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Village residents give input on proposed utility rate hikes



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Oxford Village has not raised its water rates since 2008 when the municipality built this $2.5 million treatment plant on S. Glaspie St. Photo by C.J. Carnacchio. (click for larger version)
June 25, 2014 - A small group of folks attended the June 17 public hearing to ask questions, offer suggestions and express opinions regarding the Oxford Village Council's plans to increase water and sewer rates (see story above).

"I do not understand a whole lot of this, but what I do understand is that I'll be personally facing a significant increase," said village resident Christine Ellis. "I'm really hoping that there can be maybe some sort of (way to) ease in to this, so that (I'm) not having to cut drastically from my little single-parent budget."

"Don't raise it all at once, whatever you do," said resident Shelia Frost.

Village resident Gwenn Stevenson liked the idea of having customers pay for the amount of water they actually use instead of having 2,000 gallons automatically included in the base rate as is the practice now

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"I've never gone over the 2,000 gallons," she told council. "I don't even use near 2,000 gallons. I don't take 10 showers a day. I don't water my lawn incessantly."

"I never use 2,000 gallons, but yet I'm paying every month for water that I'm not using," Stevenson continued. "So, it makes sense to me, the more water you use, you're probably going to pay a higher bill."

Resident Glenn Denomme was bothered by the 16 percent rate increase that had been proposed prior to last week's hearing.

"I'd like to see the hands of anybody who got a 16 percent raise in the last five years," he said. "Is there anybody here that had that kind of raise? I don't think so."

"I think the biggest problem here is the shock of the number because none of us got a raise like that," Denomme noted.

Denomme asked if the village has looked into reducing its operational costs or refinancing the existing bonds to save money.

"We did make a big improvement on the operating cost," replied village Manager Joe Young. He explained that prior to the new water plant's construction in 2008, the old plant was operated by village employees.

One full-time employee, just prior to his retirement, was costing the village $83,612 annually in wages and benefits. The employee who was set to take over for him was going to cost the village $59,351 per year.

The new plant is automated, which eliminated the need for full-time staffing.

The municipality outsourced the work in 2009 and now, it costs under $40,000 per year, according to Young.

On top of that, Young noted the village sold the lease it held for a cell antenna atop the water tower on S. Glaspie St. That sale generated $445,000 in revenue for the water fund.

Another cash infusion came when the village transferred a total of $500,000 from its sewer fund, which used to be flush with $1 million in reserves, to its water fund in 2011 and 2012.

"That's why we have not had to raise (water) rates because we've been able to generate more revenue," Young said.

But those have only been stopgap measures and the village can no longer afford to put off increasing the rates, officials said.

The water and sewer funds are each projected to lose $219,000 in the upcoming 2014-15 fiscal year, which begins July 1.

"We don't want to raise the rates," Young said. "But now we're at a point where we need to address the (billing) structure."

The manager said the water and sewer rates need to be adjusted so the funds they support don't get into a deficit situation and so they're more fair and equitable for the customers paying them.

As for refinancing the water bond debt, Young indicated that's not a financially viable option at this time, but the village will continue to look into it every year.

Frost wondered why the village is considering charging higher rates for larger water meters. "Why would anybody care about the size of your pipe?" she asked.

Mike Engels, a representative of the nonprofit Michigan Rural Water Association who conducted the village's rate study, previously explained the reasoning behind charging users based on meter size.

The first reason is larger buildings require larger water systems – larger water towers, larger-diameter water mains, etc. – for firefighting purposes. Larger systems cost more money and incur more bond debt.

The other reason is capacity.

A groundwater system like the village utilizes has a "limited capacity" and if more water is needed to satisfy larger-meter users, the village might have to drill additional wells and build a larger water tower, all of which, again, costs more money, Engels explained.

Paying based on meter size is a "standard practice" throughout Michigan in an estimated 80 percent of communities with populations greater than 1,000, Engels said.

Resident Kathy Denomme said she understands why the village needs to fix the rate structure right away because the municipality isn't collecting enough to cover its costs.

"I appreciate that you don't want to kick the can down the road so to speak," she said. "There is an issue (and) we need to deal with it. I get that. I think it does sound fair that whatever you use, you should pay for (it). I get that, too."

What concerns Denomme is "how are we going to prevent" this from happening again.

"I don't want (the village to) come (back) six years later and say, 'Gee, we got an issue,'" she said. "To me, this looks like perhaps somebody wasn't keeping a close eye on it."

"I trust you to put a plan together and we have to take care of this. I don't want to be told we got to do this again," Denomme added.

Denomme told council she would prefer that any rate increases be phased in over time, so "it's not a slap in the face all at once."

But by the same token, she noted, "I don't want (the finances) to get worse, either."

"I'm trusting you to look at it like you're looking at your family checkbook because you're looking at my checkbook," she said.

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.
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