GM to cost Warren Water Department $500,000
WARREN — When operations cease in March at the General Motors Lordstown complex, the Warren City Water Department stands to lose half a million dollars in revenue.
It will free up more water for the department to sell elsewhere, as long as some other industrial consumers — such as those moving into Lordstown — want to buy it, city officials said.
“The revenue loss will not be easily made up. You don’t just find another commercial enterprise to spend $500,000 a year on water,” Franco Lucarelli, director of the water department, said.
GM spent about $700,000 on water in 2015 and 2016, purchasing more than 600,000 gallons per day, Lucarelli said. The number decreased to about 500,000 gallons per day for about $500,000 in 2017 and 2018, Lucarelli said.
The city sends out about 11 million gallons of water per day.
“It will definitely have an impact of some sort on us. GM is a top-two consumer,” Lucarelli said.
Vince Flask, Warren auditor, said, “The biggest revenue loss Warren will see as a result of this is in water, roughly $500,000 a year. It is such an unfortunate situation, and the impact that we are going to feel is nothing compared to what those employees, their families and other communities will feel.”
Enzo Cantalamessa, city service director, said in Lordstown, the new energy center is a large consumer of water and another energy center is expected to come on board soon. Cantalamessa said he hopes the loss of GM as a customer simply frees up more water to sell to other large consumers like the energy center.
“The loss of revenue will be significant but not insurmountable,” Cantalamessa said. “It would be much more difficult to absorb if not for the energy center.”
But, Lucarelli said, it is too early to know if the energy center wants to buy more of its water from the city, as it gets it from other sources, too.
“We will have to figure out how that will work in a contract moving forward. In a perfect world, the energy center may be able to purchase more from us, but we haven’t spoken to them and to me that sounds like a premature assumption,” Lucarelli said.
The department has already been dealing with a decline in water consumption because of the cuts to the second and third shifts in January 2017 and June, Cantalamessa said.
After the third and final shift is eliminated in March, the city estimates it will lose, at most, $161,000 in income tax revenue. The figure is a total, predicted loss from the shifts lost in 2017, 2018 and 2019, Flask said. The blow is expected to be fully realized in 2020, Flask said.
The loss comes from people who work or worked at the complex in Lordstown or a plant in Lordstown connected directly to the plant, but live in Warren, and so must pay income tax, Flask said.
“The most we will lose is $161,000, and I think it will be lower than that. And it is spread over a period of time, so we have the opportunity to make adjustments accordingly,” Flask said.
Cantalamessa said the total economic impact of GM’s Monday announcement that the Lordstown and two other plants in Michigan and Ontario will be “unallocated” won’t be fully realized at first, that the effects will trickle down as the job losses hit the area. The city will prepare for and plan around the expected losses.
The city is expected also to lose out on a minimal amount of water pollution fees from the complex, Flask said.