While recent restructuring of that debt has helped the city reduce its yearly debt payments - the city will pay $2.5 million on debt in 2020, for example - those annual payments will rise to $9.3 million by 2027, according to PFM. The report states that, according to actuarial projections, the city's state-required contributions to employee pension plans will increase from $16.3 million in 2019 to $18.8 million in 2020.įurther, the city has more than $127 million in long-term debt, according to city financial figures. PFM's report to Erie officials identifies pension-related costs as 'the most pressing problem' the city faces in terms of finances. What gives us the most in terms of reducing our costs? That's what we have to be concerned with.' 'Two options are contributing more money to our pension funds and paying down our debt. 'Whatever we do, we have to make enough to make up for not only the $4 million they pay us each year, but enough to make up for the liabilities on our balance sheet,' Schember said. 'We're open to anything at this point,' Schember said, adding that he eventually wants to see a deal in place that provides the city with enough up-front money to fix structural budget problems. Then, the city can better explore its long-term options. The city could have an updated water system valuation as soon as early January, Schember said. He said Kathy Wyrosdick, the city's planning director, is researching the city's appraisal options. Schember cautioned that the process will take time and that nothing is immediately changing regarding the water system, including customers' rates. The yearly payments grow incrementally over time, increasing to $4.8 million by 2046 and staying at that number through 2050, according to PFM's research.

Then it can make the best decision.'Įrie Water Works' annual lease payment to the city for 2020 is $3.8 million it was $3.6 million in 2019. 'The city needs to know what the true value of the water system is.

'But you don't sell a car and let the seller determine what the car is worth,' Mann continued. 'They handle the sewer and garbage and water billing, for example, along with running the (water) system. 'There are benefits to the city's current arrangement with the Water Works,' Mann said. The entire process, including valuation, could take up to a year, according to PFM. Then the city can either directly negotiate a new deal with Erie Water Works, seek other proposals for buying/operating the water system, or a combination of the two. Mann said the city should do its due diligence, starting with the valuation.

The city could then use those profits to pay down millions of dollars in city debt. Gordon Mann, PFM's director, said in a recent interview with the Erie Times-News that an accurate, up-to-date water-system appraisal could be used to explore a new financial arrangement with Erie Water Works or a sale/lease with another operator. The consulting firm is helping the city to craft a five-year plan to stabilize Erie's finances over the long term. That shortfall, according to PFM, includes as much as $2.5 million for 2020 alone and could grow to as much as $16 million by 2024 without major changes in the city's fiscal practices. PFM's consultants, in a report presented to Schember and members of Erie City Council in late September, urged the city to begin an 'asset monetization process' regarding the water system, in large part because the proceeds from a multimillion-dollar new lease or sales agreement could help the city alleviate a structural budget deficit. However, representatives of Public Financial Management Inc. - the city's state-required financial consultant for the Early Intervention Program for financially-struggling municipalities - suggest the city should do something else first. 'We've talked to the city about basically buying out of our lease, and we want to be a partner in anything that benefits the city or helps the city out financially,' Vojtek said. Vojtek has said the utility has spent more than $260 million improving the water system's underground water pipes and other infrastructure, some of which dates back to the 1860s. 'Owning the system would certainly be our preference, and it would keep the water system in the public domain,' Vojtek said in an interview.Įrie Water Works has about 63,000 direct residential, commercial, industrial and institutional customers in Erie, Lawrence Park Township, Wesleyville and Millcreek Township, as well as parts of Harborcreek, McKean, Greene and Summit townships.

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