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Sewer costs
Oxford to help pay for $147.7M in system repairs, improvements

by CJ Carnacchio

September 12, 2012

When the sewage finally hits the fan, Oxford officials want to know how much of it they're going to pay for.

That's why representatives from the township and village met with engineers from the Oakland County Water Resources Commissioner's (WRC) Office Sept. 6 to give their input regarding how they wish to help finance an estimated $147.7 million in necessary repairs and planned improvements to the Clinton-Oakland Sewage Disposal System (COSDS).

"Everybody's going to share in the cost here, regardless of where (geographically the community's linked to the system), but there's still a lot of different ways you can slice the pie," said WRC Chief Engineer Tim Prince.

Oxford Township and Village are part of the COSDS, which includes a total of 12 townships, villages and cities.

How much each community will pay and by what method or formula the project costs will be allocated is still being determined, hence last week's meeting to seek Oxford's input. No dollar amounts regarding how much either the town ship or village could be expected to pay are available yet.

"We want to start getting all the different communities' ideas (on how project costs should be allocated) and document them," Prince said. "This is what Oxford Township thinks. This is what the village thinks."

The township sends out approximately 3,500 sewer bills each cycle, while the village bills approximately 1,350 municipal sewer users.

Prince noted that although the WRC Office is seeking input from all the communities in the Clinton-Oakland system, the final decision regarding cost allocation will ultimately rest with not a board, but one man Oakland County Water Resources Commissioner John P. McCulloch.

"Boy, there's some power," said Councilwoman Maureen Helmuth.

Township Treasurer Joe Ferrari believes the cost allocation should be based on each community's current average flow of sanitary sewage.

"I think the answer's flow rate," he said. "What you put in is what you pay . . . We're paying for what we're actually putting in the system, not what we could put in the system."

Township Supervisor Bill Dunn agreed.

The Oakland-Macomb Interceptor

Most the what needs to be done involves repairing the Oakland-Macomb Interceptor, a pipeline through which all of the sanitary sewage from the COSDS and Macomb County flows to the wastewater treatment plant in downtown Detroit.

"This project needs to be done one way or the other," Prince said.

The estimated cost to make repairs to this interceptor is $103.9 million.

"That interceptor used to be owned by Detroit," Prince said. "When that system was owned by Detroit, basically what you would have seen is an increase in the Detroit (sewer) rate (in order to pay for these repairs). Now, it is an intercounty drain. Oakland and Macomb negotiated with Detroit to take ownership of this interceptor. Detroit is now completely out of the picture."

Ferrari asked if Detroit required any "cash payment" when it turned this interceptor over to the two counties.

"Detroit's benefit was they got rid of the liability," Prince said. "There were some lawsuits going on at the time that said (the city) didn't maintain its system properly. They settled all the lawsuits and they got rid of the liability. They gave it over for no cost."

Since the interceptor only services Oakland and Macomb counties, they'd have been the only two counties paying for all the repairs regardless of who owned it.

"The thought was we could manage those repairs more cost-effectively than if Detroit handled it," Prince said.

Tim Minor, an engineer/project manager with the Detroit-based Applied Science, Inc., a consulting firm that's working with the county, explained that "at the time of transfer (of ownership), the interceptor was in bad shape."

"It needed some immediate attention," he said. "Part of the work that's being done here is cleaning, inspection and repair."

"They're not going to excavate and replace," Prince noted. "They're going to go down into the pipe and basically, re-line the pipe."

Detroit's lack of oversight

Ferrari asked what happened to all the money that Oxford and other COSDS communities paid over the years to Detroit to take care of the system.

"Was it not being maintained?" he said. "Is it like the (Detroit) zoo and DIA (Detroit Institute of Arts)?"

Ferrari was referring to the fact that Oakland County taxpayers now help support both the city zoo and DIA through dedicated millages.

"Detroit doesn't have a big capital reserve (budget) that they've been putting (the money that communities pay for sewage treatment) into," Prince said. "Mostly, Detroit sort of pays as it goes."

"So, it is like the zoo and the DIA," Ferrari responded. "When they run out of money, they're out of money, then they come back to us for the money. Same thing . . . So basically, (the city) didn't maintain (the interceptor) for all the years that we sent money down to Detroit."

"They certainly took the fees," added Dunn.

"But they didn't put those fees back in the infrastructure," Ferrari said.

Prince said part of Detroit's problem was "not being proactive enough as far as inspecting" the interceptor's condition.

"But we gave them money for that. It wasn't free," Ferrari said. "So, we're paying for their lack of oversight?"

"Yeah, partly," replied Prince.

Sending wastewater to Pontiac

In addition to making much-needed repairs to the Oakland-Macomb interceptor, COSDS communities are also being asked to help pay $24.4 million to construct a 36-inch sewer diversion line and a pump station on Perry St. leading to Pontiac's plant.

