Meinecke Miscalculation Draws Almost $1M from East Tosa Sewer Plan
After finding sewer funds were far smaller than thought, city will take nearly $1 million that had been set aside for looming East Town project to pay for Meinecke.
It did seem too good to be true, as one alderman said — and it was.
It would have made up the lion's share, some $4.2 million, out of ample surplus capital improvement funds that needed to be spent down anyway.
The trouble was, most of those funds did not, in fact, exist.
A major miscalculation by the Finance Department of the balances in the storm and sanitary sewer funds made them appear to be nearly three times as large as they really were.
As a result, a revised plan was presented and approved Tuesday that will, in part, redirect to the Meinecke Project almost $1 million that had been earmarked for the planned East Tosa sewer project.
More than $450,000 will also be redirected from the upcoming City Hall South sewer project.
Specifically referring to the East Tosa Project, city Finance Director John Ruggini said in his revised spending plan, "It is possible these funds could be restored if other projects are under-budget over the course of the next four years; otherwise the impact would be lengthening the time in which the project is completed."
The prospect of delaying the East Tosa plan was disappointing to Alds. Bobby Pantuso and Joel Tilleson, who represent the 5th District where most of those proposed improvements would take place.
But both said that in the interests of the whole community, and specifically the immediate needs of their Meinecke neighbors, they would support the proposal.
Tilleson made a point of urging Ruggini to be constantly vigilant for any and every opportunity to restore the funding for East Tosa and keep it on schedule.
The money that wasn't there
The discrepancies in calculating the amounts in the two sewer funds were large ones. Ruggini had reported last week that the storm sewer fund contained $6.4 million — a review since has showed it to total only about $2.5 million. His earlier report showed $2.2 million in reserve in the sanitary sewer fund — the real figure is about $665,000.
Ruggini explained the miscalculation as the result of a transition taking place in the capital funds accounting system.
"The capital budgeting system prior to 2012 was a manual system relying on multiple spreadsheets maintained by several staff in multiple departments designed for a smaller-scale capital improvement budget," Ruggini wrote. "Such a situation creates greater risk for calculation mistakes, which is exactly what occurred.
"Transitioning to a more automated and integrated project accounting system whereby all project expenditures and revenues are recorded in the general ledger by project number, will greatly reduce the possibility for error," he said.
Ruggini said that concerns voiced by aldermen last week, especially those of Ald. Pete Donegan, prompted him to take a harder look at the numbers.
Donegan had expressed astonishment bordering on incredulity when Ruggini presented his first plan for funding the $5 million Meinecke plan deficit, saying that he could not understand where this "pot of money" was that the city kept going to.
The pot was there; it simply did not contain nearly as much gold as thought.
The 'unattractive options' for project funding
The sewer fund surpluses that did exist were built up in earlier budgets for projects that were later canceled or came in below budget. Once set aside for capital projects, those funds cannot revert to the general fund or any non-capital budget; they can only be spent on other capital improvements.
But the sewer funds, while larger than they needed to be, were nowhere near large enough to fund the Meinecke deficit.
Ruggini said that in his review, he tried to use the same criteria he had applied before discovering the fund discrepancy – among which was not to redirect funds from other pending projects.
However, other criteria outweighed that one, such as absolutely not increasing the city's debt, and debt service, through new borrowing on the five-year capital plan.
He and Public Works Director Bill Porter also wanted to avoid at almost any cost canceling other projects all together in favor of this one, but it was considered.
Of three options Ruggini felt were open to him, he said, one was canceling a full year of the street paving program. That was dismissed, he said, because for years the city has "aggressively been trying to get back on track" in repaving at least four miles of roadway a year — and hasn't gotten there yet.
Also considered was cancellation or long postponement of another large-scale project on 100th Street that has been stalled by regulatory issues. However, that project, while not yet bid out, is 100 percent designed at considerable cost.
"Going to the East Tosa Project was the only feasible option," Ruggini said. "Of some unattractive options, it was the one we felt we could most likely adjust to."
90th Street neighbors unhappy with outcome
It took two back-to-back meetings and three votes Tuesday to approve the revised Meinecke funding plan: a special meeting and vote of the Budget and Financing Committee to approve the revisions from last week's original plan; a vote by the full Common Council to accept the new plan; and finally a vote by the council to accept the contractor's bid on it, which finally sets the project in motion.
All ended in unanimous approvals, which did not sit well with about 10 residents who live along North 90th Street and brought protest signs to the meetings, seeking delay, redesign, rerouting or out-and-out cancelation of the Meinecke Project.
Their issue is that while the Meinecke neighborhood to the northeast of them will get flood relief that will stabilize or improve property values there, the outlet for all that water — a 10-foot-diameter buried pipe — will come down their street, disrupting their lives and reducing their property values by destroying many mature trees.
Aldermen were sympathetic and even apologetic, but ultimately unbending in the belief that the long-planned, already long-delayed Meinecke Project must get under way.
Ald. Kathleen Causier, who alone represents those citizens' district (the 2nd) since the resignation of former Ald. Eric Meaux, apologized on the part of the city and for her own part in a failure to fully communicate the implications of the project.
"For some of you, the first notice of this was when you received assessments for sidewalks," she said. "We followed the letter of the law, but people expect more from us than that."
However, she said, it was far too late and the Meinecke Project was far too important to talk about redesigning it now, either for less impact where it is planned or to move that impact somewhere else.
"Redesign of this project would require rebidding and the loss of a construction season," she said, which would be a large and unnecessary cost and would put off further the relief of Meinecke flooding.
At the very least, the 90th Street neighbors said, the vote should be put off for two more weeks to give them a little more time to explore options with city staff.
"I have trouble seeing how two weeks is going to change things," said Ald. Jeff Roznowski of the 6th District. "I've heard from people who said we should spend more money and more time; I've heard from people who said we should spend less money and less time.
"This project is about the future of Wauwatosa. These 80- to 90-year-old pipes are ticking time bombs."