With Oxford Township’s sewer fund operating at a loss, it appears a rate increase could be in store for users.
Last week, the township board voted 6-1 to direct its water and sewer committee to discuss the issue of sewer usage versus customer payments and make a recommendation.
Trustee Jack Curtis, who serves on the committee, brought this issue to the board’s attention.
‘We are not collecting from our sewer users (for) the amount of sewage that they’re putting through our pipes,? he said.
Last year, the township was charged $1.91 million in usage fees by the Oakland County Water Resources Commissioner’s Office for the operation and maintenance of the sewer system.
Oxford’s sewage travels through both the Clinton-Oakland Sewage Disposal System and the Oakland-Macomb Interceptor Drain on its way to the City of Detroit, where it’s treated.
The problem is a total of $1.78 million in usage fees was collected from township sewer customers, so the sewer fund lost approximately $130,000, which had to be covered by its fund balance (or reserves).
‘I believe that we should at least charge the sewer customers for the sewage they are disposing of,? Curtis said.
The last time the township raised sewer rates for both non-metered and metered customers was Oct. 1, 2013.
At that time, the flat rate for non-metered sewer customers, the majority of which are residential users, increased from $86 per Residential Equivalent Unit (REU) every six months to $86 per REU every three months.
An REU is a unit of measurement equal to the average water/sewer usage of one single family home. A single family home is assigned a value of 1 REU, while a business, like a restaurant or car wash, may be assigned multiple REUs.
The rate for metered sewer customers was raised from $23 to the current $30.64 per 1,000 cubic feet (Mcf).
Metered customers? sewer usage is based on how much water they consume, which is measured via water meters. There is no separate sewer meter that measures the flow of wastewater.
Currently, there are 3,651 non-metered sewer customers in the township, plus 119 metered users, according to Clerk Curtis Wright.
Metered customers include a mix of businesses, government buildings and churches.

Oxford Township water customers will notice a 17 percent hike in their quarterly bill beginning Jan. 1.
Last week, the township board voted 5-2 to increase the water bond debt reduction service charge by $7.50 in order to help cover what’s owed.
It will go from $45 to $52.50 per Residential Equivalent Unit (REU). Single family homes have a value of 1 REU, while businesses, like restaurants and car washes, are assigned multiple REUs to reflect their greater water usage.
This fee is what the township charges its water customers to pay off the $10.7 million in bonds it issued through Oakland County in 2005. Proceeds were used for improvements to the municipal water system. Upgrades included construction of a 1-million-gallon elevated storage tank and two treatment plants designed to remove arsenic and iron from the groundwater.
The last time township officials increased the debt reduction charge was in 2009 when it went from $32 to $45 per REU.
Officials determined a $7.50 increase was necessary in order to cover a projected $1.56 million gap between what’s needed to pay off the debt between now and 2030, and the amount of revenue currently being collected.
Treasurer Joe Ferrari and Trustee Sue Bellairs voted against the increase.
Ferrari believes ‘everyone should share? in the burden, not just existing water customers. To him, the tap (or connection) fees for new customers to hook up to the water system should be increased as well.
‘In our past debt analysis, new water taps were considered when setting the bond debt user rate,? he explained.
The township’s current tap fee is $6,075 per REU.
‘If we are going to raise the water bond debt service charge by an estimated 17 percent per year on existing water customers, then the new water tap-ins should also absorb that same increase, with that 17 percent, roughly $1,033, specifically earmarked for water bond debt reduction,? Ferrari said. ‘We could lower the 17 percent and also include the new water tap-in customers (in) the equation, so that everyone will pay to reduce the water bond debt, not just current customers.?
Bellairs agreed it shouldn’t be up to existing water customers to shoulder the entire burden. ‘There’s only just a handful of users on this water system. How can a handful of people be expected to keep paying and paying and paying?? she told this reporter following the meeting. ‘The developers and the (new) people coming in, they should be the ones paying. (The board is) not increasing those (fees).?
As of July 31, the township had 2,591 customers on its water system, according to township Clerk Curtis Wright.
Bellairs noted there’s not a single township board member whose home is connected to the water system. Six are hooked up to private wells while one is connected to the village system.
‘It doesn’t hurt anybody’s pocketbook on that board,? she said.
Wright, who serves on the township’s Water and Sewer Committee, disagreed with Ferrari and Bellairs. ‘That debt service (charge) is specifically for reducing the debt. That was the purpose,? he said.
Tap fees, on the other hand, are supposed to be used for future infrastructure repairs, improvements and expansions, not paying off debt, according to Wright.
Wright noted once new water customers hook up to the system, they, too, begin paying the same quarterly debt charge as existing customers, so they do share in the burden.
The more new customers the system has, the more revenue is generated to help pay off the debt, which could lead to it being retired earlier than anticipated, he added.
Oxford’s water bond debt is currently scheduled to be paid off in October 2030.

Oxford Township’s 3,484 sewer customers could see their bills double in order to stop their system from operating at an annual loss of about $900,000.
