com. The interview also will air on WEKU-88.9 FM on Mondays at 7:35 a.m. during Morning Edition and at 5:45 p.m. during All Things Considered.

For many years, generations actually, Lexington’s sanitary and storm water sewer systems were so improperly maintained that when it rains hard — as it can from time to time — our sewage flows directly into our streams. And in all too many instances, our homes.

These episodes are known as “Sanitary Sewer Overflows” or SSO’s. And they are illegal under the federal Clean Water Act. This violation was the basis of a 2006 lawsuit filed against Lexington by the Environmental Protection Agency and the Commonwealth of Kentucky. The lawsuit was settled when the city entered into a Consent Decree in 2011, giving Lexington 10 years to untangle its sewage systems and bring them into compliance. The agreement requires the city to establish a Capacity Assurance Program. A seven-member “CAP Task Force” heard the concerns and ideas of elected and city government officials as well as a variety of stakeholders including Commerce Lexington, Fayette County Public Schools, the University of Kentucky and Transylvania, home builders, developers, the Fayette Alliance and neighborhood associations.

The task force met on 11 occasions in 2012 and produced 19 recommendations for how the CAP program should work and be managed. The city was required to submit this plan to the EPA in early January of this year and it now awaits EPA approval. Once the plan receives the agency’s blessing, the city will then have 30-days to begin implementation.

That work, however, has already begun, overseen by Charles Martin, Director of the city’s Division of Water Quality. He shared the details of the CAP program in an interview with Tom Martin.

Tom Martin: What is the Capacity Assurance Program?

Charles Martin: Essentially, the Consent Decree requires us to demonstrate that there is capacity in the sanitary sewer system before we allow new connections to the system, which is something we haven’t done in the past. With this new CAP program, if we can’t demonstrate that we have capacity then we have to make repairs in order to allow those new connections to happen. The premise is, if you’re going to connect new stuff you have to it make it better than it was before that connection was made.

TM: Remedial Measures Plans were developed for each of the city’s seven Urban Watersheds. What are those and are they awaiting EPA approval?

CM: They are waiting for approval, as well. And it’s the list of capital projects that are intended to make sanitary sewer overflows (SSO’s) essentially less frequent or less pervasive than they are today.

TM: And how many of them are there?

CM: In the Consent Decree it lists 111 recurring sanitary sewer overflows which means that they typically happened more than once in a 12-month rolling period.

TM: And so these are defects, flaws in the system, that kind of thing?

CM: Mostly they are capacity related - when there’s too much rain water getting into the sanitary sewer system - it should not be there, it should be in the storm sewer system - and when it rains the system gets backed up much like a roadway gets backed up after a basketball game lets out. And instead of getting backed up at a traffic light it overflows out of a manhole or a pump station.

TM: This Capacity Assurance Program revolves around a credit banking system. What is the credit bank?

CM: Credit banks are geographic locations within the Urban Service Area that are drawn around where these recurring SSO’s occur. And basically it is in some of those banks that we would be able to have enough capacity to allow somebody to connect without a credit. In other cases where we’ve got a negative capacity balance, there you need credits, which are in gallons-per-day, in order to move forward with the connection that you want to have.

TM: People are going to begin to see fairly soon that you have come up with a way to build into the system quite a few credits; I’m referring to storage tanks that will begin appearing around the county. Can you tell us more about those?

CM: Yeah, one of the biggest bank deficits that we have is at both treatment plants so that really makes us unable to certify capacity anywhere right now. So we’ve focused very early on resolving the negative balances associated with our two treatment plants. There is a project that is to begin in the middle of next year that would construct over 20 million gallons of offline storage at the town branch plant off of Old Frankfort Pike. That 20 million gallons then would be available for development in that credit bank, including the downtown area in order for them to be able to get approval for connection and to be able to continue their projects without concern about CAP. A similar type of project is about a year behind that at West Hickman.

TM: And does a gallon count as a credit unit?

CM: It depends on the circumstance. Storage has a 1 to 1 credit ratio except in West Hickman. The credits vary depending on the type of corrective action you make and also geographically where it is. Because some areas of town are much, much worse than others and EPA set it up so you’d have to do more in those worse areas.

TM: Why West Hickman?

CM: Of those 111 recurring sanitary sewer overflows I mentioned, I would say nearly 60 to 70 percent are in the West Hickman drainage area.

TM: And where is that?

CM: That is roughly starting from the New Southland Christian campus moving across Alumni Drive into the Gainesway area and ultimately down to Veterans Park.

TM: What is the Credit Harvest Date?

CM: The Consent Decree, when we signed it in 2008, was rejected by the federal judge. So there was a long appeal process. During that time we made repairs to the sanitary sewer system and we wanted to make sure that we got full credit for everything that we had done between the time of signing it and the time that the judge actually signed it, which was nearly three years. So EPA agreed to allow us to have a Credit Harvest Date that dated all the way back to 2008. And that was a change in the way the Consent Decree was written because we wouldn’t have gotten those credits if we had followed the Consent Decree.

TM: Mr. Developer or Mr. Builder is coming to you and wants to engage in building a property. Will a fee or a deposit be required for a capacity request of reviews?

