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Usage-based sewer rate hike approved PDF Print E-mail
Written by Peter Nocerini   
Tuesday, August 06, 2013 1:22 PM

IRON RIVER—After hearing public comment for close to an hour, the Iron River City Council voted July 31 to approve an increase in city sewer rates based on usage.
Council members had already conceded that rates need to be increased, but should it be based on usage or should it be the same increase for all users? The majority opinion from the public didn’t answer that question—they didn’t want any increase for anybody.
In the end, the council approved an increased based on usage on a 3-2 vote.
When it takes effect, city residents will pay $3 more per gallon (from $31 to $34) for the first 4,000 gallons they use each month. Those using more than 4,000 gallons will also pay a higher “commodity charge,” which increases by $1.20 (from $7.30 to $8.50 per 1,000 gallons used above the first 4,000).
The alternative was a flat increase of $5.25 monthly for all users (from $31 to $36.25 monthly), with the $7.30 per 1,000 gallon commodity charge unchanged.
Either way, said City Manager Perry Franzoi, sewer rates have to go up. He explained why:
--The West Iron County Sewer Authority has increased Iron River’s share of the debt service and operations-maintenance costs by $21,000.
--High power costs for lift stations. “Our costs have gone up substantially since the last rate increase. I think everybody is aware of the increase that you see in your electric bill at home.” The city is no different.
--Higher health insurance and pension costs for city employees.
--Fewer sewer system users, due to businesses that have closed and residents who have moved or died. Franzoi said the city’s water usage has gone down about 20 million gallons in volume.
“We’re faced with a situation where our operating costs are going up and our customer base is decreasing,” said Franzoi. “Ideally the system would be growing, and we wouldn’t need a rate increase—but we’re not in that situation.”
Those who spoke weren’t interested the question of usage-based increase vs. across-the-board increase. They were against any increase. One resident said the city should cut its staff and sell some vehicles.
“There has been a lot of cost-cutting,” answered Commissioner Arthur Sacheck. “The state has cut our revenue sharing, and now they are going to cut personal property taxes, so we won’t collect them. Our revenue is going out of here so fast, we’re going to have to find other sources of revenue.”
Mayor Terry Tarsi said he feels the increase “should be divided amongst the 1,700 people who are using it. It should be spread out evenly.
“It’s all of our debt. Not just the business people. I don’t feel we should take 10 businesses that use the most water and hit them with a big bill [increase].”
When it came time to vote, Sacheck made a motion to approve a flat $4 increase per month (instead of the proposed $5.25 flat increase). Tarsi agreed. “Sooner or later, we have to say this is our sewer system,” the mayor said. “We own them as residents of the city, so we should share in the cost. Not always the business people. That’s my own personal opinion.”
That motion failed, with only Sacheck and Tarsi in favor. Then Commissioner Mike Brozak moved to approve a usage- based increase of $3 monthly per user and a commodity fee increase (over 4,000) of $1.20 per 1,000 gallons.
That passed 3-2, with Sacheck and Tarsi opposed and Commissioners Brozak, Bill LaRock and Ed Marcell in favor.
Tarsi noted that it will be a $323 increase per month for the city’s largest water user: NorthStar Health Systems, which averages 270,000 gallons monthly. Two other businesses consume over 100,000 gallons per month: AmericInn and the Iron River Care Center.
• The council also voted to approve payments in lieu of taxes agreements for the WODA Group of Columbus, Ohio, which is purchasing the 16-unit Hillside and 32-unit Woodridge apartments and plans renovations.
The PILT/PILOT agree-ment would freeze property taxes at current rates for the next 16 years—WODA would not pay increased taxes for the improvements.
All the votes passed 4-1, with Mayor Tarsi opposed. “I support it 100 percent,” Tarsi said. “I don’t support the [tax] freeze. So I’m going to vote no on it.”
Craig Patterson, WODA vice president of development, told the council that his firm wanted the PILOT agreement to help its application with the Michigan State Housing Development Agency (MSHDA). If the tax freeze is for less than 15 years, Patterson said, WODA would lose points in the highly competitive battle for MSHDA state funding.
WODA plans to spend about $3 million for a complete rehab of Woodridge (to be renamed Hiawatha) and $1.5 million in renovations to Hillside, including “community space” in both buildings, as required by MSHDA.
• Council members also approved a pair of engineering amendments for the M-189 project. Craig Richardson of GEI Consultants told the council that work is needed “above and beyond” what was contracted. The total cost to the city is $3,500.
Richardson said the contractor (Hebert Construction) has come upon about a dozen sewer laterals it needs to repair and replace. Also, there is “a major conflict” with a 2-inch water line.
MDOT is paying for the construction for the laterals and water line,” said Richardson, “but each has to be engineered and inspected.”
Wayne Wales, who is working on the project, said Hebert is dealing with a lot of overruns due to utilities that are showing up in places they weren’t expected, including phone cables, water lines and power lines. This has delayed the project.
“Some of this couldn’t be planned,” Wales added, “until you get in there and start opening up some of these streets. It’s like digging in a bowl of spaghetti sometimes because there’s so much stuff in the ground.”
• The council also voted to reject all bids submitted for the DIG grant on Genesee Street. Richardson said the project went out for bid late and only two bids were received—they were 35 percent higher than expected. “The bids were a premium to try to get the job done this year.”
MEDC, he said, will allow the city to rebid the project over the winter for construction in 2014, and lower bid prices are expected.


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