June 25, 2014 - A new set of proposed rates and another public hearing.
That's what came out of the Oxford Village Council's June 17 special meeting/public hearing regarding plans to increase the municipality's water and sewer rates in order to cover operating costs, pay debts and finance future system improvements.
"We haven't been charging enough for (these services) is what happened," explained Councilman Bryan Cloutier. "Why? I don't know. I wasn't here, but we have to fix this moving forward or we're just going to continue in a vicious cycle . . . We're here to fix the problem once and for all."
"We don't want to overcharge you. We don't want to undercharge you," noted Councilwoman Maureen Helmuth.
Council scheduled another public hearing on the topic for 6 p.m. Tuesday, July 8 at the village offices located at 22 W. Burdick St.
At the hearing, a third proposed rate structure will be presented and discussed.
Under this latest proposal, an average household that uses 4,000 gallons of water per month and has a ¾-inch meter would go from paying $47.77 to $68.29 on its monthly water/sewer bill. That's an increase of $20.52 (or 43 percent).
An average household that uses 4,000 gallons of water each month and has a 1-inch meter would go from paying $47.77 to $72.11 on its monthly water/sewer bill. That's an increase of $24.34 (or 51 percent).
Village records indicate 922 users have 1-inch meters while 362 customers have ¾-inch meters.
The latest proposed rate structure would:
n Charge a monthly base rate for water and sewer that's based on meter size – the bigger the meter, the higher the rate. The base rate is designed to pay the water and sewer systems' fixed costs, such as bond debts, which are not related to usage. The base rate is basically the cost to have the water and sewer systems in place.
n Eliminate the 2,000 gallons of water and 8,333 gallons of sewage each customer is automatically allotted each month as part of the base rate. Every customer would pay for every gallon they actually use starting from zero.
n Increase the water and sewer flow rates. Water would go from $3.41 to $3.96 per 1,000 gallons, while sewage would increase from $0.51 to $1.75 per 1,000 gallons.
n Charge commercial and industrial customers the monthly Industrial Waste Control (IWC) fee that Detroit has been assessing the village based on the size of their water meters.
Why are rate increases needed?
According to figures supplied by village Manager Joe Young, based on the current rates, the municipality's water and sewer funds are each projected to have operating losses of $219,000 for the upcoming 2014-15 fiscal year, which begins July 1.
But it isn't just operating losses the village has to worry about. It also has to charge customers enough to meet its significant debt obligations.
The water system has $420,000 in bond debt payments to make annually. On top of that, the village water fund owes the sewer fund $500,000 for cash transfers made to it in 2011 and 2012.
With regard to the sewer system, the Clinton-Oakland Sewage Disposal System, of which the village is a part, projects charging the municipality an additional $108,000 annually for capital outlays financed by bond issues over the next 19 years.
The last time the village increased water rates was in September 2008 when they went up 5 percent. The base rate increased from $17.20 to $18.10 per month while the flow rate increased from $3.25 to $3.41 per 1,000 gallons.
Councilwoman Sue Bossardet speculated as to why past councils didn't deal with the rate issue.
"I think maybe previous councils just didn't want to either face it or (they) were trying to be kind," she said. "It doesn't make any difference. The fact is that it's happened . . . We can no longer afford to do that. We are bleeding money by doing that."
Councilman Elgin Nichols said if the public has a "better way" to meet the water and sewer systems' financial obligations he'd "like to hear it."
"We have worked this thing to death and it is a bill that's not going to disappear," he said.
The current structure
Right now, all village water customers pay a base rate of $18.10 per meter (regardless of size) per month, which includes up to 2,000 gallons of water whether they use it or not.
Likewise, all village sewer customers currently pay $22.85 per Residential Equivalent Unit (REU) per month, which includes up to 8,333 gallons of sewage per REU whether they produce it or not.
An REU is a unit of measurement equal to the average water usage of a single family home. A home is assigned a value of 1 REU whereas a business, such as a restaurant or car wash, can be assigned multiple REUs and pay for them.
Once customers reach the minimum 2,000 gallons of water and 8,333 gallons of sewage, they pay $3.41 for every 1,000 gallons of water used after that and $0.51 for every 1,000 gallons of sewage they produce.
Base rates based on meter size
Under the proposed structure, the monthly water base rate would be based on meter size.
Water customers with ¾-inch meters would see their base rate decrease to $16.45 per month, while those with 1-inch meters would see their rate remain at $18.10.
All other users would pay increased base rates determined by the size of the meter.
Under the proposal, a 1.5-inch meter pays $53.47; a 2-inch meter pays $92.96; a 3-inch meter pays $201.54; a 4-inch meter pays $359.48; and a 6-inch meter pays $793.82.
The sewer base rate would also be paid based on meter size.
Sewer customers with a ¾-inch meter would pay $29 while those with a 1-inch meter would pay $31.17.
As for the larger meters, a 1.5-inch meter pays $94.24; a 2-inch meter pays $163.83; a 3-inch meter pays $355.20; a 4-inch meter pays $633.56; and a 6-inch meter pays $1,399.06.
Flow, baby, flow
The latest proposal calls for water and sewer customers to pay for every gallon they use – no more including 2,000 gallons of water and 8,333 gallons of sewage in the base rates.
"That's really not equitable," Young said. "Some people don't use 2,000 gallons (of water). Some people don't (produce) 8,000 gallons (of sewage). This is more equitable. You pay for what you use."
It's proposed that all customers would pay $3.96 for every 1,000 gallons of water they use and $1.75 for every 1,000 gallons of sewage they produce.
Make room for the IWC fee
Right now, the IWC fees charged by the Detroit Water and Sewerage Department are absorbed by the village sewer fund to the tune of approximately $38,000 annually.
Village officials are looking to pass this cost along to non-residential sewer users on a monthly basis according to their meter size.
Thus, for commercial and industrial sewer users, the IWC charges would be as follows – a ¾-inch meter would be charged $13.56 per month; a 1-inch meter pays $22.60; a 1.5-inch meter pays $49.72; a 2-inch meter pays $72.32; a 3-inch meter pays $131.08; and a 4-inch meter pays $180.80.
The aforementioned IWC charges would be assessed on top of the village's sewer base and flow rates.
CJ Carnacchio is editor for The Oxford Leader. He lives in the Village of Oxford with his wife Connie and daughter Larissa. When he's not busy working on the newspaper, he enjoys cigars/pipes, Martinis/Scotch, hunting and fishing.