CRYSTAL FALLS—Jeff Sjoquist of Coleman Engineering attended the Dec. 8 Crystal Falls City Council meeting and chaired a public hearing to close out the installation of meters, which was the final phase of the city’s water project.

The $500,000 meter project was funded by a Community Development Block Grant to install 864 meters by Berger and King of Escanaba, and to purchase radio transceivers and a meter test bench. Work was completed by Nov. 30.

“We started this water project in 2003,” Sjoquist said, “and it was a unique project because of all of the parties involved and different forms and documents needed for each.”

Involved in the multi-million dollar project were the Michigan Department of Transportation (MDOT), Rural Development (RD), Community Development Block Grant (CDBG), Crystal Falls Township and the city.

Looking over the final bills, Sjoquist explained MDOT charged the city for engineering work, inspections and road plans. He anticipated the bill to run around $25,000, but it was actually $65,000. MDOT paid itself by withholding $55,000 in Act 51 funds usually paid to the city.

The city will recoup the $55,000 out of its remaining RD funds. The council passed a resolution to request that payment, along with the final $9,000 payment to Coleman Engineering which Coleman will use to pay Kleiman Drilling for its work abandoning the test wells.

The city’s water project is now completed.

City Manager Charles Nordeman explained over the past three or four years, WeEnergies has changed its method of selling wholesale electricity. The utility now charges the city its costs, plus monthly true up charges, which are different every month, making it difficult to charge city residents.

“Over the past couple of years,” he said, “Dave Graff (head electrician) and I have been looking at WPPI, a Wisconsin power co-operative. It is an organization comprised of public municipalities and includes Negaunee, Norway, Gladstone, Baraga and L’Anse.

“We’re at the point,” he said, “where if we don’t join with WPPI, we will be on our own when our contract with WeEnergies expires in two years.

“We need to join with an organization that deals with municipalities and has the same goals we have. WPPI represents what Crystal Falls wants: to provide electricity at reasonable costs,” said Nordeman.

“The city makes its money by buying electricity from WeEnergies and then selling it to its customers,” Graff explained. “WeEnergies puts its investors first. WPPI, like Crystal Falls, puts the customer first.

“The other U.P. municipalities,”  said Graff, “are extremely happy with WPPI, which also offers ancillary support programs and long-term stability. The present members of WPPI have been putting money in to a rate stabilization fund. To be fair, they are requesting Crystal Falls contribute a like amount of about $370,000.”

Nordeman said if the city joins WPPI, it will continue paying WeEnergies until the contract expires, but will also have to start paying WPPI 2 percent for administration and consulting services, which means raising rates. But if the city stays with WeEnergies, it will have to pay the monthly fees, the true up fees, plus a rate increase of 4 to 12 percent every year.

“The real advantage of going with WPPI,” he said, “is entering into a long-term agreement with consistent rates. We would have control over our long-term rates.

“Two months ago,” Nordeman reminded the council, “the city received a $371,000 rebate from WeEnergies after the utility sold a power plant. We used that money for general operating expenses rather than borrow short-term to meet those expenses until winter taxes were collected. WPPI is asking for $370,000 to purchase shares in coal, wind and natural gas plants so it can provide lower electric rates to its members.

“We don’t have that much money available,” he said, “because our revenues are stagnant and expenses are increasing. If the council is agreeable, I can go back to WPPI and discuss how to fund the buy-in over a period of time.”

Councilor Jack Bicigo noted the city would still be paying WeEnergies for two years, so asked if the city could join WPPI after that contract expires.

“We just reduced residents’ rates, and now we’re asking to raise them again? That’s a lot of money to come up with,” he said.

“Over the long run,” Nordeman answered, “the WeEnergies rates will continue to rise 4 to 12 percent each year. In two years, our contract ends and we’ll need to decide who to purchase electricity from. WPPI isn’t going to wait two years for us to join their co-op. This is a long-term choice for electricity, and a short-term look at how to come up with the money.”

Councilor Jim Burke said he researched WPPI and learned it was given a very high rating because it is poised to take on alternative energy sources and keep its costs stable.

“Looking at the long-term perspective,” Burke said, “with WeEnergies, the city loses control of what it pays and how the power is distributed, so I think the city should pursue the WPPI co-op.”

Mayor Janet Hendrickson agreed, noting, “In two years when the WeEnergies contract expires, the city will be left on its own, and who knows what their rates will be at that time.”

“We can raise rates, borrow money, or cut costs somewhere else,” Nordeman suggested, adding, “I will explain the situation to WPPI and ask for terms.”

The council agreed to allow Nordeman to negotiate with WPPI and will then call a special meeting to decide if they want to join the co-op.

“This is one of the most critical long-term decisions we will ever make,” Nordeman said.

In other action, the city council:

--held a public hearing to discuss an amendment to its CDBG application for Crystal Manor building renovations, by asking for another $400,000 grant. The money, if awarded, will be given to the Hovey Company, which is renovating the Crystal Manor into rental units, offices, and retail space.

--learned the downtown building facade project on the First National Bank, the Raven’s Nest and Plowe Furniture were completed and the business owners were happy with the work done by Carey Contracting.

The city council accepted the Michigan Housing Authority pay request from the CDBG for half of the renovation costs. Business owners will pay the other half of the costs. The Crystal Manor building was also awarded a 50 percent facade grant, which will be handled separately from the businesses.

--learned there is also money available for business owners who would like to convert the second floors of their businesses into rental units. The Downtown Development Authority will be sending surveys to all business owners, and if there is enough interest, a meeting will be scheduled to explain the program;

--reviewed a new five-step pay scale for non-union positions. Most of the employees are now at the top of the pay scale, so won-t receive merit increases. The council will act on the proposal at the January meeting;

--heard Axel Anderson, who has been employed by the city for 30 years, plans to retire by May first. Nordeman will have an actuary evaluation done to determine retirement benefits, and will request that MERS open a window. He will bring his findings back to the council next month;

--agreed because the city must pay back a water and sewer loan, all property owners must pay their share. Presently, owners of vacant buildings don’t pay a sewer charge. It was agreed to reinstate the sewer surcharge to all EDUs, or equivalent dwelling units, in the city. At present, the charge is $13.50 per month;

--approved a reimbursement request from assessor Patti Roell of Iron Mountain. At the request of the city, she obtained her certification as a Level III assessor, so the city council agreed to pay the $125 fee;

--entered into a contract with Aramark Uniform Services to provide uniforms for the electric department. It is a requirement by the National Fire Protection Association that all utility linemen wear appropriate clothing that won’t burn in a flash-over. OSHA requires that the city pay for them. The council approved a cost of about $2,800 per year to outfit the five linemen;

--set a public hearing to be held during the January meeting concerning a land exchange between the city and Larry Bicigo. Located to the south of Urban Avenue, the city owns an abandoned right-of-way at the end of Jackson Street next to Bicigo’s parcel, and Bicigo owns a lot adjacent to lots that the city owns. By trading parcels, the city will own all of the land west of Waterworks Road;

--set the Crystella Ski Hill rates at $5 per day or $30 for the season. The ski hill will open as soon as there is sufficient snowfall. The concession stand will be operated this year by the Lincoln Park Playground Committee and all proceeds will go toward playground equipment for the park, located at the Paint River river walk. The skating rink will be flooded as soon as there are enough consecutive cold nights.

The next meeting of the Crystal Falls City Council will be Monday, Jan. 12, 2009, beginning at 5 p.m.