City of Raleigh, Public Utilities Department: Strategic Plan
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Why: Economic drivers and future liabilities
While there are several reasons for implementing this Strategic Plan, one of the primary
drivers is undoubtedly the current economy. There are unprecedented external stresses on our
Department, our City and the merger communities that we serve. These stresses include a near
record economic downturn. Not since the great depression has our national and local economy
endured such a severe and long-running downturn. Although the last year has seen marginal
improvements in all indicators, unemployment in the Triangle still remains near 8 percent,
which is 4.3 percent more than 2008, at the start of the recession. Total employment in our
area is almost 10,000 less than 2008, even though our service area has seen an additional
growth of at least 10,000 new residents. A graphic illustration of these statistics may be found
in Figures 2 and 3, on page 14. The end result is a weak economy that contributes to lower tax
and water/sewer revenues.
Added to this economic reality is the challenge of planning for and investing in aging water and
wastewater infrastructure in need of repair or replacement. The Public Utilities Department
maintains over 2,300 miles of water lines and 2,300 miles of sewer lines within our seven
communities. The replacement value of the existing underground infrastructure is estimated
to be over seven billion dollars. Together with the “above ground” infrastructure of water and
wastewater plants, water tanks, field operation centers and wastewater lift stations, the Public
Utilities Department is responsible for over nine billion dollars of infrastructure. Although we
are fortunate that a large amount of this infrastructure was installed after 1980, approximately
$500 million of water and sewer lines were installed prior to 1945 and are due for replacement
or repair over the next 20-30 years. Along with necessary repair of above ground infrastructure,
a significant number of unplanned underground investment burdens are expected over the
next two decades.
The Public Utilities Department’s (PUD) 10 year capital improvement program has grown from
approximately $652 million in 2006 to approximately $952 million in 2012, a 46 percent
increase. At the same time, the annual debt payments, called debt service, has risen from $16
million 2006 to $48 million in 2012, over a 200 percent increase. In addition, the record
economic downturn has made retaining a high bond rating difficult. The higher the bond
rating, the easier it is for the City to borrow money for capital projects and the lower the
interest rates for those bonds. The current bond market requires higher coverage
Allen. J. Russell (April 2, 2012). Council Pre-Budget Workshop from the City Manager City of Raleigh.