Water crisis in 1993 spurs bond plan in Milwaukee mayor's proposed budget.

CHICAGO -- Mayor John Norquist of Milwaukee has proposed a fiscal 1995 budget that includes $89 million in bond authorization to improve the city's water system in the wake of a 1993 cryptosporidium outbreak that made thousands of people ill.

The improvements to the city's water system represent the single largest capital project in the mayor's proposed budget of just under $1 billion for the fiscal year that begins Jan. 1.

Norquist's plan calls for using bond proceeds to relocate a water intake pipe. from Lake Michigan at one water plant, and to improve filtration and use an ozone disinfectant process at the city's two water plants, according to Stephen Agostini, Milwaukee's director of budget and management.

If the Milwaukee Common Council approves the plan, the city would issue only about $19 million of bonds next year, Agostini said. The rest of the bonds would be issued in 1996 and 1997, he said.

The budget also calls for an increase in water rates that is expected to average $17 a year per household in conjunction with the bond authorization.

In April 1993, Milwaukee's water supply became contaminated by a protozoan called cryptosporidium that resulted in flu-like illnesses for thousands of people and a municipal order to boil water that lasted for seven days.

According to city bond disclosure documents, an estimated 340,000 people exhibited the symptoms although few were tested for the presence of cryptosporidium. More than 50 deaths of people with impaired immune systems or with terminal illnesses may have been related to the water contamination.

So far, the city has been hit with about 1,400 claims, including 11 death claims. In addition, the city is defending itself against two class action suits and five individual suits that have been filed, according to the disclosure documents.

If found liable, the city's liability would be limited under Wisconsin law to no more than $50,000 per person, according to the bond documents.

Norquist's budget also calls for $12.5 million of general obligation bonds for maintenance and classroom space projects for Milwaukee public schools.

Other bonding proposals in the budget include $434.9 million of GO bonds for general capital projects and $155 million of revenue anticipation notes for the city and its school system, according to Dorinda Floyd, a budget management specialist for the city.

Floyd said another $25 million of GO bonding authority is included in the budget for "unforeseen" needs, in addition to $4.8 million of special assessment GO bonds, $12.4 million of tax increment financing GO bonds, and $415 million of delinquent tax GO bonds.

She said the city often carries over bonding authority that hasn't been used up in a given year, but that there is a three-year limit.

The mayor's budget would raise the property tax levy in Milwaukee 0.8% to $149.9 million from $148.7 million in the current fiscal year.

Agostini said the budget was presented to the council last Friday. Final adoption of a fiscal 1995 budget is scheduled for Nov. 10.

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