2010-05-15 / Top News

Island Sewer Rates May Begin Four-year Climb in 2011

By Karen Gould

The Board of Public Works (left) faced City Council members during a joint meeting Friday, April 30. The board advised the city of a proposed 4.5% sewer rate increase plan to support a $4 million plant upgrade project. No rate increase decisions were made during the meeting. Pictured are (left, front to back) Department of Public Works Director Bruce Zimmerman, board member Victor Callewaert (not visible), board Chairman Tom Lewand, Andrew Doud, Ron Dufina, and Jim Pettit; from the city (right, front to back) Jason St. Onge, Dan Wightman, Mayor Margaret Doud, Armand “Smi” Horn, consulting engineer Jack Rafter, Mike Hart, and Frank Bloswick. Armin Porter was absent. The Board of Public Works (left) faced City Council members during a joint meeting Friday, April 30. The board advised the city of a proposed 4.5% sewer rate increase plan to support a $4 million plant upgrade project. No rate increase decisions were made during the meeting. Pictured are (left, front to back) Department of Public Works Director Bruce Zimmerman, board member Victor Callewaert (not visible), board Chairman Tom Lewand, Andrew Doud, Ron Dufina, and Jim Pettit; from the city (right, front to back) Jason St. Onge, Dan Wightman, Mayor Margaret Doud, Armand “Smi” Horn, consulting engineer Jack Rafter, Mike Hart, and Frank Bloswick. Armin Porter was absent. By next year, four annual 4.5% sewer rate increases could begin hitting Mackinac Island residents and businesses. The proposed Island-wide raise in rates may even be adjusted slightly before they are recommended for adoption by the Board of Public Works (BPW) and approved by the city council. The rate increase is needed to support a $4 million plant renovation, said Tom Lewand, BPW chairman.

The first of four increases is planned for May 2011, with the rest scheduled through May 2014, reaching a compounded rise in rates of 19.2% over the four-year period. It would raise an estimated $273,333.

Currently, a standard residential customer using 5,000 gallons a month pays $49.05 for the service. Based on the proposed 4.5% increase, in the first year that same customer would pay an additional $2.21, for a total of $51.26.

The increase will not be applied to water or garbage disposal rates.

City council members learned the specifics of the planned rate hikes during a joint meeting Friday, April 30. The meeting came at council's request last year when it sought an annual update from the department. Any future rate increases must be voted on by the council and would follow a recommendation from the BPW. Neither happened at Friday's meeting and the rates could change, Mr. Lewand said, if sewer use falls short of projections this year.

Mr. Lewand presented a 10- year financial plan for the upcoming project during the meeting. The renovation project is designed to improve the reliability of the wastewater plant, upgrading and repairing the most critical and oldest components.

The plant is now 40 years old, he said, and many of the parts have a life expectancy of only 30 years. The rates will help finance about $3.6 million in bonds to pay for the project.

The options and details of the rate increase, however, are still being deliberated.

“There are some assumptions in this budget, which make me a little nervous, and you need to be aware of it,” he said of the project, “and we're going to study it further before the rate increase would be recommended next year.”

First of all, he said, the rate increases are based on the assumption that sewer use will increase 2% annually, an optimistic projection, he admitted.

Annual sewer revenue has not changed significantly since 2007. If the economy begins to rebound, said Mr. Lewand, revenue will rise as hotel occupancy increases. A 2% increase in revenue would raise more than $125,000 over the next 10 years.

Mr. Lewand, who serves on the executive committee of the Michigan Economic Development Corporation, said increasing automotive sales over the next few years could stimulate about 700,000 new jobs in the state, and he bases his 2% growth prediction, in part, on this trend, even though, as Alderman Mike Hart pointed out, economists predict the state will continue to struggle for at least another five years.

Other considerations are that the BPW may only upgrade and replace $4 million worth of equipment, instead of the $5 recommended by its consulting engineer, on the chance that some of the old parts will not fail.

If there are part failures, he said, funds would be borrowed from 2006 bond reserves, but those funds then would have to be replaced.

Also, to keep the rate increase at the 4.5%, the financing plans for the refurbishing project include using $400,000 from a funded depreciation account, reducing the the amount to be borrowed to $3.6 million.

Solid Waste Millage

Alderman Jason St. Onge said he would like the BPW to consider lowering the one-mill tax levy allocated to the board in 2006 for solid waste handling. The millage raises $192,000 a year, and Mr. St. Onge said it was intended to be temporary, to help the department reduce its revenue shortfall.

Mr. Lewand said the board would come up with a plan by the end of the summer on how the millage will be handled.

“I will recommend that be part of our proposal to city council and that we have a plan that says here's what will happen to rates if we reduce the millage. Then it's part of a decision for our board to make a recommendation to council and council to pass it at that point.”

BPW member Victor Callewaert said one of the considerations for the millage was to offset losses from people using public trash cans instead of paying for proper disposal. Proper disposal is made by purchasing tan bags for garbage that can be composted and blue bags for trash that must be sent to a landfill. He suggested a review of who is not buying the city bags, and Mayor Margaret Doud asked the BPW to supply a list of the purchasers.

Waste To Energy Project

The BPW would like to turn the Island's waste into energy and has been working with Dennis Thomas, an Island resident and alternative energy consultant, and Dana Kurk from Michigan State University in converting methane gas from composting operations into electricity.

Mr. Lewand said the city could use horse manure, yard waste, and sewage sludge to produce methane that could power electrical generators. The electricity could be sold to Cloverland Electric Cooperative, and the city might be able to save some of the $88,000 a year it pays to transport the sludge off the Island.

“Putting all that together, we'd be saving on operating expenses and we should be making some money,” he said. “We're only going to start this if it pays for itself and produces some profit for us. We're not going to cost the taxpayers or rate payers one additional penny of money, if we don't have the revenue source.”

A plant to make the conversion would cost about $3.3 million, Mr. Lewand said.

Mr. Thomas, who participated by telephone, said federal incentives designed to reduce greenhouse gas emmisions could contribute about 50% of the cost to build a plant, if current programs are extended beyond this year.A

generator at the plant, he noted, could supply power to the Island at peak times of electricity use.

Mr. Kurk, also by telephone, said about 150 plants have been constructed in the United States and more than 4,000 in Europe.

Main Street Recycling Bins

BPW member Andrew Doud is working with resident Steve Murray to place three recycling bins for plastic and metal drink containers on the sidewalks downtown. Mr. Murray is paying for the project.

“We only want to put three cans out this year to see how it works,” said Mr. Doud.

The bins are the same size as the city's trash receptacles.

Downtown Trash

The city will send a copy of its trash ordinance to Police Chief Jim Marks and direct him to enforce it.

Public works board member Jim Pettit asked the city to crack down on owners who stack garbage bags, cardboard boxes, and other trash outside their businesses hours, and sometimes days, before it is scheduled to be picked up. Trash around the city has become an eyesore, he said.

“The trash downtown, cardboard stacked up, is disgusting,” he said. “Every year it gets worse and worse. Last year was the worse I ever saw.”

Mr. Pettit said some businesses are complying, but many are not.

“It's not only unsightly,” said Mayor Doud, “but it is a liability.”

Return to top

Click here for digital edition
2010-05-15 digital edition