CM: In most cases newly developed projects that are just coming through the planning process will be required to pay a fee. There is a $450.00 administrative review fee for the application, basically because we are outsourcing a lot of that work. Many of the plans that were grandfathered, ones that were already in process that maybe hadn’t built out all the way, the ordinance and the task force has decided not to impose a fee on them since they had already really been through the process. But by and large, yes. There will be fees associated with this, not only for the application but also for the privilege to reserve capacity, moving forward.

TM: When you’re asked to make a capacity determination, do you have only so many days or weeks to get that done?

CM: Yes, the ordinance says that we will have 10 days to at least provide some type of response and 10 days following that. Right now we’re getting responses back to people in two or three days. Our goal is to exceed that. But the ordinance does have a specific provision for that.

TM: As this comes on line do you anticipate that there’s going to be a waiting list?

CM: There’s the possibility of one. We don’t have one yet and I’m not looking forward to it. There is some strong potential given that the economy seems to be turning around.

TM: What about the longevity of these credits, reserve credits, tap-on permits? Will they expire at some point?

CM: Once you have received a permanent allocation that you get as part of your development plan approval, they are yours forever; they stay with that property. To remove those, even if your project may not have gone through, would be considered a partial taking of the value of that property and so it needs to stay with the property.

TM: Can you transfer them? Can you sell them?

CM: No, the task force recommended not creating a third party market for this and largely it’s because it’s very hard for us to track where they are.

TM: What is the “Developer Earned Credit Program?”

CM: That’s a program we are still working on right now but what it basically allows is a developer who potentially ends up on the wait list, if they want to move ahead and not be subject to the wait list, then it gives them a mechanism to go out and generate capacity credits on their own, based on their investment and they own them. They don’t share them with anybody so they can use them for their project.

TM: How do they earn those credits?

CM: Well, a variety of different ways and it’s one of the things that we are trying to put together: a guidance document that tells people how they can do that. But for example, they could go out and repair sections of sanitary sewers under our direction and then they get credits for that. You can get credits for a lot of different things whether it be a storage tank or plugging a leaking manhole. They all have different values, but any corrective action that you make that eliminates some of the water that is getting into the system has a gallon per day credit value to it.

TM: No doubt there are going to be disputes over capacity determinations. How do you plan to work those out?

CM: Well, the ordinance is specific on what the appeal process would be and that they would make their appeal to the Commissioner of Environmental Quality & Public Works and of course they also have due process of law, if necessary.

TM: Are any categories or classes of facilities excluded from CAP?

CM: Well, they’re not necessarily excluded from CAP - everybody is included in CAP - but some things are considered to be essential services, public schools, health care facilities and public safety facilities, are specifically identified in the Consent Decree and I think that EPA recognizes that those things are essential fabrics of a community and that they should be able to move forward on the merits of their need. From the CAP’s standpoint because they get a green light they are good to go but I still have to be able to deduct that additional flow from that CAP bank. So they have an impact to the CAP and the fact is that they might create a negative situation where somebody is having a need come moving forward.

TM: Will the ordinance that we have on the books now and the land development processes we have at LFUCG support CAP implementation? Or do you think that there are going to have to be some changes?

CM: I believe that they support them right now. There is a provision of the zoning ordinance that basically says that you can’t move forward and have a development plan certified unless you have demonstrated that you’ve satisfied the CAP provisions. Likewise for projects that don’t go through the development plan process there’s the stopper at the building permit desk. You can’t get a building permit without a tap-on first. And that was important for us because we didn’t want people investing money in a building permit and in construction to find out they couldn’t get sewer service. An aftermath though for the building community is that this was completely opposite from how they have done it in the past and so we’ve had to do a lot of education with builders and such to say that is different than it was before. I don’t see any changes in it as much as I see we’re going to have to continue to educate and work with the stakeholders to get them adjusted to the new way we are doing it.

TM: For the home builder, how many credits will be needed to build a house?

CM: For a new house it’s not so much credits as a value. Under the CAP, the value of a residential single family home is 192 gallons per day. If you wanted to build a house it depends again on that geographic region, but you may have to recover as much as 600 gallons a day of flow to allow that single house to go into place because it’s all about ratios. In some cases that you to have reclaim 4 gallons for every gallon that you add and that can be very conservative. But I want to make a point here: if you have an existing home and you tear your house down, you still have sewer capacity. There is a thing called a Use of Record and that was a big thing folks were worried about - ‘if my house burns down, do I lose my sewer capacity?’ No, you still have that as a privilege of that particular parcel.

TM: Are there different rules for urban infill versus suburban development?

CM: No, there are not. The CAP has no concept of infill versus suburban development. It’s all about whether or not there is capacity within the system and it varies again within the system depending on the severity of it. Someone had mentioned to me, ‘well maybe we need to expand the Urban Service Boundary and be able to avoid this CAP situation.’ It doesn’t matter. Because if they want public sewage that means it has to go to one of the two treatment plans and both of them have negative CAP balances right now.

TM: You’ve been waiting for EPA approval for about 9 months, been quite some time now. Correct?

