Source: Sherman Publications

Twp. water, sewer charges to be studied

by CJ Carnacchio

February 20, 2013

Oxford Township wants to know if the rates and fees it’s charging for water and sewer are adequate for the services provided.

Last week, the township board voted unanimously to hire Paul Stauder, of Ann Arbor-based Stauder, Barch & Associates, to conduct water, sewer and debt reduction studies. They approved an amount not to exceed $3,500.

“He’s going to look at the sewer and water usage rates to see if the rates we charge are the correct rates for the usage compared to what we’re being billed by Oakland County,” said township Trustee Jack Curtis, who chairs the water/sewer committee. “We want to make sure we don’t have any shortfalls in the sewer and water funds.”

The county bills Oxford for sewer services provided by Detroit and for the water system that is owned by the township, but managed by the county’s Water Resources Commissioner’s (WRC) Office.

Township officials believe the studies will assist in the process of establishing an accurate fee structure for water and sewer charges along with the payment of current and future bonds.

“We have this outstanding (water) bond (debt) that we need to pay off,” Curtis said. “And some people believe we ought to be raising those rates to pay off the bond.”

He’s of the opinion “let’s find out where we’re at first before we just raise (rates).”

“You’ve got to have some sound basis for raising them,” Curtis said. “The first step is an evaluation of what like communities (charge). Communities that have water bonds. Communities that have their own water system. Communities that contract for sewer with Detroit. We need to find out if we’re charging the proper amount.”

For instance, according to Curtis, sewer customers “aren’t paying enough to cover” the monthly sewer bill from Oakland County, which in turn receives a bill from Detroit.

Oxford has 2,485 water customers and3,484 sewer users, according to township Clerk Curtis Wright.

Water customers are charged a minimum usage rate of $34 per quarter for 1,500 cubic feet of water – whether they use it all or not – and $1 for every 100 cubic feet they use above that.

On top of usage, township water customers also pay a debt service charge of $45 per Residential Equivalency Unit per quarter ($180 per REU annually) to help retire the municipality’s water bond debt of approximately $13.2 million. That debt was incurred for system improvements such as construction of two treatment plants and a 1 million-gallon elevated water storage tank on N. Oxford Rd. across from the high school.

An REU is a way to equate high volume water and sewer users (such as commercial developments) to the estimated average usage of a single family dwelling. Basically, one home equals one REU. A business that uses the equivalent of five single family homes, for example, would be charged rates based on 5 REUs.

Nonmetered township sewer users, which are primarily residential customers, are charged a flat rate of $86 per REU every six months. Metered sewer users, which are primarily commercial customers, are charged $23 per 1,000 cubic feet (mcf).

The township has already conducted a study of its water and sewer connection fees, which are charged whenever a new home or business want to tap into the municipal system.

Performed by township engineer Jim Sharpe, the study showed Oxford has the fifth highest water tap fee out of 11 townships, but the third lowest sewer connection fee out of 10 townships.

Right now, the township charges $6,075 per REU for water taps and $3,500 per REU for sewer taps. In other words, it would cost a combined $9,575 to hook a single family home up to Oxford’s water system – and that doesn’t include the fees charged by the WRC for the construction work to make the actual connection.

However, for a business that was rated for 5 REUs – the equivalent of five homes – the connection fee would be $47,875, again that doesn’t include the WRC’s fees.

Curtis explained this study was done because of comments he was hearing, as chairman of the township’s Economic Development Subcommittee, from business owners, developers and property owners.

“We asked them for reasons why they’re not considering developing here and they tell us that our water and sewer tap fees are too high,” he said. “Sure, they’re complaining, but we wanted to see if their complaints were based on fact, so we did a quick analysis of tap fees in like communities.”

Curtis said there’s one school of thought that says raise the tap fees in order to help pay off the water bond debt.

But he argues if developers and new businesses are not coming to the township now because of the current tap fees, why would they start doing so if they’re increased?

“We just can’t go out and make a wild statement that we need to raise our bills or we need to raise our tap fees,” Curtis said. “Let’s do a study, determine where we’re at, what we need to do, (then) do it with sound mind and a sharp pencil.”

Sharpe’s study compared Oxford Township’s connection fees to those of 10 similar townships in Oakland, Macomb and Genesee counties. The number of system users in each community ranged from 1,000 in Highland Township to 13,000 in Waterford Township. Only one township offered water services, but no sewer and that was Highland.

According to Sharpe’s study, the highest water connection fee was $7,850 charged by Grand Blanc Township, while the lowest was $2,100 charged by Waterford Township. The average water connection fee was $4,582, so Oxford’s $6,075 price is above the average.

Of those 11 townships, only two have a debt associated with their water system. They are Oxford with its debt of approximately $13.2 million and Lyon Township with its $1 million debt.

Four of the townships get their water from Detroit, whereas the rest, including Oxford, own their own municipal systems.

With regard to sewer connection fees, the highest was $16,041 charged by Lyon Township, while the lowest was $2,500 charged by Oakland Township. The average sewer connection fee was $6,163, so Oxford’s $3,500 price is below the average.

Of those 10 townships, only three have a debt associated with their sewer system. They are Commerce Township with its $50 million debt, Lyon Township at $7 million and Washington Township with its $6.5 million debt.

Six townships, including Oxford, send their sewage to Detroit for treatment. Two townships own their own sewer systems, one has it handled by a neighboring township’s system and one has it handled by Genesee county.