Penobscot Valley:
Prudent Investments Linking Our Towns IV. CAPITAL PLANNING A. Introduction This report is one of several prepared as a follow-up to the PVPILOT Regional Plan prepared by the Bangor Area Comprehensive Transportation System and Eastern Maine Development Corporation. Formal capital planning is undertaken in many, but not all towns in the PVPILOT region. Moreover, annual financial reports of the towns treat capital outlays inconsistently, thereby limiting the usefulness of a quantitative analysis of capital expenditures across all of the towns. In its place, this report presents the results of a series of interviews conducted with town managers in the participating communities conducted during August and September of 2002. While the study focuses on public works, capital investments and other expenditures for public infrastructure, the objective of the interviews was to identify specific examples of inter local cooperation that already are in place, regardless of whether they were the result of formal agreements or ad hoc decision. In addition, the discussions attempted to identify additional avenues for regionalism from the perspective of the town managers. It is not the intent of this report to provide an exhaustive inventory of inter-local agreements among the communities that comprise PV PILOT. Nor does it seek to prescribe specific activities to be pursued by particular towns, or groups of towns. Rather, the goal of the study is to present examples of successful inter-local cooperation and, on the basis of comments presented by the town managers, to suggest possible strategies for encouraging greater regionalism. B. Regionalism Regionalism of public services is not a new concept in Maine. More than ten years ago, an article in the Maine Townsman examined the "new" regionalism that was emerging as a result of solid waste regulations from the Maine Department of Environmental Protection (Josephson 1991), while another article provided an in-depth look at the various types of formal inter-local agreements and the differences between them (Herman 1991). In 1975, the Maine Municipal Association published the Handbook for Interlocal Cooperation Agreements in Maine to provide guidance for municipal officials on the procedural and substantive issues involved in the creation of formal multi-municipal relationships (Maine Municipal Association 1975). The handbook was updated in 2001. Various efforts have been made over the years to promote greater cooperation among neighboring towns, and several reasons have been put forth to explain the lack of progress on regionalizing some municipal services. Part of the reason is structural. Public governance and provision of public services in New England historically has been the responsibility of the local municipality. Planning, zoning, education, social welfare, and commercial development traditionally have been the dominion of the local town or city. Likewise, local government is primarily responsible for securing the funds to pay for public services. It is no wonder that, in the face of growing demands for greater efficiency in the provision of services, local leaders recognize the opportunities afforded by regional solutions, but typically have been hesitant to surrender local control over what many view as a local responsibility. A survey of its memberships in 2001 by the Mid Maine Chamber of Commerce list a wide range of obstacles that they felt prevented municipalities from further consolidating public services. Among the wide range of responses were political considerations, bureaucratic complexities, loss of local control, and potential losses of tax revenues (Mid-Maine Chamber of Commerce 2001). While views such as these may exist, the town managers interviewed for this study generally expressed a desire to engage in cooperative activities where clear gains in efficiency were expected. This was particularly true in those communities that clearly would benefit from cooperation. For example, a town with no solid waste management facilities within its own borders (landfill or transfer station) benefits from an agreement that allows its citizens to drop off materials at the facilities in a neighboring town. In such cases, the desire for absolute local control takes a second priority when there is a realization that some services could be provided more effectively, and more efficiently through inter-local cooperation. On the other hand, particularly in towns with greater than average fiscal capacity, there appears to be less pressure to engage in cooperative agreements if sharing of resources or services results in inconvenience in the administration of town services or for its citizens. As an example, three towns in the region had jointly purchased a piece of composting equipment several years ago. However, due to the inconvenience of transporting the equipment, one town opted later to buy its own equipment separately. Inter-local cooperation generally occurs in one of two forms. In the simplest cases, cooperative agreements are forged, formally or informally, to share resources or responsibilities for specified public services. Shared resources may include personnel (for example, a code enforcement official that serves two neighboring towns), or equipment. Public works equipment that requires only occasional use is suitable for such cooperation (e.g., compost turner, street sweeper). In the most complex cases, multiple towns enter into agreements that result in the creation of a new legal entity. The