Council to consider updated deficit elimination plan for water fund

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

The council originally approved a revised deficit elimination plan for its water fund that increased water rates up to 35 percent for residents in 2017, with an expected 15 percent in 2018, and 5 percent in 2019.

In a letter to the council, Ishpeming Finance Director Jim Lampman said while the 35 percent increase was implemented in fiscal year 2017, according to the city’s revised deficit elimination plan water rates in fiscal year 2018 will rise only 12 percent.

The city must file an updated deficit elimination plan and certified resolution to the Michigan Department of Treasury by July 30, according to the letter.

The original multi-year plan filed for fiscal year 2015 and approved by MDT, estimated fiscal year 2016 with a deficit of $1,117,1870, Lampman’s letter states.

“I am pleased to report to Council that the actual reportable Water Fund deficit at the end of fiscal year 2016 was $1,078,057, which is $39,130 less than the projected deficit,” the letter states.

The Water Fund deficit largely stems from several issues, Lampman said.

Issues include: Back-to-back winters that resulted in freezing pipes and mains causing significant damage to the water system infrastructure, including $1.4 million in freeze-related damages during the winter deep freeze in fiscal year 2014; the approximately $500,000 nonparticipating water system infrastructure replacement that took place as part of the U.S. 41 and connector roundabout projects in 2016; and the roughly $800,000 in upfront engineering costs on the United States Department of Agriculture Water System Improvement Project.

Lampman said the costs for the USDA Rural Development project will be reimbursed to the city when the bond closes on July 20.

The Department of Treasury requires the deficit to be eliminated by Dec. 31, 2020 — within five years of the occurrence.

The council will also consider a $30,145 bid for construction of an estimated 400 feet of trail off of New York Street. The decision to award the bid was tabled during a special city council meeting on June 28.

The city used a $91,400 Michigan Natural Resources Trust Fund grant to construct a 4,700-foot trail connecting the Iron Ore Heritage Trail to a network of existing trails in the area in 2016.

The final portion of the 4,700-foot trail was delayed due to the area being considered for inclusion in the city’s USDA water infrastructure project.

Council members requested clarification of whether the city is obligated to complete the trail during 2017.

In a letter dated Feb. 10, 2016, from City Manager Mark Slown to the grant coordinator at the Michigan Department of Natural Resources appears to commit the city to completion of the project in 2017.

“At the Feb. 3, 2016 meeting, the Ishpeming City Council passed a motion committing to completion of a portion of the Malton Road non-motorized trail in 2017 as either part of the water main replacement project, or as a stand alone project if this water main is not constructed,” Slown’s letter states.

The council will also consider the second reading of an ordinance that regulates smoking and use of tobacco products in outdoor public places as well as the second reading of an ordinance to regulate mobile food vendors.

Lisa Bowers can be reached at 906-228-2500, ext. 242. Her email address is