‘People aren’t going to like this one bit, but we’re not going to like it if we keep depleting our (sewer) funds,? said township Trustee Jack Curtis, who chairs the Water and Sewer Committee. ‘This will stop the bleeding.?
That’s if the committee’s recommendations are approved by the township board.
Last week, the committee voted 2-1 to recommend to the township board that sewer bills be increased from $86 per Residential Equivalent Unit (REU) every six months to $86 per REU every three months beginning Oct. 1.
An REU is a unit of measurement that’s equal to the average water/sewer usage of one single family home. A single family home is assigned one REU, while a business like a restaurant or car wash may be assigned multiple REUs.
Under this proposed increase, the total annual cost for sewer services would jump from $172 to $344 per REU and township sewer customers would be billed four times per year instead of twice.
‘The input that I received talking to some of the sewer customers is that a quarterly billing is more palatable than a larger bill twice a year,? Curtis said.
‘The important thing for the people to know out there is we’re not making any money on this,? said township Supervisor Bill Dunn, who also serves on the committee along with Clerk Curtis Wright.
‘All we’re doing is trying to pay our bills. We cannot do like other communities and get in the hole.?
The committee also voted 2-1 to recommend that sewer tap fees ? the cost to hook up to the system ? be increased from $2,500 to $3,500 per REU beginning Jan. 1, 2014.
The township board is expected to consider these recommendations at its 7 p.m. Wednesday, July 10 meeting. Meetings are held on the second floor of the Oxford Veterans Memorial Civic Center (28 N. Washington St.) in downtown Oxford.
In a nutshell, the committee recommended doubling usage rates because the sewer fund is operating with an annual loss of approximately $900,000.
Last year, the township was charged $1.6 million by the Oakland County Water Resources Commissioner’s Office for the operation and maintenance of the sewer system. The county basically serves as the township’s Department of Public Works.
Those charges from the county included approximately $53,000 in payments for bond debt associated with the Oakland-Macomb Interceptor (OMI) rehabilitation project.
The OMI Drain is the sole conveyance conduit for transporting wastewater from more than 830,000 Oakland and Macomb residents to the Detroit wastewater treatment plant.
Factor in the depreciation of the sewer system’s infrastructure, which amounted to $195,255 and is considered an expense, and it cost $1.8 million to operate the township sewer system last year.
The problem is only $899,169 in payments were collected from sewer customers, so the system operated at a loss of $897,703.
Right now, these operating losses are being covered by the sewer fund’s reserves, which as of the end of 2012, amounted to $3.9 million.
But those reserves are not going last forever if the township keeps losing $900,000 annually, Dunn told this reporter. Plus, he said that money is needed to help pay for sewer projects, both expected and unexpected.
‘The user fees are eating a hole in the (sewer) budget right now,? Curtis said.
If the depreciation is factored out, the township sewer fund’s actual cash loss last year was $702,448.
The depreciation amount basically represents how much the township should be collecting, if it chooses to, for future repair and replacement of aging sewer lines.
‘Some communities fund depreciation as a way of maintaining reserves for future capital improvement needs or on-going capital needs and so on,? explained Paul Stauder, who conducted a water/sewer rate analysis for the township. ‘Others take the position that it’s a non-cash expense and it’s not required to be funded.
‘There is no legal requirement to fund it. I think it depends in part on what your comfort level is and what you guys want to do with maintaining reserves down the road.?
In Stauder’s opinion as long as the township fully funds its bond payments and have enough left over to deal with general capital improvement needs, ‘you don’t necessarily have to fund (the depreciation).?
However, if the township needs ‘to provide funds for things like eventual replacement of sewer lines,? Stauder said, ‘then I think it is a good idea to fund it.?
‘We can go over these numbers all day, but the thing is we have to pay our bills,? Dunn said.
In order to help pay for the increase in bond debt that’s expected over the next two years, the committee also recommended increasing the sewer connection fees from $2,500 to $3,500 per REU.
This is the onetime fee that homeowners, businesses and developers pay to hook up the township’s sewer system.
The committee’s hoping this $1,000 increase will help cover the existing and proposed bond debts associated with the OMI rehabilitation project and improvements to the Clinton-Oakland Sewage Disposal System (COSDS), of which Oxford is a part.
The township’s share of the principal for these existing and proposed debts amounts to $4.6 million. Factor in interest rates ranging from 2 to 5.5 percent and the township’s looking at an average total of approximately $310,000 in annual debt service payments over a 20-year period.
Assuming all that bond debt is issued for the OMI and COSDS, Stauder recommended sewer users be assessed a $13 per REU quarterly capital charge as well.
That recommendation would have added $52 per REU in capital charges each year to the proposed $344 per REU in sewer usage rates, bringing the total annual sewer cost up to $396 per REU.
Right now, there are no capital charges levied on sewer customers.
According to Stauder’s calculations, the capital charge would pay $260,000 of the $310,000 in annual debt payments. It’s assumed the other $50,000 would be covered by connection fees from new hookups to the system.
Township engineer Jim Sharpe explained the reason behind the capital charge.
