Ishpeming City Council to discuss water fund deficit plan

ISHPEMING — The Ishpeming City Council will hear an update on the deficit elimination plan for the city’s water fund during its meeting at 7 p.m. today at Ishpeming City Hall.

Under Michigan Department of Treasury requirements, the deficit must be eliminated by Dec. 31, 2020 — within five years of the occurrence. The city must file an updated deficit elimination plan and certified resolution by the end of July each year to the treasury, according to a memo from Ishpeming Finance Director Jim Lampman.

The initial deficit elimination plan included a 35 percent water rate increase for city water customers effective Jan. 1 2017.

The rates increased an additional 12 percent as of Jan. 1, and are expected to rise by 5 percent each year in 2019 and 2020, according to Lampman’s memo.

The original multi-year plan filed for fiscal year 2015 and approved by the treasury, estimated a deficit of roughly $1.117 million for the fiscal year 2016, Lampman’s memo states, but the actual deficit for that year came in at slightly more than $1.078 million.

The deficit was reduced to $534,648 as of Dec. 31, 2017, Lampman said, which was about $27,000 lower than initial treasury department projections.

“These results show that the annual deficit elimination plan updates submitted to Treasury are realistic and on track to eliminate the deficit by 2020,” Lampman’s letter states.

Lampman said contributing factors to the deficit include unseasonable cold during the 2014-2015 winter resulting in a large number of water main breaks; about $500,000 in non-participating water system infrastructure replacement that took place as part of roundabout construction at the intersection of U.S. 41 and Second Street in 2016; and roughly $800,000 in upfront engineering costs for the city’s water infrastructure project that was reimbursed to the city in July 2017. The project is financed through a U.S. Department of Agriculture Rural Development loan.

The meeting agenda also contains three ordinance amendments related to feeding wild animals, owning and keeping dogs and cats within the city and the establishment of a water and sewer utility to be considered for second reading and adoption.

The council will also consider several change orders related to the city’s $10.5 million USDA RD water project.

Lisa Bowers can be reached at 906-228-2500, ext. 242.