Home News and Features City’s 50-Year Pipe Replacement Cost Likely to Exceed $166.4M Estimate 

City’s 50-Year Pipe Replacement Cost Likely to Exceed $166.4M Estimate 

Montpelier's wastewater treatment facility. Photo by John Lazenby.
Montpelier has a 50-year plan to replace its aging water and sewer pipes, with most of the activity beginning in 2040 and beyond, according to a June 3, 2021, city memo about the plan. The estimated cost of the pipe replacement, according to the memo, is $83.2 million for water pipes and $83.2 million for sewer lines. These figures were based on an inflation rate of 1.7%, far below current inflation rates, meaning the costs would be higher if estimated today.

However, the city’s plan for replacing water and sewer lines will likely be altered soon to incorporate the recommendations of a nearly completed hydraulic study of the Montpelier water system by consulting engineering firm Dufresne Group of Barre. The study is being conducted as part of the city’s application to renew a state permit to operate its drinking water system. At press time, a draft version of the study was being reviewed by city and state officials but was not publicly available. 

However, Montpelier City Manager Bill Fraser said the city feels “pretty good” about the draft study. “It will lay out a couple of things to do to address pressure, but does not involve pressure reducers and expensive pumps around town,” he said. “It will highlight the highest priority lines to work on.”

Public interest in the 50-year plan has been heightened after revelations that water mains in Montpelier are breaking every other week, on average, and that pressure in the water system is well above state standards. The issue came to the forefront after high pressure caused pipes inside the Baird Street apartments to fail last August, leaving residents without water for days.

Under Pressure to Reduce the Pressure

The high pressure and frequent water main breaks have also been causing pressure-reducing valves in homes and commercial buildings to fail prematurely, according to local plumbers, and valve failures have in some cases led to damaged appliances such as hot water heaters and toilets. The city does not reimburse property owners for these expenses.

Montpelier Public Works Department Director Kurt Motyka explained that the Dufresne study will “provide alternatives to reduce the frequency of water breaks and recommend one of the alternatives for moving forward. If the state approves the recommendation, the city has 60 days to develop a schedule for implementing the recommended alternative. Then the state will have to approve that as part of our permit to operate.”

“There is no easy answer,” Motyka said. “There is no alternative that is cheap or easy to implement.” Due to public interest in the subject, he said he will post the hydraulic study online when it is completed.

The 50-Year Plan

The current 50-year plan was first developed in 2016, and an updated version was outlined in a June 3, 2021, memo by then-Finance Director and now Assistant City Manager Kelly Murphy. The plan calls for $14.8 million in water pipeline improvements from Fiscal Year (FY) 2021 to FY2047, with another $54.3 million in improvements in the FY42-to-FY72 period, plus $13.3 million in in-house work of 450 feet per year by DPW over 50 years.

Replacing sewer lines under the 50-year plan would reach a similar total, according to the memo, with over 70% of the work scheduled for the last 30 years of the plan. The memo shows “extra pipe work” of $1 million a year for both water and sewer starting in FY41. Murphy acknowledged that the cost of doing projects “has really gone up” recently.

Asked why so much of the pipe replacement occurs in the back half of the 50-year plan, Murphy said the city doesn’t have enough bond capacity to fund more work in the short-term. The city has a policy limiting citywide debt service to 15% of revenue, a level the city has recently reached.

“Ideally, we could be able to invest [in pipe replacement] right away, but in order to keep rates stabilized and our debt service policy intact,” more of the replacement work occurs later in the 50-year plan, she said. 

A chart in the plan shows the city’s debt service declining beginning in FY25 and continuing to drop over the next 15 years. But Murphy noted that in addition to the borrowing needs for water and sewer lines, there could be other city bonding demands in the future. These could include borrowing for a new recreation facility, road and bridge repair work, and perhaps new sewer and water pipes and a second road to serve the former Elks Club site, depending on what is planned there.

