Finishing Line - June 2010

Grey Water— Reuse has Tangible
and Intangible Benefits
By Robert Roman

One of the biggest barriers to the adoption of reclaim in the car wash industry has always been the initial cost of the system components. Since the time to make up this cost depends on the volume of sales and the cost of fresh water, car wash owners must be able to value the water supply enough to justify the cost to purchase, install, and operate the extra equipment. However, the reuse of grey water in a car wash is becoming easier to justify.

According to the U.S. Environmental Protection Agency, Government Accountability Office and other sources, many homeowners and businesses are going to face potentially huge hikes in water and sewer rates for the foreseeable future. Already, some consumers are seeing price hikes of 50 percent to 100 percent or more.

Scalding rate hikes are often the result of years of sustaining artificially low water and sewer rates at the expense of expanding system capacity and repairing or replacing aging pipes. Combined with water shortages due to drought, rising demand, and the increasing cost to provide fresh water and process wastewater many municipalities no longer have a choice but to impose major price hikes or raise taxes.

Another barrier to reclaim is the attitude: If you can do without reclaim, do without it.

The decision to reuse grey water is no longer a nightmarish prospect haunted by poor water quality, maintenance, reliability issues, and pit odors. Common experience has shown that the technology available today is far superior in cleaning up grey water and it can be efficiently used in the car wash process.

Consequently, all of this should make it easier for car wash owners to value the water supply. Consider the following example:

The car wash owner cleans 65,000 vehicles a year using 50 gallons of fresh water per car at a cost of $3 per thousand gallons or an annual water bill of $9,750. The owner is planning to install a reclaim system that would reduce fresh water consumption by 70 percent, which translates to an annual savings of $6,825.

The owner would divide these annual savings by 0.20 to make a rough estimate of the cost of a reclaim system that could be supported by these savings based on a payback period of about five years. In this case, the amount would be $34,125. Of course, as the cost of fresh water rises, so do the savings and the cost of a system that these savings could support.

Now let’s consider this owner is facing a rate-hike shock to $9 per thousand gallons. In this case, the owner’s annual expense for water would rise to $29,250. The annual savings from reclaiming wastewater would be $20,475, which would support a system cost of $101,250 ($20,250/0.20) based on a payback of five years. Subsequent benefits would provide a robust return on investment.

Moreover, there is the long-term benefit to consider because net operating income contributes strongly to the market value of a car wash; the higher the net income, the higher the value.

In the case of new car wash construction, there may also be additional benefits in the form of reducing development impact fees and making the project more palatable to the community and those responsible for approving the permits.

In valuing the water supply, car wash owners should consider the tangible and intangible benefits of reusing grey water in the car wash process in relation to the cost to purchase, install, and operate a reclaim system. A decision to purchase a reclaim system that results in increasing return on investment and/or decreasing overall operating expense will generally be a good decision for the business.

Bob Roman is president of RJR Enterprises — Consulting Services (www.carwashplan.com). You can reach Bob via e-mail at bob@carwashplan.com.

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