Penobscot Energy Recovery Corporation (PERC) located in Orrington was cited by several town managers as a very successful joint undertaking of this type. PERC is the region's waste to energy incinerator that serves as the ultimate destination of municipal solid waste for approximately 130 towns. C. Cooperative capital planning in the PVPILOT region The discussions with area town managers focused on: public services, capital investment and public infrastructure; housing issues including growth and affordability; and local education. This portion of the study reports only on the findings pertinent to the issues of water supplies, septic waste and sewage treatment, solid waste management, roads and highway maintenance, and public works activities. A summary of these services in the PVPILOT communities is presented in Table 1. Water: Public water systems generally are designed to serve locations with at least moderate density levels of residential, commercial or industrial development. As a fairly expensive capital investment, such systems are cost effective where large numbers of connections can be made per linear unit of installed pipeline. In addition, an adequate base of total users is necessary to avoid prohibitive unit costs associated with the fixed and operating costs of the pumping, storage and treatment facilities. Since residential development often occurs without regard to its proximity to political boundaries, it can make sense for a public water system to serve households and businesses in adjacent towns if they are within an economically viable service area as a method of increasing the user base. This kind of activity occurs throughout the PVPILOT region. There are five community water systems in the region (Orono and Veazie share a single system) that serve residents in 13 of the fifteen area communities. In most cases, a neighboring community is only partially served by a water system that originates in another town (Figure 1). In one case, two towns have joined to form a single water district that serves residents of both towns (Orono and Veazie). In addition, portions of Veazie are served by the Bangor Water District. In many cases, residents are served and billed directly for water service provided from a neighboring town (for example, some Milford and Bradley residents receive water service from the Old Town Water District). In the case of Hampden, the town has its own water utility to install and maintain water lines and pumping stations, however, it receives its water supply from the Bangor Water District. Sewage and Wastewater Treatment: Similar to public water systems, municipal waste treatment relies on adequate numbers of users to support the large capital investment for plant and equipment and pipeline. There are five treatment plants in the PVPILOT region that serve users in nine communities. Figure 2: Wastewater management & inter-local cooperation in PVPILOT towns. Among the smaller towns in the PVPILOT region, there appears to be no urgent need for sewer expansion. Hampden has a fairly extensive sewer system that is connected to the City of Bangor's Wastewater Treatment Facility. This agreement appears to provide adequate capacity for Hampden for the foreseeable future. Hermon's industrial development, in particular, has benefited from the extension of the Bangor sewer system into an industrial park near its border. This enabled Bangor to extend its system into Hermon and thereby enable the development of industrial activity there. The Town of Milford, which is served by Old Town Waste Treatment Facility, is presently being forced to relocate its main sewer connection to the Old Town facility due to impending bridge reconstruction. Among the alternatives being explored is an extension of the sewer to cross the Penobscot River at a point near the boundary line that borders the Town of Bradley. Since Bradley currently has no treatment facilities, this option may open the possibility of connection to Old Town's treatment plant at some future date. For now, it appears that there is no immediate need for a sewer system in Bradley. Solid Waste Management: The closure of open dumps and the expense of operating landfill facilities have caused many smaller towns to forego the option of local waste disposal within their municipal borders in favor of contracting with private sector waste companies. In fact, almost all of the town in PVPILOT contract for curbside trash pickup, even among some of the towns that have their own public works departments. As a service for their residents, four of the towns have established a transfer station where residents may drop off trash (and sometimes recyclables) for transfer to a landfill elsewhere. However, only the City of Brewer has agreements with neighboring towns (Eddington, Holden and Orrington) that allows residents of those towns to utilize the Brewer landfill and transfer station. A similar inter-local agreement between two other towns in the region was terminated, apparently due to concerns of waste volume. Figure 3. Solid waste management and interlocal cooperation among PVPILOT towns. Public Works and Road Maintenance: Several of the issues that were examined within this category of municipal services include possible sharing of public works equipment, joint provision of public works services such as road plowing and sanding, and coordination of road construction and paving. Just as many of the towns in the region opt to contract out their solid waste disposal services, so to do many of the towns choose