66.43% sewer, 22.1% water RTS rate increases
By Joseph Goral
Staff Writer
jgoral@mihomepaper.com
LAKE ORION — The Lake Orion Village Council adopted increased water and sewer rates for this upcoming fiscal year during their meeting on Monday.
The new rates will take affect beginning July 1.
The Lake Orion water system’s current ready-to-serve rates are listed as $79.98 per quarter with the new proposed rates as $97.66. This totals a 22.1% rate increase. The village’s sanitary sewer system’s current RTS rates are listed as $98.96 quarterly with the new rates listed as $164.70 – a 66.43% increase.
One resident told village council members her last water bill was $733.13, that she limits the amount of time her kids are in the shower and “things like this are making it extremely undesirable to live” in Lake Orion.
“We can’t cut our grocery budget anymore,” she said. “We’re on the budget billing system for electricity and gas, we can’t cut that anymore. I can’t cut down the amount of driving that I’m doing, I can’t cut my automobile gas, I can’t cut my automobile insurance.”
Resident Tracy Woodrum said she no longer waters her lawn, and has to work multiple jobs to pay basic bills.
“Three years ago my summer bill, the three months (of) July, August, September, was over $1,200,” Woodrum said. “And I simply cannot afford that.”
Cost-per-unit increases were also listed, beginning with a 7.67% increase from $6.78 to $7.30 quarterly for Lake Orion’s water system. The sanitary sewer system’s cost per unit currently is $7.17, and the new rate increases by 25.17% to $8.97. The $7.30 water rate and $8.97 sewer rate is what is proposed to be charged for every 100 cubic feet used.
Water and sewer rates are calculated by considering operation, maintenance, debt, depreciation and the number of customers in the village, as Wesley Sanchez, Lake Orion Public Works Director, told the Lake Orion Review last week.
“All these things add up to a certain dollar amount, and they have different timelines on changing them out,” Sanchez said. “So what we do in the rate is we take all those things and when they need to be changed out.”
He added the village identified around $395,000 worth of short-term asset needs, including meters, software, hardware and more, and allocated $150,000 as reserve funds for any needs that come up. These reserve funds will be used so the village will not need to borrow money later, as it has in the past to pay for the first two phases of water main replacements of parts around 20 years old.
The village needs to make debt payments due to borrowing around $6 million for these replacements. Had there been more planning 20 years ago when the parts were new, Sanchez said the village would have the funds today to make needed improvements.
Council Member Michael Lamb said Lake Orion agreed in the 1970s to accept government funds to build pump stations, but “nobody ever set aside a dime” to fix anything in the village because they “lacked the expertise, education and knowledge to operate and maintain water and sewer systems.”
Eventually, the village hired Oakland County to run Lake Orion’s sanitary sewer stations and sewers – to which the village’s DPW makes routine repairs and conducts maintenance, according to Lamb.
“But the whole system is operated by Oakland County,” Lamb said. “So for years, 20 years at least, we paid Oakland County half a million dollars a year to maintain all our pump stations and to maintain our sewer. My explanation I got from previous council members was that they believed that Oakland County was supposed to be setting money aside for the repair and replacement of the sewer system. Well now we all know that this did not occur.”
Lamb said Oakland County “finally had enough of the village” and said they cannot maintain the system anymore and not keep parts for 50-year-old pump stations, meaning the county cannot maintain the system unless the pump stations are rebuilt.
Lamb said there was only one way to address this because of a lack of funds in the village – to sell bonds to pay for the pump stations. He added the village still has another $8 million in bonds to sell, meaning there will be more rate increases to come.
“So people had lower water bills for the last 20 years, but at what expense,” Sanchez said. “Now we have to borrow.”
The debt payments range from $359,979 to $368,299, which will be made every year from this year through 2034, according to village documents.
“If we didn’t have that debt, everybody’s quarterly charge would be $45 (based on a three-quarter meter, the smallest meter,)” Sanchez said. “That debt adds $50 a quarter.”
The village listed $1,099,286 in their budget for the water system’s operation and maintenance expenses – $534,618 to the township for purchased water and $564,668 in operating expenses for the village. Adding this year’s debt payment of $360,348, and a payment of $40,000 in equipment replacements and capital improvements brings this year’s bill to $1,499,634.
In other words, the village needs to charge enough to pay for the $1,499,634 calculated in the bill.
Sanchez also said new customers coming into the village through new developments, like Moceri Company’s Mystic Cove town homes and apartments, would help everyone’s water bill “leverage out,”
While rates would not necessarily decrease, “the more people buying water, the easier the burden is on the rest of the residents.”
Lake Orion has roughly 1,500 water customers and around 280 fewer sewer customers, which is why the sewer bills are higher than water bills.
The village also needs to make debt payments every year on water and sewage disposal system revenue bonds through 2034 ranging from $282,827 to $304,667. The village’s adopted sanitary sewer system budget is $1,687,458 – meaning the quarterly ready-to-serve charge of $164.70 and the rate per 100 cubic fee of $8.97 would be used to pay for the system.
Lake Orion pays $1,382,791 to Oakland county for sewage disposal, operations and maintenance, and more. That includes $577,778 for sewage disposal, $504,872 for operations and maintenance and $304,667 for this year’s debt payment.
“Everybody knows costs are out of control,” Lamb said on June 9. “The sewer and water rate, as predicted, are going to increase tremendously this year, next year and probably the year after.”
He said the village cannot take general funds to pay for the sewer and water. For this reason, Lamb said, in his opinion, the village should reduce taxes “elsewhere.” He added he believes proposals will be coming forward on how to reorganize the community and “get some serious tax savings to the residents.”
“I don’t want to kick the can down the road any further, unfortunately.” President Pro Tem Stan Ford said before the increased rates were approved. “And it’s a burden, I get it. But, if you want us to vote no on this and not do it, where do we go? What do we do? That’s not the answer.”
Council Member Alex Comparoni said he will probably need to move after living in Lake Orion for 35 years.
“My first water bill here was $100, and now it’s $900,” Comparoni said. “So I feel you, but I’m also feeling the pressure. This has to be done.”
Discussed later in the meeting was the possibility of charging monthly water bills instead of quarterly. No motion was taken on the item, meaning residents will still be billed quarterly.
The increased cost of postage necessary for monthly billing would have totaled around $8,053, assuming postage rates remain the same for the upcoming fiscal year. This increase in cost would have been added on to residents’ sewer bills.
Residents may also email comments to waterdepartment@lakeorion.org.