By Meg Peters
Review Co-Editor
It’s no new news that the Village of Lake Orion has been working on a plan to increase its water and sewer rates, which last increased in 2006.
What is new, however, is a sketch of what those increases might look like.
Their goal is to fill in an annual water and sewer fund operating loss of roughly $268,000. The village administration is recommending increases in water usage fees, sewer usage fees, and an overall increase in all fees and charges by at least three percent.
If approved, village water customers will see an increase in water usage fees from $2.60 per unit to $2.70 per unit. The 10 cent increase would take effect January 1, 2016, and raise three percent per year indefinitely, unless reformed by council, according to the rise of inflation.
Also proposed is an increase in residential and commercial sewage usage fees. Sewage fees make up 55 percent of the utility budget, and water fees 45 percent.
Residential customers could see their sewage usage fees increase by 91 cents per year for the next three years, from $2.60 per unit to $4.58 per unit in 2017-18. Fees would additionally increase by three percent per year indefinitely for inflationary purposes. ?
Commercial sewage usage fees could increase from $2.77 per unit to $6.05 per unit, spaced out at $1.20 annually for the next three years. Fees would then increase by three percent annually thereafter each’July 1.
All other miscellaneous fees and charges, like capital and lateral fees, and water turn off and turn on fees, would also increase by three percent, and then three percent annually, to keep up with inflation, as determined by council.
If the council decides in subsequent years they do not need to increase water and sewer rates as much, they can be lowered or frozen.
The rate increases were first recommended in reports by the Michigan Rural Water Association Rate Evaluation Program in 2014, and tweaked by Village Manager Darwin McClary and administration to reflect the current 2015 budget. All rate increases would take effect’January 1
The current water and sewer operating budget, which includes depreciation expenses, is about $1.7 million annually, and fund reserves on hand tally to about $1.9 million, which are healthy, McClary said, for now.?
‘The reserves are healthy right now, but we’re operating at the $268,000 loss, so those reserves are dwindling each year we go on,? he said.
The water and sewer systems depreciate over a 50-year period, and are about 45 years old.
‘We need to be setting aside money from these usage fees and meter charges to allow us to replace sections of these systems as we need to,? he said.
Council could potentially vote on the rate increases at the’October 26’village council meeting after a public hearing.
‘It will fully fund our capital reserves, our depreciation expense, and our operating expenses, so it will eliminate that $268,000 operating loss that we’re seeing,? McClary said.
According to the reports, the water usage increase would bring in about $13,200 annually, and sewer revenue would increase by $236,950, to help cover the operating loss found in the 2014 financial audit. ?
McClary also recommends the three percent annual increase on all other fees and charges for preventative purposes, so residential and commercial customers don’t see as big of rate hikes in the future. The three percent hikes would happen every’July 1, as determined by need.
Water and sewer meter rates, or base rates, would remain the same.
In order to adopt the new rates, council must amend the current water and sewer ordinance to allow the setting of water and sewer rates by a resolution of council, rather than by ordinance, which would simplify the process. In essence, council would remove the fees from the ordinance, and allow the increases to be adopted by resolution. The new process will allow council to adjust the rates annually if determined they are not needed.
McClary anticipates council will review the amendatory ordinances at the next village council meeting,’October 12. Council could take action on the proposed rate increases as soon as the’October 26’meeting, after a public hearing..
Residents may voice their opinions at the public hearing, which could take place October 26.