Missouri American Water has officially offered to buy Eureka’s water and sewer system and Mayor Sean Flower said he wants to sell.
But, he said, the decision is up to Eureka residents.
An appraisal of Eureka’s water and sewer systems has valued both systems at a combined $28 million. The appraisal valued the water system at $18 million and the sewer system at $10 million.
Missouri American Water is offering the full appraisal amount, although it plans to spend $37.2 million in capital improvements over the next five years, which would reduce the city’s net cash proceeds from the deal to $20.7 million.
Planned capital improvements include, but are not limited to, building a main extension to connect the Eureka water distribution system to Missouri American’s St. Louis County water supply and making sure the sewer system is compliant with federal and state regulations.
Flower said it will be the aldermanic board’s job to look at the offer and vote whether to place the question on the Aug. 4 ballot.
“The sale of these systems will be one of the most important decisions in the history of the city,” Flower posted on Facebook.
He said he plans to have the board vote during its May 19 meeting.
Flower recommends selling the system for several reasons.
The sewer system must have capital improvements to stay up to code, and the city would have to raise rates prohibitively to cover the cost, he noted. He said the upgrades may cost residents less under Missouri American Water’s ownership.
Flower also said water quality would improve if the water system is sold.
Flower said the cash the city will receive could help make up for lost sales tax revenue from the last couple of months.
“I think it’d be also extremely good for the city to have the cash from the sale around and really help us stabilize city operations while this (sales tax revenue) is going up or down,” he said.
Also, he said, the cash could be used to pay off the $7 million in city debt.
If the water system were sold, water would be supplied through Missouri American’s Wildwood plant, Flower said in a Facebook post. He said a purchase would take the city wells offline and give Missouri American Water responsibility for major upgrades.
According to the offer letter, if voters approve the sale in August, the water system would switch to its new supply in mid- to late-2022.
According to Missouri American Water’s offer letter, an average water user’s bill would be about $78 a month, compared to the current $62 average monthly charge.
Appraisers included Edward W. Dinan of Dinan Real Estate Advisors Inc; Joseph E. Batis of Edward J. Batis & Associates; and Elizabeth Goodman Schneider of Goodman Appraisal Consult.
The Eureka Board of Aldermen voted 4-2 on Aug. 6, 2019, to enter into an agreement with Missouri American Water to get an appraisal of the systems.
Bryan Kiefer and Carleen Murray, both representing Ward 2, voted no.
Kiefer said he does not oppose researching the value or eventually selling the system to Missouri American Water.
“But I just think we need to use what we have first,” he said. “I want to see if our system and improvements work first.”
Murray said although she did not oppose the appraisal she voted no because of a section in the contract that made her worry Eureka might be on the hook for the whole $25,000 cost of the appraisal.
The contract calls for Eureka to pay half the cost – $12,500 – unless it sells the system to Missouri American. If that happens, the city will not have to pay anything toward the appraisal.
If, however, the city sells within three years to another company, Eureka would have to pay the full $25,000 for the appraisal.
Flower said if the city has to pay anything, the cost will be covered through the general fund.