The Birmingham Water Works currently serves over 600,000 Alabamians in Birmingham and five surrounding counties. It's the largest water system in Alabama and has mainly been the center of controversy in the city over the summer.
Amid the chaos, it's essential to ask the question: How does the Birmingham Water Works work?
More specifically, who runs the Water Works? Is it a public or private company? Where does it get its money?
Who runs the Water Works?
The Birmingham Water Works is run by the Birmingham Water Works Board (BWWB), a nine-member board of directors.
Two of the BWWB members are appointed by the mayor of Birmingham. The Birmingham City Council appoints four. One is appointed by the Jefferson County Mayors' Association, another by the Shelby County Commission and one by the Blount County Commission.
The board members serve staggered six-year terms.
The BWWB appoints a general manager who executes its policies and orders. The general manager has three assistants. One oversees engineering and maintenance. Another oversees operations and technical services, and the last one oversees finance and administration.
Is the Water Works public or private?
According to Rick Jackson, the public relations manager for the Water Works, the Water Works is a "public utility."
The Water Works was founded in 1872, a year after the founding of the city of Birmingham. Elyton Land Company established a water system by constructing a pump station by Village Creek.
In 1899 the utility company was sold to what would become the American Waterworks Company.
In 1951, the city of Birmingham purchased the water system and established an independent water board.
Where does the Water Works get its money?
Jackson said the Water Works receives money from four sources:
Rates and charges (monthly charges for water services, basic facility charges, connection and maintenance fees, miscellaneous charges for ancillary services, and penalty charges related to service interruption)
Sewer collection fees
Impact fees (charges assessed against new developments to recover capital costs associated with expanding water service facilities)
Development impact fees (charges for installing or extending water lines to service a group of properties)
According to the BWWB's financial statements, the BWWB's total assets equated to almost $1.25 billion in 2021. Its total operating revenue exceeded $195 million.
The BWWB's assets and deferred outflows of resources exceeded its liabilities and deferred inflows of resources for the Fiscal Year (FY) 2021 by $172.5 million.
On November 10, 2021, the BWWB approved an operating and maintenance budget of $115.3 million and a capital budget of $77 million for FY 2022. The budget approval resulted in a 3.9% water rate increase that went into place on January 1, 2022.
The rate increase was below the national average of 4.6%.
Billing issues, kickback accusations and criticism
Earlier this year, media reports said thousands of customers didn't receive bills for months. Later, they received much larger or multiple bills all at once.
The bills were also not based on accurate meter readings but estimations based on previous months. Birmingham Water Works blamed a lack of meter readers and insufficient staffing for the issue.
The BWWB hired Macaroy Underwood of Underwood Financial Consultants, LLC, to review the customer billing and collections from January 1, 2022, through July 31, 2022. Underwood was the general manager of Birmingham Water Works from 2005 to 2018.
Underwood's hiring was questioned by several of BWWB's finance committee members due to ethical dilemmas surrounding hiring a former general manager.
The BWWB accepted the retirements of most of its purchasing department on August 25 amid accusations of poor practices and kickbacks.
Sources told WBRC in August that the BWWB voted to accept the sudden retirements of three employees, including the purchasing department manager. The BWWB will begin paying lifetime pensions to them upon retirement.
According to the WBRC report, BWWB retired the employees abruptly over uncovered improper purchasing activity and kickbacks.
Reis Logan was hired in September to fill the open manager position.
On September 6, BWWB Chairman Chris Rice submitted his resignation to Birmingham Mayor Randall Woodfin. He tried to rescind his resignation last week, but, according to the city attorney, he won't be able to do so.
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