West Branch residents could be looking at sewer rate increase
By Eric Young
Managing Editor | editor@ogemawherald.com
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WEST BRANCH — Residents and businesses connected to the city sewer system in the city of West Branch could see an increase of almost 15 percent on what they pay for sewer in the near future, if the city chooses to raise sewer rates to help pay off the wastewater treatment plant debt.
West Branch financial advisor Tom Traciak reported at the West Branch City Council meeting Sept. 10 that the city might need to raise its sewer rates more than 72 cents per thousand gallons because city residents aren’t using the system as much as the city predicted they would when it put the new rates in place in October 2009.
At that time, the city approved a rate of $4.85 per thousand gallons for residents in an effort to pay the debt on the city’s WWTP project that saw a complete reconstruction of the aging plant.
Traciak told the city council that the city had been projected to use around 75 million gallons of water, West Branch Township 30.6 million gallons and Ogemaw Township 6.6 million gallons in 2012. However, the city and West Branch Township have used about 20 percent less than projected.
“What we’re seeing is about 59 million gallons for the city, 24 million gallons for West Branch Township,” Traciak said. “Ogemaw Township’s about the same. Those volumes are significantly down from what we estimated, which means there is a higher debt service charge as a result.”
Traciak said the city actually implemented a small buffer when it decided the rate it would charge originally, making the rate $4.85 per thousand gallons instead of $4.45 per thousand, projecting there would be a decrease in usage when rates increased. But that buffer wasn’t enough.
“There was nothing to indicate that we were expecting this kind of variance in your volume,” he told the city council. “I’m not sure what that’s attributed to — either just conservation or if the numbers were trending that way. I don’t know.”
Traciak said he has worked with around 300 communities and never seen that big of a decrease due to conservation.
“Sometimes you see conservation, usually right after a rate increase,” he said. “Usually, when that happens, it bounces back though. People don’t stay with conservation long-term. Usually, after three to six months, they’re back to their normal usage patterns.”
City Clerk Jane Tennant said the decrease isn’t entirely due to conservation. She said the city had some industrial plants close or reduce shifts, which have caused the city to see large reductions.
Traciak said the city’s only real option would be to increase rates, because the plant is set up as a cost center.
“It’s not like you’ve developed a fund balance in the plant operating or debt service that you could maybe draw from for a time,” he said.
The rates that are paid are designed to pay for the plant and its debt, nothing more.
City Manager Tom Youatt asked if an increase could lead to more conservation, compounding the problem.
“Trying to predict what your customer base in particular, how they’re going to respond, is very difficult,” Traciak answered. “I see very different usage patterns across the state.”
Mayor Todd Thompson said he would not vote for a rate increase.
“These people are already taxed to death — water and sewer billed to death,” he said. “I don’t know what we’ve got to do, and I know we can’t do this or we can’t borrow money from this fund for that fund. That’s illegal. But I’ll never vote for an increase. I don’t care what happens.”
Thompson said people are already struggling to pay their sewer bills.
“Look at the for sale signs in our town now,” he said. “Not everybody wants to move out of town. They can’t afford to live here.
“It’ll be a ghost town in five years if you continue to tax these people the way we’re doing.”
Traciak said a 75 cent increase for the typical home owner, who uses approximately 4,000 gallons a month, would be just $3 a month, or $9 a quarter.
No action was taken on raising the rates at the meeting. However, Tennant did say that a new ordinance would need to be adopted to raise the rates, and the timeframe would not allow for that to happen before the next quarter, which starts in October.
The Herald will continue to report on this issue as it develops.