LAKE ORION — Improvements to the village’s sewer system are on their way after village council authorized publishing a notice of intent to issue revenue bonds and to reimburse the village for the proceeds of the bonds during a village council meeting on April 22.

These bonds total between $3 million and $9 million, depending on the amount of grant funding the village receives for the project. They will help with the acquisition, construction, furnishing and equipping improvements to the sewer system. The improvements will be the first major capital improvement in around half a century since the system was constructed.

“I would like to make the motion to adopt the resolution authorizing the notice of intent and declaring intent to reimburse revenue bonds as presented relating to the Village of Lake Orion sanitary sewer pump stations improvement project,” said Council member Ken Van Portfliet.

The motion was support by Council member Carl Cyrowski and passed 4-2, with council members Michael Lamb and Nancy Moshier casting the nay votes. Council President Jerry Narsh was absent from the meeting.

Currently the water and sewer-fund balance is not sufficient for the project, according to a presentation included in the council agenda packet. Applying for congressional community projects funding in 2025 and 2026 for the project could cover up to 80% of the project’s costs, but water and sewer rate increases are still stated as necessary in the presentation.

These rate increases are part of the reason two council members, Lamb and Moshier, voted against the motion, with Lamb saying he recognizes the projects need to be financed through municipal bonds.

Why the improvements are

necessary

In the early 1970s, Lake Orion’s sanitary sewer system was constructed to deal with widespread septic system failures. Even after the system was complete, problems still surrounded the sewers. By May 1974, the Lake Orion Review reported that around 800 customers were not tied into the sewer. In March the next year, 76 village property owners were threatened with court action if they did not hook up to the sewers within two weeks. The deadline for owners to be hooked up was Nov. 1, 1973, according to Review archives.

No major capital improvements have been made to the pump stations in the roughly 50 years since.

An SAW grant was given to the village in October 2015 to create an asset management plan. The findings of the grant, and the findings of a capital improvement plan presented in 2018 found that all 16 pump stations have exceeded their design life and require “complete rehabilitation,” according to the presentation.

Also according to the presentation, the 50-year-old lift stations and force mains have obsolete equipment, which means parts are unavailable for the equipment, while other parts are no longer up to electrical code compliance and there is corrosion of structures and components. All of this means “a risk of failure and potential contamination,” the presentation stated.

Lamb said there are two reasons he opposed authorizing the notice, first being “the county made a generous offer to fund” the project, allowing the village to maintain less bond debt. The second reason is that the wording in the agenda packet says the principal and interest on the bonds “shall be payable solely from the revenues received by the Village from the operations of the” system.

“What that means is that the only way these bonds can be repaid is through your sewer bills,” Lamb said. “When all the bond principal is due, your sewer bills is going to be high. Very high.”

Lamb said he previously proposed other sources to pay off the bonds, including recapturing “some of the DDA tax capture districts.” Lamb said this would allow the village to take the new tax dollars from Moceri’s Lake Orion projects, the Ehman Center rehabilitation project and other projects over the next five years that Lamb said will create “huge amounts of money” that would be around $500,000 in tax dollars.

“We’re not going to need those tax dollars to pay for staff,” Lamb said. “So where is that money going to go? It’s all going to go to the DDA for parties.”

In the meantime, Lamb said “the rest of us” are going to be paying more for their sanitary sewer bills.

Another method of funding could be through user fees or through other municipal tax methods, according to Lamb.

“The problem with this particular method is it locks us in to only paying those bonds through your sanitary sewer bills,” Lamb said. “So, if the village council and other citizens were to come up with other creative financing methods, they’re no longer open to us.”

On top of this, selling the bonds and taking the debt would require the village to pay a firm for their services in selling the bonds, whereas the county would have absorbed the costs in their regular staffing, according to Lamb.

Village manager Darwin McClary responded that the fairest way to fund the improvements to the sanitary sewer system is through the system’s rate schedule. According to McClary, the county proposed “to handle the funding of this through country bond issuance, they were proposing” it be limited tax general obligation bonds. Meaning if sanitary sewer rates were not sufficient to cover the bonds’ cost, it would become a tax liability for tax payers, according to McClary.

McClary said this means if the project were funded through taxes, people would be paying for the improvements based on the value of their homes and properties, not based on their participation as users of the system.

“I believe very strongly that that is a very unfair way of funding those improvements,” McClary said.

Risks and rewards

The presentation lists four risks and three rewards with the approach as presented. The risks include additional costs to residents greater than $1.15 million, an increased risk of failure due to deferred rehab and the potential for emergency response costs.

Rewards are possible savings to the village totaling up to $4.99 million and the ability to spread rate increases over the three-year project. A higher and lower increase in sewer rates are both listed as a risk and reward, respectively.

The project will take place in three construction phases and is expected to start this summer with the final phase beginning in 2026.

Phasing allows rate increases, increases to labor and materials and inflation to be paid over time, according to the presentation.