to contract out various public works services. Indeed, six of the towns in the PVPILOT region have no public works department. These towns contract with the private sector for all of their maintenance needs such as plowing and sanding of roads, mowing, ditching, culvert replacement/installation, etc. When asked, several of these towns responded favorably to the suggestion that such services might be provided jointly among two or more towns. One of the smaller towns with its own public works department had considered previously, if somewhat informally, the possibility of providing plowing and sanding services for neighboring towns. However, to do so it would become necessary to acquire additional equipment, and the additional equipment would entail the construction of additional garage and storage facilities. Eventually, the added costs were seen as making the joint services infeasible. At the outset of this study, it had been suggested that coordination of road maintenance and paving presented an opportunity for inter-local cooperation that would result in reduced costs and improved service to the traveling public. However, when approached with this topic, most town managers seemed skeptical. Generally it was felt that coordination would not produce cost savings significantly beyond the contract costs that result from the current public bidding process. One person, however, with experience in multi-town coordinated paving contracts, indicated that savings are likely. Ten years ago, joint purchasing programs in southern and eastern Maine produced savings of $6 to $14 per ton for asphalt in place. The southern Maine program was operated by the Greater Portland Council of Governments while the eastern Maine program was coordinated by a private consultant (Josephson 1992). Figure 4. Road systems in PVPILOT towns. In addition to the potential savings, coordinated road maintenance could provide perceived benefits to motorists by eliminating situations where road conditions change noticeably at town boundaries. This typically occurs when one town has resurfaced a section of the road while the neighboring town may not resurface it for several more years. Similarly, winter driving conditions often change due to differences in snowplowing and sanding schedules or practices. While the town managers in PVPILOT towns acknowledged these potential benefits, most indicated that there are, in fact, few opportunities for coordination because there are relatively few local roads that cross municipal boundaries. This appears to be particularly true among the smaller, more rural towns (Figure 4). A survey of Maine towns conducted in 1990 found that 32 percent of towns in the state engaged in some form of cooperative activity regarding road maintenance (Deller and Halstead 1991). The most frequent agreements pertained to snow removal and sanding, while the purchase and spreading of asphalt were among the least common cooperative ventures. The cost analysis conducted as part of that study found the average cost for road maintenance per mile of road was lowest for towns with approximately 80 miles of road. Towns with fewer (or more) miles of road to maintain typically have higher average costs per mile (A town with 40 miles of road to maintain spends almost as much as towns with 80 miles of road). Since more than one-half of Maine towns maintain less than 30 miles of road, the study concluded that cooperative agreements can take advantage of economies of scale to produce savings for many smaller towns. In the PVPILOT region, only Bangor and Hampden have at least 80 miles of roads while Brewer, Hermon and Old Town have between 60 and 80 miles of roads. However, the Maine Department of Transportation provides maintenance for some roads in these towns. Figure 5. Mean travel time to work for residents of PVPILOT communities. While pubic transportation is not a capital planning issue that receives significant attention in many smaller towns, it nonetheless is a topic that deserves attention, particularly as population growth increasingly occurs in outlying communities. Figure 5 shows the mean travel time to work in the PVPILOT region, according to U.S. Census Bureau, and suggests that most people in the region probably travel to the larger communities of Bangor, Brewer, Orono and Old Town to work. Average travel time to work (which is a function of the change in total numbers of commuting workers in a town and the distance between where they live and where they work) is growing fastest in the outlying communities (Table 2). Part of the problem may result from sprawl (people choosing to live in outlying communities and working elsewhere), however, in some communities the increased travel time may be the result of jobs lost in the local and regional communities. For example, the populations of Kenduskeag and Milford increased little or declined, yet the increase in aggregate travel time to work for those residents were among some of the largest in the region. Conversely, the large increases in travel time to work for residents of Glenburn and Holden appear to result at least partially from the large increases in population including new residents who work elsewhere. Table 2. Population change and travel time to work in PVPILOT communities. D. Concluding Observations Capital Investment: An analysis of capital investment based on secondary information, whether past investments or those planned for the future, is precluded by the lack of consistency with which expenditures are defined and