‘The (proposed) $86 (per REU quarterly usage rate) would cover the operational cost, but you still have to deal with the upcoming bonds,? he said. That’s where Stauder’s proposed capital charge comes in.
But committee members didn’t like the idea of adding a capital charge on top of raising the usage rates. That would amount to a $99 per REU per quarter increase.
‘I would just as soon not put any more burden on the sewer users,? Dunn said. ‘That’s a pretty healthy increase for a normal family to double their sewer (bill).?
Instead of recommending a capital charge, the committee decided to raise the sewer connection fee by $1,000 per REU beginning Jan. 1, 2014, so that new construction can help cover some of this anticipated debt.
Dunn noted that right now, the township is probably going to have 30 to 50 new sewer customers this year based on building permits. Given this growth, he felt it isn’t necessary to implement a capital charge right now.
But Dunn acknowledged that could change in the future.
‘There may be a time down the line when we have to add a debt reduction portion to their bill,? the supervisor said. ‘Let’s get over this shock and just keep an eye on it for the next few years.?
Dunn noted he feels ‘comfortable? holding off on levying a capital charge and seeing how the increased tap fees work because the sewer fund has $3.9 million in reserves.
Curtis expressed his concern that raising the sewer connection fee might hinder economic development and growth.
‘If there are communities around us with tap fees lower than ours, that offer a community like ours, do you think they may go there instead of coming here?? he asked.
‘I don’t think it will affect it,? Dunn said. ‘If someone wants to come here to Oxford (and) they’re going to have to pay $1,000 more than (somewhere) else (for a sewer tap), it’s going to be part of the cost of the house (that’s passed on to the customer). Is that going to stop them? I don’t even think they’ll think about it.?
Stauder noted the township could use some its $3.9 million in sewer reserves to pay their portion of the OMI and COSDS projects up-front and not incur any more debt.
‘Sometimes it’s hard to convince people that certain rates and charges are necessary when you’re sitting on a couple million bucks,? he told the committee. ‘Sometimes it’s easier to use those funds for capital outlay like this (and) not incur the future debt.
‘I think in the long run your rates and charges will probably be more tolerable if you use those assets to reduce your need for future debt rather than sock it away and/or use it for operating,? Stauder added.

It’s not all economic doom and gloom out there as evidenced by some encouraging housing figures from the Oxford Township Building Department.
The number of Certificates of Occupancy (CO) issued for new residential construction this year has almost doubled compared to last year.
As of Nov 1., the township has issued 21 COs. Last year, it only issued 11.
‘That’s pretty good,? said Planning Commissioner Jack Curtis, who chairs the township’s Economic Development Subcommittee (EDSC). ‘The best direction to head is up.?
Oxford Village has a bit of good news, too. Currently, it has three new homes under construction in the Oxford Lakes subdivision. Manager Joe Young noted these are the first new homes to be built in the village in about four years.
‘You can see a slow improvement in the economy,? Curtis said.. ‘Just try to go out and find a builder. Try to find somebody who can rough a house. You can’t do it. The pay that they receive per square foot on a building is lower, but they’re all working.?
Permits to begin construction on 32 new residential projects were issued by the township this year. That includes the aforementioned 21 COs.
Curtis noted how right now, folks driving by the corner of W. Drahner Rd. and Pathfinder Trail can see the initial construction of what will ultimately be four duplexes on a 1.5-acre lot. When completed, each of the eight units will be 1,750 square feet in size, consisting of two floors and a basement.
Township Supervisor Bill Dunn explained the main reason for this uptick in new residential construction is the price of vacant land is cheap enough for home-builders to turn a profit.
‘Before, you were paying $50,000 to $80,000 for a lot,? he said. ‘Now, you can pick it up for pennies on the dollar, basically $10,000 or $15,000. That makes a big difference to a builder’s bottom-line. There’s a lot of lots out there that are very, very affordable.?
Dunn indicated he knows of an individual who recently bought about 50 vacant housing lots in the Waterstone development. ‘He didn’t do that because he thinks he’s going to lose money,? the supervisor said.
All but four of this year’s COs were issued for homes in subdivisions located within Waterstone. The remainder were for the Willow Lake subdivision.
‘These are no-brainers,? Curtis said. ‘These homes are in existing subdivisions with sewer and water (services provided through the township). These guys know what they’re doing.?
Prior to this year, the issuance of COs was trending downward in the township. In 2009, 37 were issued. That dropped to 19 in 2010 and 11 last year.
One of the things Curtis believes is helping to contribute to this new construction is fact that word is spreading regarding all the positives about Oxford.
‘I think it’s in response to our marketing of the township,? he said. ‘Thanks to the Automation Alley articles we’re getting the word out about Oxford. It’s a beautiful place to live. Terrific schools. Great parks. Great fire department. Affordable housing. Vibrant downtown. It all adds up to a nice place to live.?
For almost a year now, the EDSC has been publishing press releases on the Automation Alley website.
These releases are regularly distributed to 2,500 journalists, companies and members of the business community.