December 4, 2003
VIA FACSIMILE AND CERTIFIED MAIL
RETURN RECEIPT REQUESTED
Chief, Water Programs Enforcement Branch
Water Management Division
U.S. Environmental Protection Agency, Region 4
Atlanta Federal Center
61 Forsyth Street, S.W.
Atlanta, Georgia 30303
ATTN: Douglas Mundrick
Georgia Environmental Protection Division
Permitting, Compliance, and Enforcement Program
4220 International Parkway, Suite 101
Atlanta, Georgia 30354
ATTN: Marzieh Shahbazaz
Subject: Notice of Delay to EPA and EPD
Consent Decree - City of Atlanta
First Amended Consent Decree - City of Atlanta
Civil Action File No. 1:98-CV-1956-TWT
As required under Section XII, Force Majeure (C), of the Consent Decree (CD) and First Amended Consent Decree (FACD), the City of Atlanta submits this notice of events arising from actions by the Atlanta City Council on December 1, 2003 that will delay or prevent the performance of its obligations under the CD and FACD, despite the City’s best efforts to fulfill these obligations. As required, this notice is submitted within fifteen (15) days after the City has learned or should have learned of the delay or anticipated delay. The potential delays are both capital and compliance in origin. This letter sets forth precipitating events for potential delays, the nature of the delays and the proposed plan of action to cure the delays.
On Monday, December 1, 2003, the Atlanta City Council approved a water and sewer rate increase ordinance and a Department of Watershed Management (DWM) budget ordinance. These ordinances differed significantly from the proposed rate increase and budget requests put forward by the City’s administration as a component part of meeting the terms and conditions of the Consent Decrees. Specifically, the approved rate increase ordinance, 03-O-1713, substantially diminished the effective rate increase sought of 45% for FY 2004 by providing an “affordability base rate” exemption of six hundred cubic feet per month for all customers at the current rate. In addition, the budget ordinance cut $25 million from the DWM operations budget for 2004.
One immediate consequence of the ordinances passed by City Council is the inability of the City to issue new bonds in 2004. The six hundred cubic feet rate structure as passed by the Council undermines the financial strength and stability of the water and wastewater fund. Specifically, it results in a revenue loss of $25 million in the first year which compounds to over $75 million by the fifth year and also results in a declining debt coverage ratio. Consequently, this rate structure does not provide for a solid five year financial plan or revenue stream that can adequately demonstrate to Wall Street that the City can support any future borrowing. Absent the necessary revenue generated by issuance of new bonds, the City will be unable to meet the capital needs anticipated for the coming fiscal year. Therefore, under the current capital projects schedule, the City will not be able to initiate new consent decree projects beginning in July 2004.
In addition to failing to meet this calendar, there is a more immediate compliance impact. The lack of funding will require the City of Atlanta to prioritize its capital projects with an emphasis on the provision of basic drinking water and sewer service and the protection of public health over consent decree compliance. The effect will be that we will not initiate consent decree compliance projects that were scheduled as early as January 2004.
A specific failure is the West Area Tunnel project. Set forth below is the proposed schedule for West Area Tunnel completion:
|
Activity |
Date |
Float |
CD Milestone |
|
Complete Design |
Jan. 2, 2004 |
0 |
Jan. 2, 2004 |
|
BOP Advertises Contr. |
Jan. 2, 2004 |
37 |
None |
|
DOP Receives Bids |
Mar. 17, 2004 |
0 |
None |
|
Contractor NTP |
Jul 12, 2004 |
21 |
Jul. 12, 2004 |
|
Substantial Completion |
Nov. 7, 2004 |
4 |
Nov. 7, 2004 |
However, given the City Council’s actions, we will be unable to meet this schedule. The City would have started the bid process, which would have included the advertisement and the release of bid plans, on January 2, 2004. This schedule would have provided 62 days of float through the final construction deadline. Due to the revenue constraints to completing this project, the City will be unable to even advertise the project or to go forward with the Tunnel project in any meaningful form.
A third major area of potential delay, also precipitated by the City Council’s approved rate increase, is that the revenue stream will not provide adequate financial resources for the Renewal & Extension Fund. This means that the $30 million worth of smaller capital repair and system improvement projects will not be performed as required.
The fourth major area of potential delay is precipitated by the budget ordinance. The financial analysis conducted by DWM of the approved budget indicates that the budget will not provide the funding necessary to meet the compliance, capital project and operational requirements under the two Consent Decrees. The City Council’s approved budget ordinance reduces the Department of Watershed Management’s budget by $25 million for 2004. The effects of this budget reduction include the fact that the City will not be able to adequately fund the required management, operation and maintenance systems as required under the Consent Decrees. In addition, we will not be able to fund the management system improvements that we have recently committed to in our Indian Creek report and presentation. The conditions that led to the construction failure at Indian Creek, including inadequate funding and delays in project initiation, will not be corrected but will be further exacerbated under the City Council’s approved ordinances.
Absent action by the City Council to approve adequate funding and to rescind substantial cuts to the DWM operational budget, the City cannot in good faith offer a plan of proposed compliance.
Thank you for your consideration of this notification. If you require additional information, please let us know or call me at (404) 330-6522.
Sincerely,
Jack Ravan
Commissioner of Watershed Management
City of Atlanta
cc:
|
Chief, Environmental Enforcement Section
Environmental and Natural Resource Division
U.S. Department of Justice
1425 New York Avenue, Room 13065
Washington, D.C. 20530
Ref: DOJ Case No. 90-5-1-1-4195 |
United States Attorney
Northern District of Georgia
Richard Russell Building
75 Spring Street S.W.
Suite 1800
Atlanta, Georgia 30335 |
|
Linda K. DiSantis
Department of Law
City of Atlanta
68 Mitchell Street S.W.
Suite 4100
Atlanta, Georgia 30303 |
David. H. Pope, Esq.
1355 Peachtree Street, NE
Suite 2000
Atlanta, Georgia 30309 |
John E. Hennelly
Assistant Attorney General
State of Georgia
Department of Law
40 Capitol Square, SW
Atlanta, Georgia 30334-1300
City Team:
Shirley Franklin, Mayor
Lynnette Young, Chief Operating Officer
Greg Pridgeon, Chief of Staff
Linda DiSantis, City Attorney
Robert Hunter, Deputy Commissioner of Watershed Management
Sally Mills, Chief Environmental Officer
Joseph Basista/PMT MWH/Khafra Joint Venture
Stacey Abrams, Deputy City Attorney
Pilar Penn, Assistant City Attorney
Repository (Attn: Marilyn Johnson)
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