CM: Yeah, on the Remedial Measures Plan we’ve been awaiting even longer than that. Sometimes because they have a lot of other things going on they are not necessarily prompt on their approvals. And I’m okay with that. We’ve been implementing things in a way it’s kind of nice, you’re playing without the clock and it’s nice to win the game when the clocks not running.

TM: So you’re going forward with some of this remedial work anyway? We are actually seeing some of that now.

CM: Yes, yes you are. And you’re about ready to see more of it here in the very near future.

TM: As this planning was coming about by the Task Force and by all these stakeholders at the table was economic impact discussed? Was it taken into account?

CM: Yeah. I think there was a lot of concern about that because obviously recovering from the great recession, there’s a lot of concern that this doesn’t become an impediment of that. Unfortunately, CAP is driven by eliminating these un-permitted violations of federal law, as you pointed out. But I think even EPA recognized that even though they legally probably had the authority to put us on a moratorium, they chose not to. Instead, they recommended this CAP program that allows us to still do business, but make it better than it was before, while doing business. It’s the challenges of implementing that in a challenging environment and especially trying to do it quickly because everyone’s been sitting on projects for an extended period of time because of the economic conditions. Everybody’s really ripe to go and that’s challenging for us.

TM: What’s your best guess on how long it will take to complete all this work, and the big question is how much will it all cost in the end?

CM: I think to complete the sanitary obligations under the Consent Decree that we’re looking at another 10 years to be able to do that. How much it’s going to cost? The original estimates for the Remedial Measures Plan alone, which is the large capital, was nearly $600 million. We’re looking at every possible way to deliver the exact same product for considerably less than that. Mayor Gray’s made it clear to us is that is his goal and his intention and he’s helped us in a lot of ways in being able to accomplish that. One thing that folks need to understand though is that after we make whatever investment we make in our sewer system, it does not mean we will never have sanitary sewer overflows again. No city I’ve ever dealt with, and I’ve been in this business 30 years, has ever been able to get all the water out of their system. So if you have a severe enough rainstorm you’re still going to have overflows. But the cost associated with potential fines during those less frequent overflows is a fraction of the cost that it would be to make this system larger than what we’re recommending right now. I’ll give you an example: for 3.2” of rain we had a cost estimate of $600 million. For another ½” of rain protection it was $900 million. It increases exponentially and it just didn’t make sense for this community to invest that kind of money for another ½” of rain.

TM: Where is all that money going to come from?

CM: Sewer user fees. By and large, those of us who live in Fayette County and pay sewer user fees through LexServ are going to bear the burden of it. We’ve been able to mix some grants into that although the grant thing from the federal level is not as productive as it once was. We’re also utilizing some low interest loans that have come through EPA. But ultimately the rate payers are going to bear the burden.

TM: Just to be clear, we are paying sewer use fees now, so should we anticipate that they are going to be going up?

CM: I think that it’s inevitable that they will. We’re working really hard to make the revenue that we have available to us right now, stretch as far as we can. We had two successive rate increases in 2009 and in 2010 and they were to last us until 2012. And here we are in the latter part of 2013 and we’re not contemplating a rate increase in the near future.

TM: We’re in this situation because of many, many, many years of neglect. There is really no other way to put it. Kicking the can down the road. Lexington is certainly not alone in that regard. Many, many cities have done that. How far into the future is it reasonable to expect that these repairs and these new procedures will keep us legal and clean or do you anticipate that this is going to be a matter of just ongoing vigilance and adjustment?

CM: From a CAP perspective the two year/24 hour storm which is that 3.2” of rain is the governing thing, so we’re building a system that is designed to handle that design storm at full development, current Urban Service Area, 2035. So we tried to project out as far as we could and not after we spent all this money then have other CAP issues. Keeping us clean and in compliance is all relative. Environmental laws change so frequently it’s hard to say but I expect that when I am finishing my career we will be finishing this Consent Decree and not be under federal order about how we go ahead and conduct our business in Fayette county. That’s my goal.

TM: And we’re seeing the onset of pretty consistent extraordinary weather events these days for whatever reason they are happening, they are happening more frequently and they are I would argue, more powerful than usual. That must make it difficult to anticipate remaining within that 3.2 inches.

CM: Yeah, you are right because I feel the same way as you do. It just seems like it rains harder and more frequently with that high level of intensity than it did when we were kids. Yeah, it is presenting some challenges. I met with the deputy administrator for US-EPA. And we talked about how we’re merging our storm water and sanitary sewer programs together, something we did a few years ago and that’s important because they are so interlinked. All of these wet weather problems with the sanitary are just that: it’s wet weather. It has to do with how we convey storm water and how we go about conveying it when it just runs down the street or puddles up on the corner, those two things go hand in hand. And so we’re working towards that, but it’s going to be difficult.

TM:There are so many more details to this very complex new program and to those who are reading this or listening to it, you can learn more online at Lexingtonky.gov and then search on Division of Water Quality, I believe, is that correct?

CM: That is correct.

Lexington Herald-Leader is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere in the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

Commenting FAQs | Terms of Service