Source: Sherman Publications

Water rates to increase 12 percent

by Andrea Beaudoin

March 12, 2014

Independence Township Board of Trustees voted to increase water rates by about 12 percent on March 4.

The increase will come in two rounds-one effective March 16, 2014 and the other effective March 2015.

Residents must be feeling the pinch after the board just raised sewer rates by 17 percent in February.

Township Treasurer Paul Brown said because the water fund was not in the same dire straits as the sewer fund, the board decided to split the increase in water rates over a two-year period.

Supervisor Pat Kittle said the rate increases are painful, but necessary.

Unlike sewer services which are supplied from an outside source, Detroit Water and Sewage Department, the township owns its water resources--supplied by 16 wells throughout the township.

Independence Township DPW Director Linda Richardson said because the township owns its own water, it is protected from huge rate increases, like other communities that are supplied water from the DWSD are now facing.

Richardon added the water department is in a good position to handle infrastructure costs without having to take on any more long term debt.

Kittle said water rates, like sewer rates, still had to go up because the township could not keep subsidizing rates--a decision made by a previous administration.

If subsidies continued the township would eventually violate their own reserve fund policy as well as state law.

“The board made a major policy decision several years ago to subsidize sewer and water rates for residents during the housing crisis,” said Kittle. “The Township was covering utility cost increases by pulling cash out of the Water and Sewer savings accounts.”

Kittle reiterated the previous board made the right decision during what was an extremely difficult economic time, but the township needed to take immediate action to stabilize fund balances.

“We took the dramatic action of raising sewer rates by 17% because the Sewer Fund would be broke in the year 2016,” he said.”

Other costs that needed to be considered when increasing sewer rates include substantial increases from DWSD, necessary infrastructure improvements and unavoidable maintenance costs.

While the water fund was in better shape than the sewer fund, it would still go broke if subsidies continued.

Kittle said the time to avoid bringing the water fund balance to “critical-mass” or a zero balance by 2020-21, was immediately.

A recent rate study, conducted by Bendzinski and Sons a group of financial analysts that work with Michigan municipalities, recommended a rate increase of 14 percent.

Brown said while no rate increase is easy, it’s necessary to ensure the township remains on solid financial ground.