ALPENA -During a public hearing March 3, Alpena Municipal Council directed city staff to explore options that would implement increased water rates over a two or three year span.
City Manager Greg Sundin and City Engineer Rich Sullenger have done so and put together eight scenarios that would curtail the higher fees. Staff, however, will not recommend any of the new options Monday, and instead will ask council to approve the original rate hikes and for them to be in place on May 1.
Sundin said it is up to council to determine what it wants to do, but he believes having the rates increased at one time is the best move in order to move forward with capital improvement needs. He said there are options that would cut the 1,000 gallon rates in half and others that cut the ready-to-serve charge by 50 percent, with the balanced to be implemented next year. They did the same for three year options. Each option is done with monthly and quarterly billing numbers for comparison.
"We did what the council asked and looked at phase-ins of two and three years," Sundin said. "They will be presented to council but we will have our recommendation, which is the original because of the need we have. We wouldn't have recommended it in the first place if it wasn't necessary."
Sundin said some people are questioning the city about the amount of money it is trying to collect through the higher rates. Sundin said the city actually is asking for less than what it needs to get a handle on needed work to the water and sewer system, as well as both plants.
"We aren't asking for everything because everything we need is $3.5 million and this proposal equates to $1.9 million for capital," Sundin said. "We have never asked for the full amount because we knew it wasn't realistic. This, however, is what we feel we do need now."
If council decides to go with one of the phase-in plans, the amount of capital funding will be reduced significantly for one year and needed projects will have to be put on the back burner, again. Sullenger said if the staff has to recommend one of the phase-in options it would be one for two years that leaves in the $5 ready-to-serve charge for both water and sewer, but cuts in half the proposed 1,000 gallon rate. He said the city also would fall short on the $1.9 million it needs.
"It would equate to $1.66 million the first year, but we figure there would be a 10 percent drop in usage due to the higher rates which would drop it again to about $1.5 million or lower," Sullenger. "Can we get by with that? Yes. But all we would be doing is once again kicking the can down the road."
By billing monthly and collecting the $5.84 fee 12 times a year instead of four from the 4,727 customers with a one-inch meter or less, it would generate more than $333,000 a year. Sullenger said that money is what it costs to cover billing expenses. He said currently billing is broken up into three cycles, which means bills do not come in all at one time.
With the monthly billing all of the customer payments would arrive at once. He said in order to handle the increase another employee would be hired at United Water. He said the other expenses are for United Water's service, as well as for the system that allows people to pay their bills via the Internet.
"It is not a revenue for the city," Sullenger said. "When you take all of those costs and put them together, it totals $333,000 a year. Those are our costs to have that billing service done."
Sundin said he expects the council to make some sort of decision on the rates and doesn't expect another public hearing on the issue. He said he doesn't think there is much else to consider.
"I don't know if there is anywhere else we can go," Sundin said. "It is simple to do, we can cut the commodity charge, operation and maintenance fees, but we would pay for it later on. It would be nothing more than kicking the can down the road once again. We can fix things now or wait for them to break when they could be more expensive to fix."
Steve Schulwitz can be reached via email at email@example.com or by phone at 358-5689. Follow Steve on Twitter ss_alpenanews. Read his blog, Upon Further Review ... at www.thealpenanews.com.