reported. Even audited municipal financial statements lack uniformity with regard to their treatment of capital expenditures. Some towns may regard purchase of a public safety vehicle or public works equipment as a capital expense, while some may view the same expenditure as an operating cost. While most town financial statements include a separate category for capital outlays, some ignore this category completely. Water and Sewerage Utilities: Owing to the capital intensive nature of public utilities, many towns are served by quasi-public entities that are chartered to serve customers across municipal boundaries. All of the town managers in communities that presently do not have a local wastewater treatment plant or municipal water system indicated a willingness and a desire to work cooperatively with neighboring towns where necessary to provide these services. It was quite clear that most smaller towns lack the population base and fiscal capacity to establish these utilities on their own. In some cases where continued population growth and denser development may necessitate the provision of these services, most town managers in that situation indicated a desire to work with a neighboring for possible expansion of existing utility services. As an example, Hermon, which presently is partially served by the Bangor Water District, has already established future water resources that it would deed to the Bangor Water District as part of an agreement to expand service to Hermon residents at some future time. Except for local zoning ordinances, planning for installation of water and sewer utilities is perhaps one of the most effective tools that a local community has to control the direction and extent of growth. Given the broad acceptance of inter-local activity in the provision of these services, there maybe an opportunity to engage multiple municipalities in using the development of sewer and water services as the vehicle for region wide growth planning. Solid Waste Disposal: Approximately one-half of the towns in the PVPILOT region have foregone the development of a licensed landfill or a transfer station in favor of contracting with private waste management companies for disposal of household trash. These contracts typically include provisions for once- or twice-yearly cleanup weeks for residents to dispose of white goods, yard wastes, and other non-household wastes. In four of the communities, agreements have been established to provide drop off services for their residents at a neighboring landfill or transfer station. However, it remains an issue that is problematic in some communities. While a local landfill provides convenience for residents and insurance against escalating tipping fees at licensed landfills, it is regarded by many as an expensive service. Some towns with landfills or transfer stations are reluctant open those facilities to non residents, citing concerns of capacity and operating resources. Some with limited own-source activity are more open to allowing non resident usage. While there is nearly universal agreement that the PERC incinerator in Orrington is a good example of successful regionalization, there appears to be an opportunity for greater cooperation in solid waste management on a smaller scale. Road Paving and Maintenance: While some of the towns in the PVPILOT region have a well developed maintenance schedule for road paving and reconstruction, others are less well developed or nonexistent. However, even among those towns that presently have a reactionary approach to road maintenance, there is a clear sense of need to establish a regular maintenance plan, and nearly every town without a plan is moving in that direction. That several towns in the region have not yet established a maintenance program but have expressed a need for one suggests an opportunity for PVCOG to provide technical assistance within the framework of better coordinating regional road maintenance, paving and construction activities. Creative approaches to joint road maintenance that have been tried elsewhere within the state have proven the potential for cost savings. The solutions have ranged from simple joint purchasing programs to the creation of a joint highway department. This study was focused solely on towns in the PVPILOT region and examined in general terms the existence and possibilities for cooperative agreements. Although there is little cooperative activity with respect to road maintenance in PVPILOT towns, additional efforts should be made to identify joint programs that have succeeded elsewhere in Maine and assess specifically their potential application in the PVPILOT region. Other comments and observations:
References Deller, Steven C. and John Halstead. 1991. Financing Rural Roads and Bridges in the Northern New England States. Maine Agricultural and Forest Experiment Station bulletin 836. Orono, Maine. Herman, Geoff. 1991. Interlocal Cooperation: Options Which are Available. Maine Townsman. Josephson, Jo. 1992. Cooperative Ventures: New Approaches to Road Maintenance, Maine Townsman. Josephson, Jo. 1991. New Regionalism: Opinions, Issues and Operations. Maine Townsman. Maine Municipal Association. 1975. Handbook for Interlocal Cooperation Agreements in Maine. Augusta, Maine. Mid-Maine Chamber of Commerce, 2001 Membership Survey. http://www.midmainechamber.com/survey-2001.html For more information concerning this report or for additional copies, please contact Chris Boynton at mcsc@umit.maine.edu.
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