Source: Sherman Publications

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Fees surging for sewer service

by Andrea Beaudoin

January 29, 2014

Citing aging infrastructure and increased costs from Detroit Water and Sewage Department, Independence Township hiked sewer rates by 17 percent.

Fees had to be raised to pay for increasing sewage treatment costs, said Independence Township Supervisor Pat Kittle.

"If the township were to keep subsidizing sewer costs, the reserve fund would be drained and would violate a reserve fund policy adopted by the township," Kittle said.

Township Board of Trustees voted, Jan. 21, to raise the rates. Before the increase, residents paid an average of $83 every three months. With a increase, the average resident will pay $14 more per quarter.

Independence Township, like many other communities, contracts for sewer service through Oakland County, which in turn obtains sewer service from the Detroit Water and Sewage System.

Oakland County Executive L. Brooks Patterson said costs associated with the Detroit system will continue to rise because of an aging infrastructure and legacy costs.

Detroit Water and Sewage Department is working to create a new regional water authority called the Great lakes Regional Water Authority.Oakland County will not be entering that deal.

"You can put lipstick on a pig, but it's still a pig," Patterson said.

Under a regional authority, Oakland and Macomb counties would lease infrastructure from Detroit, making payments to the city of Detroit.

"The system is about $8 billion in debt," said Patterson, who also said Oakland County will not sign up to share ownership of the system.

"No deal is better than a bad deal," he said. "They wouldn't even show us the financials. It's a bad deal, and Oakland County will not enter into a bad deal."

Oakland County will not sign on as an owner because that would mean we'd be responsible for ownerships cots to the system.

For Detroit the largest US city to declare bankruptcy, the water system is an asset that could serve as a huge source of revenue.

"There are still parts of the system that have wooden pipes," said Patterson. "And rates will continue to rise---they will at least triple."

Patterson said the financial reports requested but held back include estimated upgrades and repairs needed to the system.

About four million customers get their water from the system.

"It's easy for Oakland County to say, 'no,'" said Patterson. "As an owner we would be exposed to costs into the billions, so Oakland County will stay a customer on the system."

Meanwhile, Independence Township officials must raise rates to keep up with increasing costs.

Patterson said in Independence Township infrastructure improvements were not completed by previous administrations which has left township supervisor Pat Kittle with a slew of costly improvements that need to be completed.

"Pat Kittle is now being forced to play catch-up with improvement costs," Patterson said.

Kittle said a million dollar deficit for 2013 in the sewer fund, which will continue to grow, had to be addressed.

From 2008 to 2012 the cost of sewage treatment has raised 15 percent each year, and the sewer system has lost an average of $556,000 a year-just in Independence Township.

Each year after 2013, the township will face a continuous deficit in the water fund of $543,000 in 2014—$581,753 in 2015—and over $480,000 for the years 2016 and 2017.

The township's sewer system currently has over 120 miles of sewer mains in addition to several lift stations, pumps and manholes connecting 9,000 residents to the system.

"The price tag for all this equipment runs into the tens of millions of dollars," said Kittle.

"All of this infrastructure is linked to huge sewage interceptor system carrying waste to treatment plants in Detroit and Pontiac."

Increased sewage treatment fees are also being passed on to the township from Oakland County and the Detroit Water and Sewage Department.

Kittle said the Detroit Sewage Treatment annual fees alone have risen from $1.7 million in 2010 to an estimated $3.2 Million in 2016—or about an 88 percent increase.

In addition to the fee increase, another project planned by Oakland County carries a $180 million price tag-with the township's share being $9 million.

In 2013 Independence Township faces a $1 loss unless sewer rates rise. Kittle said deficit expenses have not been passed onto residents instead, the township has been subsidizing the expenses from the general fund.

"That just can't continue," said Kittle adding that although it is always painful to raise any expense—it has to happen because the township cannot keep draining their savings account."

Future infrastructure projects are also required-and the township must save money in case of a major repair to the townships $27 million system.

Kittle said regular maintenance to the system is critical in order to make sure the system is not leaking and causing environmental damage.

In order to make sure the system is functioning properly the system requires a "check-up" and possibly other repairs or replacement of sewer pipes.

"All this costs money," said Kittle.

He added that it costs $500,000 for every 25 miles of cleaning and inspection to the 118 miles of pipe in the ground.

No raise planned for city residents

Just 115 homes are served by the system in the city of the village of Clarkston—which pays fees to the township.

City of Clarkston contracts water and sewer through the township, but have set their own rate schedule.

City Manager Carol Eberhardt said the city is not facing a deficit because rates have never been subsidized in the city like in the township.

In 2009 City of Clarkston residents witnessed their sewer rates rise from $57 to $97.

A letter was sent to residents informing them that rates had to rise because of the city's debt to Independence Township's Public Works and the city had to also make a retroactive payment of $52,000.

In addition to the debt owned by the city to the township, there was also a major break in the sewer system on Washington in downtown, which cost the city nearly $100,000 in repairs and depleted the city's reserve fund to $164,634.

To make up for the repair and debt to the township, residents' sewer rates were raised from about $57 quarterly to $97, an additional $40 quarterly over a 10 quarter period.

Residents would likely never see those rates again based on the increased charges passed onto the city from the township.

Although residents were hoping their bills would go back down, City of Clarkston Mayor Joe Luginski told residents not to expect that to happen.

Water expenses which include debt and depreciation of the system also decreased resulting in an increase of over $488,000 in loses to the fund or $62,913 annually.