Waukesha opts for Milwaukee water supply instead of Oak Creek

Plan saves $40 million on construction, provides revenue for lead lateral replacement

Milwaukee Mayor Tom Barrett and Waukesha Mayor Shawn Reilly mark their agreement with a water toast.

The city of Waukesha will get its Lake Michigan water from a Milwaukee, not Oak Creek as Waukesha officials had planned for the last five years.

“This is the most significant intergovernmental cooperation agreement in the history of southeastern Wisconsin,” Milwaukee Mayor Tom Barrett said during an announcement at Discovery World.

Milwaukee Mayor Tom Barrett and Waukesha Mayor Shawn Reilly mark their agreement with a water toast.

Getting water from Milwaukee instead of Oak Creek will result in millions of dollars in cost savings, officials said in announcing the deal on Monday. Waukesha will save $40 million in construction costs by cutting 10 miles off the length of the supply pipeline it has to build and will save millions more by securing lower water rates from Milwaukee. Waukesha residents will pay around $200 less per year for water versus other suppliers and some of the city’s top industrial water users could save $55,000 per year, according to Dan Duchniak, Waukesha Water Utility general manager.

The deal still needs the approval of common councils in both cities. It is also an agreement that many thought would never become a reality. Waukesha had an agreement to only negotiate with the city of Oak Creek since November 2012. That exclusivity agreement expired at the end of May after being extended once.

The end of that agreement opened the door for Milwaukee to reenter negotiations with Waukesha. The larger city has advantages of proximity and lower water rates over Oak Creek. While some intangibles may have favored Oak Creek – Waukesha would have been a major water customer and could have had more influence – the financials of the deal pushed Waukesha officials to Milwaukee.

“A Milwaukee water supply is the most cost effective and efficient choice for our customers,” Waukesha Mayor Shawn Reilly said. “Due diligence has led us to this partnership.”

Reilly said he had spoken with Oak Creek Mayor Dan Bukiewicz and notified him of Waukesha’s decision.

“They worked in good faith with us; we worked in good faith with them. What it really comes down to is the fact there’s a $40 million savings in construction costs,” Reilly said. “If the finances worked we would have definitely been with Oak Creek.”

The finances are swung in Milwaukee’s favor because Waukesha will be able to connect to its water supply at 84th Street and Coldspring Road instead of building a pipe all the way to the area of 27th Street and Ryan Road, Duchniak said.

The 40-year agreement would also benefit the city of Milwaukee, bringing in $3.2 million to $4.5 million in revenue per year. Jennifer Gonda, Milwaukee Water Works superintendent, said the two sides estimate it will provide a $40 million net benefit to Milwaukee residents over 20 years.

Barrett is already planning to use money from the first payments by Waukesha to replace lead water lateral pipes in Milwaukee.

“At the end of the day, this is about how government can act in a responsible fashion,” Barrett said.

The two sides didn’t always see eye to eye, particularly as Waukesha originally sought to secure a water source for an area that went beyond its current service area. The city contended state law required it to be able to provide water to the service area defined by the Southeastern Wisconsin Regional Planning Commission. But opponents argued that service area would violate the Great Lakes compact that allowed Waukesha access to Lake Michigan water.

Barrett on Monday described that as “an honest policy disagreement” and said he would tell Waukesha officials during the approval process that “if this breaks the way we think it should break and will break” the city was still interested in being a supplier to Waukesha.

“I think what the people of this region will come to appreciate over the years to come is that we never allowed those disagreements, we never allowed those challenges, to kill us,” Barrett said.

Reilly described it as “a partnership that will benefit both cities.”

“It is my hope that our partnership will lead to additional opportunities for us and others to work together for the common good,” he said.

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Arthur covers banking and finance and the economy at BizTimes while also leading special projects as an associate editor. He also spent five years covering manufacturing at BizTimes. He previously was managing editor at The Waukesha Freeman. He is a graduate of Carroll University and did graduate coursework at Marquette. A native of southeastern Wisconsin, he is also a nationally certified gymnastics judge and enjoys golf on the weekends.

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