Cheboygan city council increases water, sewer rates to help fix, stabilize system

CHEBOYGAN — After a public hearing and presentation from Cheboygan City Department of Public Works Director Jason Karmol, city council voted to raise utility rates and fees for city water and sewer customers effective July 1.

The water rates will increase from $7.05 to $9.57 per 1,000 gallons used. Non-residents, such as the Inverness Township sewer customers, would be charged 1.5 times the city rates. Sewer rates would increase from $8.48 to $9.99 per 1,000 gallons. Inverness Township customers could be charged the 1.5 times rate for water only, but there is a separate agreement that has been negotiated between the township and the city.

These new rates pay for the work underway at the plant, as well as setting the city up to provide utilities for future developments coming to the city. The city would also be able to create an asset management system to address future issues, such as pipe replacement.

"So it would be reasonable to say we are putting our backbone back together, but our veins, capillaries, things like that, we still need to address that, to continuously move the community forward," said Cheboygan City Manager Dan Sabolsky.

Prior to the rates being increased in 2018, rates had not been increased since 2002. The goal is to create a self-sustaining rate structure that would lead to a balanced budget and allow city officials to solve problems as they arise.

Karmol's presentation was created by Mike Engels of the Michigan Rural Water Association, who studied rates for years. While analyzing rates and fees in Cheboygan, Engels looked at the city's financials and took into consideration the desire to bring its wastewater and water systems up to satisfactory conditions.

The c wants to protect its multimillion dollar investment, and officials are conservative when looking at other cities' plans.

"So it's unfair to look at systems unless they're similar in size and scope," said Karmol. "So it's difficult for us to do a community comparison. What we had to do here is look at our system and what it takes to get our system up to snuff."

Karmol said inadequate or low rates shorten the system's lifespan, making it less reliable.

"The council members were supposed to set and approve an adequate budget to achieve this goal. We have to raise rates when necessary to protect the community sewer system investment, and nobody wants to raise rates," said Karmol. "So, what the customer should expect is a quality product, reliable, long system lifespan, the proper maintenance and efficient use of financing."

In Cheboygan, there are 49 miles of water and sewer pipes, four wells and one water tower. There is a wastewater treatment plant and five pump stations, worth more than $100 million.

The Michigan Department of Environment, Great Lakes and Energy has what is called a sanitary survey, which judges the city's system on a number of factors. A USDA loan was recently taken out by the city to make upgrades to address some deficiencies and the rates for the city had been set to pay back that loan and balance the budget.

Karmol said the current cost to replace the water system is around $47 million, so the city cannot afford to let it deteriorate, nor depreciate fully. The study by EGLE found a number of deficiencies needing to be addressed.

The wastewater plant is operating under an administrative consent order by EGLE because the plant has not been meeting its discharge permits fully since 2006. The plant has been in service for 44 years and was originally supposed to be used for 20-25 years. There are 38 pages of violations logged at the plant, which the city is trying to address with improvements.

The proposed rate increases would help to address the deficiencies, increase the ability to serve new customers, balance the budget and make the loan payments, while increasing the reliability and safety of the systems.

Cheboygan City Mayor Pro Tem Brett Mallory questioned whether, moving forward, it would make sense to have a built in annual rate increase, to help keep these large increases from happening again.

This was suggested in 2018, but council at the time voted it down because there was already a large increase being proposed and council didn't want it to be too much for residents to bear.

More: City approves increases to water and sewer rates

The water- and sewer-related fees were also adjusted Tuesday night. After hours call out fees, such as turning the water back on to a residence, were adjusted from $40 to $160.

Water bacteria sample testing was also increased from $18 to $20 per test, as well as several other customer service fees.

During the public hearing, there were comments supporting and opposing the rate increases.

Janet Gahn said she doesn't like paying increased rates, but encouraged the city to go with the option to increase the rates all at once, rather than splitting it up between two years.

Louis Vallance opoosed the increases and said the funding should be used to provide utilities to residents where there is not currently water and sewer available.

The full presentation by Karmol will be made available to any city resident. The rate increase options are also available at cheboygan.org, with a full audio recording of the meeting.

Contact Reporter Kortny Hahn at khahn1@gannett.com. Follow her on Twitter at @khahnCDT.

This article originally appeared on Cheboygan Daily Tribune: Water and sewer rates increase in Cheboygan