Dana Nagy, drinking water community operations section supervisor for the state of Vermont, has been critical of the city’s existing 50-year plan in light of frequent water main breaks, some of which led to 60 boil water notices issued in the last five years. He has also said Montpelier’s water pressure is unacceptably high.

 “This situation can put public health at risk … A five-year period with this many breaks is not acceptable,” Nagy told The Bridge earlier this winter.

Motyka has acknowledged the city has an aging water system, with some water pipes over 100 years old. 

“That combined with the high pressure we have is a challenge for our community,” he said in a budget overview video made Dec. 16. But he believes that high pressure is not the main cause of the city’s frequent water main breaks.

“I think it’s really the aging of the piping,” he told The Bridge.

Montpelier is not alone in facing the challenges of aging underground infrastructure. Big cities from New York to Chicago to Los Angeles are experiencing frequent water main breaks, and the leaks are leading to a loss of water. 

The Environmental Protection Agency estimated in 2014 that public water systems lose, on average, one-sixth of their water — mainly from leaks in pipes, according to The New York Times. Former city councilor Justin Turcotte said he saw an estimate once that suggested a significant amount of water was leaving the Montpelier treatment plant and never arriving at homes and businesses.

Water Treatment Plant — Finally Paid for in 2024

Another former city councilor, Stephen McArthur, served in 1991 and 1992 as chair of the city’s first committee to study building a water filtration plant, which was eventually constructed and became operational in 2000. Before that, Montpelier had no filtration plant and simply added chlorine and chloride to the water from Berlin Pond, according to Motyka.

“I recall our engineering consultants and Steve Gray (former public works director) telling us we were building an expensive plant that would provide wonderful water, but that we needed to be thinking strongly about replacing our distribution pipes soon,” McArthur said

City Manager Fraser, who began working for Montpelier in 1995, said the cost of using water and sewer fees to pay for the $6.1 million in bonds issued to pay for the plant was so high that there was no capacity to begin a major effort to replace the water pipes or sewer pipes while the bonds were being paid off, delaying that work.

According to city Finance Director Sarah Lacroix, voters approved the $6.1 million to build the water treatment plant in November 1990. This ended up consisting of two loans: a $2.6 million bond on which the final payment was made in December 2021, and a $3.6 million bond, consolidated with an additional $750,000 bond approved in 1996, that will see its final payment made in December 2024.

How to Pay for Pipe Replacement: Water Fees or Property Tax?

In 2022, the total annual payment on the remaining bond was about $490,000. Once that is paid off, Fraser said, the city will be able apply that amount, plus other water and sewer revenue already being set aside for pipes, so that “we might be able to spend $750,000 to $800,000 per year toward pipe replacement,” starting in FY24 or FY25. Public Works is assessing whether it would be better to spend that amount each year or to apply it toward a new bond for pipe replacement work, Fraser said.

Fraser said city policy is to have users of the water and sewer systems pay for replacement through fees. Funding pipe replacement via the property tax would have been legal, but would mean that water and sewer users who do not pay property taxes — such as the state, nonprofits, U-32, and Berlin users including the hospital — would not be contributing to the replacement costs. That leaves the burden on water and sewer fees.

“Faced with the question of whether we drastically raise water rates to fix pipes or wait and hit replacement hard after the bond is paid off, every city council … agreed it would be ridiculous to raise rates that much,” Fraser said. “Has that led to more leaks? Probably.”

To boost funding somewhat in the meantime, the city council decided in 2017 to raise water and sewer rates by the rate of inflation plus 1%, Fraser said. For the fiscal year beginning July 1, that means water and sewer rates are going up 8.7%. Last July 1, the rates went up 8.1%, for a total of a 16.8% fee increase over two years. 

This is part two of The Bridge’s series about water in Montpelier. Stay tuned for part three. 

Editor’s note: This article was updated on March 16 to correct the construction date of the water filtration plant.