Akron navigates $1.3B debt burden as sewer mandate crowds out water investments

Akron navigates $1.3B debt burden as sewer mandate crowds out water investmentsWith combined sewer overflow projects accounting for 61% of the city's total debt, Akron officials are relying on recent rate hikes and strategic refinancing to fund the upcoming Northside Interceptor Tunnel and a potential $300 million high-rate treatment facility.

Sewer CSO projects make up over 61% of Akron's $1.3 billion total debt, creating financial constraints that the mayor noted have "crowded out" other water infrastructure investments.

The city's sewer fund balance is projected to grow following a recently enacted rate increase, which was implemented to prepare for debt service on the Northside Interceptor Tunnel starting around 2028.

Akron recently refinanced a 5-year design loan for the tunnel into a longer-term construction loan, temporarily dropping annual sewer debt service to approximately $40 million.

Officials are negotiating to reduce the estimated $300 million cost of a proposed enhanced high-rate treatment (HRT) facility, with the mayor stating the city is in the "endgame" of consent decree negotiations.

To manage a tight water fund balance, the city is implementing labor cuts within the water department, though it is still allocating $374,000 for new heavy equipment at its treatment plants.

Akron's FY2026 operating budget discussions have highlighted the heavy financial toll of the city's federally mandated combined sewer overflow (CSO) consent decree. According to Director of Finance Steve Fricker, over 61% of the city's $1.3 billion total debt is tied directly to CSO projects. The mayor acknowledged the burden during a March 9 committee meeting, noting that "the sewer debt has kind of crowded out some of our water [investments] as well," limiting the city's ability to fund its drinking water infrastructure. Despite the constraints, the city is preparing for its final major consent decree hurdles, including the Northside Interceptor Tunnel and a proposed enhanced high-rate treatment (HRT) facility. The HRT facility alone could add another $300 million to the city's debt total. However, the mayor expressed optimism about ongoing negotiations with regulators, stating, "We are still very hopeful that we are going to be able to reduce the cost of this last proposed enhanced high-rate treatment facility... we feel like we are in the endgame, and for the first time we have all the parties on the same page." To prepare for the upcoming financial obligations, Akron implemented a sewer rate increase late last year. Fricker confirmed to the council that no additional rate hikes are planned for 2026. The recent increase is specifically designed to build the sewer fund balance ahead of the Northside Interceptor Tunnel's debt service, which is expected to begin in 2028. In the interim, Akron's annual sewer debt service has dropped slightly to roughly $40 million. Fricker explained this temporary reduction occurred because the city was able to roll a 5-year design loan for the tunnel into a longer-term construction loan. While the sewer fund grows, the city is closely monitoring its water fund balance. Fricker noted that the FY2026 budget includes labor cuts within the water department to control costs. However, the city is still allocating approximately $374,000 from the water capital fund for essential equipment, including 10-ton dump trucks and a track loader for the water plant, alongside new utility vehicles for the wastewater treatment facility. In a bright spot for the city's water infrastructure, a presentation on the closeout of American Rescue Plan Act (ARPA) funding revealed that the city successfully utilized federal dollars to accelerate water main replacements. A consultant from Guidehouse noted that the strategic use of ARPA and other funds allowed Akron to become the first Midwest city to fully eliminate lead service lines from its distribution system.