"That will take a portion of the Clinton-Oakland flows (i.e. 30 percent of the total amount) and send them to the City of Pontiac wastewater treatment plant instead of the City of Detroit wastewater treatment plant," Minor said.

This diversion line to Pontiac will require building a storage tank for the sanitary sewage with an estimated price tag of $19.3 million. It would be built at the Elizabeth Lake Pump Station.

"They're talking about building storage there for peak rain events," Prince explained. "(It would) hold back flow so the sewer system doesn't get surcharged."

Theoretically, it's not supposed to, but realistically, some storm water does infiltrate sanitary sewer systems through sump pumps, leaky pipes, manholes, etc. Fortunately, the Clinton-Oakland system is "one of the drier systems" with regard to this, according to Prince.

Dunn didn't understand why Oxford should have to pay for any of the project that involves connecting to the Pontiac wastewater treatment plant.

"It looks like this is upstream of where we connect (to the COSDS)," he said. "Why should we be part of that? We're not going to benefit."

Prince said the benefit of constructing this Pontiac diversion is the "long-term savings" to the COSDS as a whole.

"We're projecting that it's going to save Clinton-Oakland money," he said.

Prince explained that an analysis of how much Detroit rates are "going to go up per year over the next 30 years" was conducted based on projections and it showed "6 percent (per year) for 10 years and then 3 percent (per year) for the next 20 years."

"If you compare that to how much we think Pontiac rates are going to be . . . we're saying long-term it's going to be a lot more cost-effective to send that 30 percent flow to Pontiac than it is to Detroit," he said. "The estimated savings for the Clinton-Oakland system was about $25 million (over 30 years)."

How much of that estimated savings would Oxford realize?

"For Oxford Township, you'd have to factor in the percentage of what your cost is compared to the whole system," Prince said. "So, if your 5 percent of the whole system, you could just take 5 percent of that $25 million."

Just as Oxford's asking why it should help pay for the Pontiac diversion line, Prince noted that Waterford and West Bloomfield townships could easily ask why they should have to pay part of the $103.9 million bill to repair the Oakland-Macomb Interceptor when "most" of the sanitary sewage in those two communities would end up flowing to Pontiac.

"You could argue either side of this story," Prince said. "If you want to say let's do this based on tributary flow, then (Oxford) will get a hell of a lot bigger chunk of this $104 million because your flow's going (into the interceptor to Detroit) and Waterford and West Bloomfield's (flow) is going to Pontiac."

Right now, the COSDS isn't sending any sewage to the Pontiac plant because there's no connection. "There's only one community tributary to it and that's Pontiac," Prince said.

The deal to eventually send flow to Pontiac was negotiated to "benefit all the communities," Prince noted. "The county said, 'You know what? We feel this should be (treated like) all one system. Everybody's going to benefit because of Pontiac."

"This whole concept was negotiated and developed because we thought we're going to save all the communities money," Prince said.

Getting a better deal with Macomb

Prince explained how diverting 30 percent of the flow to Pontiac, instead of the intercounty interceptor, could potentially lower Oakland's portion of the interceptor repair costs.

With previous interceptor repairs, Macomb paid 60 percent and Oakland paid 40 percent. "A good deal of that ($103.9 million repair estimate) is going to go to Macomb," Minor said.

If 30 percent of COSDS's flow wouldn't be going through the interceptor, Oakland can argue that its share of the $103.9 million repair cost should be even lower.

"We're saying we should get a better deal now," Prince said. "We're (working on) sending less flow to the (interceptor) . . . We're talking to Macomb County and saying we need to renegotiate how this next segment's going to be paid for because we should be paying less of that percentage."

"We're working to negotiate a split that's more advantageous to Clinton-Oakland," Minor said. "That 60-40 is a starting place. We're going to try to get something even better for Clinton-Oakland."

Drain board would set the rates, not the City of Pontiac

Dunn also expressed concern over how much Pontiac could end up charging for treating this sewage.

"Who's going to regulate the prices? Is it going to be the communities or Pontiac?" he asked. "You can give me all these numbers all you want, but they could give us rate increases just like the City of Detroit can. Or is (the rate) going to be locked in?"

"It's not a locked in rate," Prince answered.

"Then I don't agree with this," Dunn retorted.

Prince explained that it won't be Pontiac setting the rates, it will be a drain board.

"Right now, for example, John McCulloch is the chairman of the drain board," he said. "I think there's two other board members."

The city isn't even in charge of its treatment plant.

"Pontiac's not managing it anymore, the drain board is managing it," Prince said. "Basically, our (WRC) office is managing it. What ended up happening is our office agreed to pay off some of their bonds and that's probably going to show up in a slight rate increase to (Pontiac sewer customers). But over time, it will be cheaper for them doing it that way."

For example, if at some point in the future 50 percent of the flow to the Pontiac plant came from the Clinton-Oakland system and 50 percent came from the city's users, "then basically, the cost to operate that plant would be shared 50/50," Prince said.