The Value of Water, Part 1: More Than A Basic Burger?

We're going to be hearing a lot in the Milwaukee area in the next year or two about the value of water.

That's because Waukesha may get permission to buy Lake Michigan water from Milwaukee - - the preferred supplier - - or Racine, or Oak Creek, and will likely agree to pay a regional services cost-sharing fee on top of state-established per-gallon water rates.

In 2000, Waukesha's Water Utility service territory had 75,500 residents. The 2028 projection is 85,800 and to eventual "build-out" - - 97,400, so keep in mind that Waukesha's water service is projected to grow by about one-third - - that is a heck of a lot of growth, development, tax base and political power moving into and around the City of Waukesha.

What's the impact of inserting Milwaukee water there?

What is a fair price for shipping the water. broadly-defined?

Various consultants and politicians will weigh in on a regional water service fee, and how to calculate it, and I will offer some perspective in an occasional series, The Value of Water, on this blog.

Reader comments or suggestions are welcome, too.

This first installment is a simple reminder of how little a fee Milwaukee accepted from New Berlin last year when the two sides made a deal to pipe Lake Michigan water to the central one-third portion of New Berlin.

The fee was $1.5 million covering the entire 20 years of the contract - - or $75,000 a year.

I said at the time that the fee was a pittance, especially since the area to be served by the water, officials estimated, could grow by 1,100 homes and nearly 6000 jobs.

Which is a lot of new tax base and spin-off development -- enhanced, no doubt, by Milwaukee water.

Now divide Milwaukee's 604,447 residents - - the current official population estimate - - by $75,000.

Yes, that's right. Your calculators are not lying: 12.4 cents annually, per resident.

At that rate, you'd have to wait 15 inflation-proof years to cover the cost of a single, $1.90 burger at George Webb's

So while you're debating if that was a good deal for Milwaukee, or a better deal for New Berlin, think ahead to what sort of payment Waukesha might consider.

Or perhaps you are saying: hey, no fair: New Berlin paid in advance,in full, and the money went into the City of Milwaukee budget.

The 2008 City of Milwaukee budget was about $1.3 billion - - so the fee covered about one-tenth of 1% of one budget year out of 20.

Back to Waukesha: Its water service territory has about twice New Berlin's population, give or take, so would Waukesha offer double the New Berlin fee, and should Milwaukee take it?

25 cents per year per Milwaukee resident?

I'll provide some different ideas in later posts, but, honestly, I can't see the justification for a deal given Waukesha's projected growth - - another 10,300 people (see the data on slide 22 in a Waukesha Power Point) in its water service territory by 2028, and eventually 11, 600 more- - unless the payment begins in year one with cash or services worth between $1-2 million, then with the projected development and growth providing an upper annually on top of the base payment,