MOUNT VERNON — Nearly half of the city’s water meters have reached or exceeded their life expectancy of 15 years and are no longer capturing reliable data. Project H2Overhaul aims to fix that.
Safety-service Director Tanner Salyers told city council members on Monday that the city initiated a rate study, anticipating needed upgrades to the wastewater treatment plant.
One goal was to transition from using cubic feet to gallons as the unit of measurement so that customers would easily understand their bills.
“We discovered that our existing water meters were too outdated to make this transition through software alone. That highlighted the need for a broader system upgrade,” Salyers said.
On further review, the city identified nearly 4,000 water meters that are either at the end of their service life or more than double the 15-year industry standard life expectancy.
“These meters that are effectively the utility’s cash registers are no longer reliably capturing usage data,” Salyers said.
“As a result, the city is unable to accurately measure water consumption.”
Comparing total gallons billed and total gallons produced, the city discovered an estimated water loss of 50.27 percent.
That equates to 500 million gallons of water, enough to fill 760 Olympic-sized swimming pools.
“This is a substantial volume of unaccounted water which severely undermines the city’s ability to adjust rates responsibly to support utility operations and infrastructure investment,” Salyers said.
Additionally, he said inaccurate consumption data means high-usage customers might be undercharged while low-usage customers risk facing disproportionate rate increases based on faulty meter readings.
The problem gets worse
According to industry standards, a household of four people typically uses 10,000 to 12,000 gallons of water per month.
Sixty-eight percent of the city’s metered accounts are billed at or below the minimum usage of 2,992 gallons per month.
“So this trend raises questions regarding meter accuracy and consumption reporting, particularly given the age and condition of the city’s metering infrastructure,” Salyers said.
The city has replaced 77 meters so far this year. Between 2020 and 2024, the city replaced 1,917.
Salyers said the number depends on available funding and projects in the pipeline.
“However, considering the industry standard meter life cycle of 10 to 15 years, this pace does not constitute a sustainable or effective replacement program. This results in measurable financial losses and inaccurate readings and inefficiencies,” he said.
“The H2Overhaul addresses this.”
Fixing the problem
Project H2 overhaul addresses the problem in three ways:
•The bulk procurement of 4,000 new meters and 400 SmartPoint MXUs (achieve economies of scale)
•Competitively bidding for a third-party vendor to install about 3,500 of the units (city personnel will install 500)
•Installing permanent wastewater flow meters to enable the city to conduct ongoing citywide I&I (inflow and infiltration) analysis
SmartPoint MXUs. Between 2017 and 2020, the city upgraded its water meter system by installing 6,673 SmartPoint MXUs on the meters.
MXUs wirelessly transmit meter readings to utility staff and eliminate the need for manual data collection.
“While this initiative marked a meaningful step forward for infrastructure modernization, it did not involve the replacement of the water meters themselves,” Salyers explained.
“If the data [from the meter] is flawed, the MXU only transmits inaccurate data more efficiently.”
Wastewater I&I. Wastewater meters identify where stormwater enters the sanitary sewer system.
I&I increases treatment costs, reduces system efficiency, and can lead to sewer overflows.
“Permanent flow monitoring, which is what these permanent wastewater flow meters will track, will provide real-time data to detect storm water infiltration, guide flood mitigation and storm water management, and inform capital planning with accurate location specific information,” Salyers said.
According to Salyers, this is especially critical with the extreme weather events and flooding occurring nationwide. Closer to home, Lancaster recently experienced extreme flooding.
He noted that in addition to the west end, other parts of the city are in the flood plain. FEMA and the Army Corps of Engineers’ grants require the city to submit an I&I study, which the city currently does not have.
Paying for the fix
The city administration proposes to use a tool called “manuscript debt” to fix the water issues. Essentially, the city loans money to itself and repays itself over a set term.
For H2Overhaul, the administration wants to issue up to $2 million in bonds and use up to $2 million from the reserve balance account to buy the bonds.
City council members gave a second reading on Monday to legislation authorizing those two steps.
The reserve account, commonly referred to as the rainy day fund, has a balance of $3.31 million.
The city will use the $2 million in bond revenue to buy the meters and MXUs and hire the third-party contractor to install 3,500 of the meters.
The city would repay itself over three years, with the quarterly payments coming from the water and wastewater accounts.
Because the financing involves utility bonds, it does not affect the city’s statutory debt limit.
Salyers said city council could opt to use other investment accounts instead of the reserve balance account. However, he cautioned that this could constrain resources needed for upcoming municipal facility investments.
It could also compromise the liquidity of major accounts intended for large-scale capital projects.
“Additionally, it increases the risk of fund commingling, which should be avoided for sound fiscal management,” he said.
Another option is borrowing from the state’s Ohio Market Access Program. However, that requires state approval. Administrative fees and interest payments would go to the state instead of the city.
It also subjects the city to terms and conditions outside of its direct control.
How does Project H2Overhaul affect rates?
Salyers said that as the city evaluates rate adjustments to support operational costs and the capital investment needed for the wastewater and water treatment plants, the city must have accurate data to “ensure fair and effective billing practices.”
“Given the number of water meters in the system that are currently at or beyond their expected service life, we have adjusted our ongoing rate study to reflect a more accurate financial model over the next three years,” he said.
Based on that model, the city anticipates annual rate increases of 7 percent for water and 11 percent for wastewater for 2026, 2027, and 2028.
According to Salyers, those rates mean an average minimum monthly utility bill of around $71.34.
Salyers emphasized that the projections are conservative and based on a 5 percent annual revenue growth in the water and wastewater funds.
“Should the project deliver what we truly anticipate, which is probably somewhere between a 10 to 15 percent revenue growth, these proposed increases may be reduced,” he said.
“Conversely, if we do nothing and we do not do H2Overhaul, the city would face significantly higher rate increases and potentially extend the escalation periods to meet funding requirements.”
“It’s just the way it is. We have a gap in funding, and you have to meet it somehow.”
Tanner Salyers, Mount Vernon safety-service director
Frequently asked questions about the project
Salyers said the city can pause scheduled repayment on the internal loan in the event a catastrophe occurs and the city has used the reserve balance account.
He said that, contrary to popular commentary, the water loss does not stem from the city dumping water.
“The EPA would be all over us if we were just cranking up the flow in our wells and treating 7 million gallons of water a day and said no one’s here to fill up the truck, so we just dumped it into the Kokosing,” he said.
Regarding the water loss stemming from the water lines, Salyers acknowledged that it is a possibility. However, he noted crews have replaced many of the lines, so much so that the city rarely issues a boil advisory anymore.
Salyers said the project means more accurate billing. The city will bill customers based on actual usage.
“In many cases, this means high-usage customers will pay more fairly while low-usage customers may see minimal impact,” he said.
His final word of caution to the council referenced an email the EPA sent asking for an explanation of the 50 percent water loss.
“They’re aware, and that’s how it starts,” he said.