In effort to make repayment of its $17.725 million water bond debt more fair and equitable, the Oxford Township Board last week voted 5-2 to begin billing the capital charge based on Residential Equivalent Units (REUs) as opposed to system connections.
‘The REU basis is the proper thing to do here,? said Tom Hundley, a Project Development Specialist with Rowe, Inc., the township’s engineering firm. ‘I think this would probably best serve your needs.?
An REU is a way to equate high volume water users to single family homes, which are used as the standard.
The single family residence with its value of 1.0 is the basis around which all other facilities? water consumption is measured according to the REU schedule established by Oakland County in the late 1960s or early 1970s.
For instance a mobile home isn’t considered to use as much water as a single family residence so it’s assigned an REU factor of 0.6 ? the same as one residence in a multiple family development.
A fast food restaurant is believed to use more water so it’s assigned an REU factor of 5.6. An automatic car wash with conveyor is assigned 33 REUs per lane.
When the township board voted in December 2005 to begin levying a $128 per year capital charge on all current and future water system users to help pay off the bond debt, the equity of such a charge wasn’t taken into account.
Since the charge was based on each connection to the water system, a homeowner was being charged $128 per year, but so was an entire mobile home park and even the local Meijer store.
With the switch to an REU basis, the Meijer for example would pay $128 annually for each of its 36 REUs.
Instead of paying $128 for the entire mobile home park, Parkhurst Estates would now pay that amount multiplied by its 192 REUs.
A single family residence would still pay only $128 a year for its 1.0 REU.
However, that $128 per year charge could be reduced because there are more REUs in the township than connections to the water system, meaning there’s more money to be collected.
Currently, there are 2,242 connections to the township water system versus approximately 2,800 REUs.
‘If we go to this here way, we’re going to collect a lot more money. Can we reduce the cost?? asked Trustee Charles Kniffen.
Hundley said basing the debt charge on REUs could lead to a ‘minor? or ‘modest? reduction of the $128 for ‘typical customers,? meaning single family residences.
‘The new spreadsheet reduces the cost marginally,? he said. ‘It may make a difference if you have a lot of REUs, but typically for most customers (single family homes) it’s a minor reduction. But it is a reduction, I’m sure.?
Whether the capital charge stays at $128 or is decreased has to be balanced against the number of new connections being made to the system. Each new tap in brings in $6,075 to help pay off the water bond debt.
Given this, the township board directed Treasurer Joe Ferrari to determine whether an adjustment to the $128 annual capital charge is warranted and present those findings back to the board for further consideration.