ISHPEMING - The city of Ishpeming is proposing to raise sewer and water rates by almost $13 a month for minimum users and a little more than $7 for the average user.
The city council is expected make the decision after holding a public hearing on the rates at its Nov. 6 meeting.
The rate increase was the recommendation of GEI Consultants Inc. to the council during a special meeting Thursday morning. GEI recently completed a sewer and water rate analysis on those city utilities.
Workers from A. Lindberg & Sons Inc. install a new water main beneath Hematite Drive between Main and Lake streets in Ishpeming in August. The deterioration of the city's sewer and water infrastructure is a growing concern, with 43 water main breaks last winter, and city officials and outside consultants said rate increases are necessary to support the system adequately. (Journal photo by Zach Jay)
The proposed increases - $12.70 per month for residents who use 2,500 gallons or less and $7.35 per month for the average resident, whom GEI said uses about 3,383 gallons - will not only cover the city's costs of providing those utilities but will also generate an additional $250,000 each year for capital improvements, which Interim City Manager and Department of Public Works Superintendent Jon Kangas said are desperately needed to repair and replace the city's strained and antiquated system.
Kangas and the council recognized that the rate increases will likely be unpopular with residents - particularly the steep hike for minimum users - but also agreed that after more than 20 years of previous city councils and managers "kicking the can down the road" rather than address the city's infrastructure problems, they don't have much of a choice.
"Regardless of what the city chooses to do, if rates will be increased, the minimum user is going to see a hit, there's no doubt about it," Kangas said. "And most (minimum users) are going to think it's not a fair hit. The truth is they've been subsidized for a long time by the bigger users."
The minimum usage rate was also increased from 2,000 to 2,500 gallons per month, a step that GEI said would help the city cover costs associated with providing the utility service no matter how little water the customers use.
"It costs money to keep service available for them to use," Councilman Mike Tonkin said. "You can use 1,000 gallons a month or you can use 100,000 gallons a month, but all of the equipment is there to provide it to you, and you've got to pay for that."
GEI said that 953 of the city's approximately 2,800 water and sewer customers are minimum users - a little more than one-third.
The results of a 2012 audit showed that the city is losing more than $500,000 between its sewer and water funds each year, and consultants from GEI as well as Kangas said the rate increases are necessary for those funds to remain solvent.
Kangas said that in addition to the current inadequate rate structure, because there have been so many water main breaks and leaks during winter months the funds have been "hemorrhaging money."
He said the city had 43 water main breaks or leaks last winter - 90 percent to 95 percent of which were on sections of 6-inch cast-iron pipes. Kangas said while it was a "Cadillac" system when first installed, cast-iron is now the "most brittle pipe you can put in the ground." He said the diameter of the cast-iron pipes is an issue as well, because the walls of the 6-inch pipes are very thin.
Problems with the city's degraded infrastructure cause additional losses of money, Kangas said, because the city then has to pay overtime for DPW employees to find the breaks and shut off water to the main, as well as buy materials to repair the damage.
If the city does decide to finance capital improvements for the sewer and water funds, it will also be eligible to qualify as disadvantaged on its application for a Stormwater, Asset Management and Wastewater grant.
Disadvantaged status would mean the city won't have to match any funds of the up to $2 million that could be given to the city to conduct a thorough asset management study on its sewer and water infrastructure.
Kangas said that such a study would enable the DPW to identify which are the city's most problematic areas and therefore should be made a priority for upgrades. Disadvantaged status would also allow the city to use up to $500,000 of the potential SAW grant on necessary construction projects as identified by the asset management study.
Increasing costs to operate the sewer and water funds also reflect a downward trend in metered sales of water. According to GEI's study, more than 12 million gallons a month were being used in 2007. That number was down to less than 10 million gallons monthly as the city moved into 2013. GEI and Kangas said that part of the trend can be attributed to new appliances in the home that use less water, as well as consumers consciously trying to conserve.
The downward trend is further complicated by the city's increase in water purchased from the Negaunee-Ishpeming Water Authority. The city purchased more than 25 million gallons from the NIWA in 2013, an increase of approximately 3 million gallons over the past five years.
This ties in to the importance of addressing the water main breaks, Kangas said, because when the mains break the lost water ends up in the runoff and storm sewer system and eventually back at the NIWA's treatment plant - meaning the city essentially pays for the water twice.
However, the news isn't all bad. The water and sewer rate increases will be offset by a $5 per month reduction in the monthly garbage bill for the city's customers - savings passed from the city to its residents due to the good health of the garbage fund. Without these savings, the water/sewer rate increase for minimum users would be closer to $20 and the increase for the average customer more than $12.
Zach Jay can be reached at 906-486-4401. His email address is email@example.com