City Council, Mayor Express Discomfort With Proposed Utility Rate Hikes
Members of Saline City Council expressed more discomfort with the proposed higher utility rates that will be required to pay off loans to upgrade the city's wastewater treatment plant - as once again, the estimated cost of the project was ratcheted up by a few million dollars.
During Monday's city council work session, City Manager Colleen O'Toole reported that the estimated cost of the project's first phase was rising to $62 million - up from $56.5 million estimated at the last meeting.
O'Toole is recommended increasing utility bills for all water and sewer users. The typical Saline residential water and sewer customer, who uses about 13,500 gallons a quarter, would see the quarterly bill rise by $81 next year - and continue to rise.
Originally, when Tetra Tech conducted a study of the city's options for improving the wastewater treatment plant, council settled on a plan to rebuild/rehab the 80-year-old plant. The first phase was expected to cost $23 million.
Since then project's price has skyrocketed, in part due to inflation and in part due to the scope of the project. Water and wastewater treatment superintendent Bill Briggs explained the most recent cost increase to council. The city's wastewater treatment plan has 18 rotating biological contactors that treat city sewage. They are expensive to maintain. A recent repair bill for one of them was nearly $50,000. Briggs estimated the city could be on the hook for hundreds of thousands of dollars in the next few years to maintain the RBCs. The city was planning to remove the RBCs and replace the process with a new sludge dewatering process in the second phase of the project. Concerns about more environmental violations convinced city staff to recommend pushing this change to the first phase.
"One of the RBCs is down. Right now we're meeting our limits for April. When it turns to May, if we don't have it fixed by then, we'll be exceeding our permit," Briggs told council.
The city previously determined phase one of the WWTP project was about building a plant that safely and lawfully meets the current needs of the city. The second phase, now estimated at around $20 million, would take place in 2027-2028, and would help the city meet growth.
Two weeks ago the city learned it was too rich to be eligible for the federal grants that could have lessened the impact on Saline's ratepayers. Mayor Brian Marl said he and O'Toole have applied for a federal grant worth $18 million. He and city leaders have written letters to US Rep. Tim Walberg, US Rep. Debbie Dingell, US Sen. Debbie Stabenow and US Sen. Gary Peters seeking support for the grant. On Friday, Marl is meeting with Dingell, expected to be Saline's next representative in Congress, to talk more about the grant application and other avenues. In addition, Marl said, there may be more grant money available as federal money filters to the state,
Marl suggested it might be worth going back to EGLE, the state entity requiring Saline to improve its wastewater treatment process, and ask for time.
"In light of rising costs, in light of supply chain issues, in light of inflation at a 30-year high and in light of the fact that this body and this city have invested significant time and resources and made public commitments to rehab our wastewater treatment plant, I think it does make sense to try and re-engage EGLE and potentially involve our elected officials to see if we can get some additional time to complete the necessary upgrades we have committed to do," Marl said.
Marl said he would find it difficult to vote for such a significant rate hike.
"It's going to be really hard for me to vote in favor of an increase of $80+ per utility customer, per quarter," Marl said.
Council has discussed other options. One option involved tiered pricing based on water consumption - and practice used in Ann Arbor. However, a representative of Baker Tilly, the firm hired to conduct the rate study, recommended against the practice, saying it could lead to lawsuits.
Still, Councillor Jim Dell'Orco suggested some variant of the idea. He suggested that the fixed charges to every Saline ratepayer unfairly suggest customers who don't use much water. So a couple of senior citizens who use 8,000 gallons a month are effectively paying more per gallon than an industrial user.
He asked O'Toole if she or Baker Tilly could run numbers that skew more toward usage and away from fixed charges.
During public comment, Tom Allbaugh, who has worked for OHM Advisors and Tetra Tech, two firms intricately involved in Saline infrastructure projects, suggested that if the city can't find new users to share the costs of the project, it should abandon the current wastewater plant and negotiate to join the Ypsilanti Community Utilities Authority, which also handles Pittsfield's wastewater.
Councillor Dell'Orco said he thought it was possible that any authority granting funds might look kindly on regional projects. Mayor Marl said he thought it was worth exploring.
However, as O'Toole noted, the siting study pegged the cost of connecting the YCUA at $87 million - a cost that's surely since risen substantially.
Councillor Janet Dillon suggested the rising costs were somewhat inevitable.
"We've been trying to be diligent in staying relatively flat over the years with rate increases and at some point, you've got to play catch up. We've hit that day and time," Dillon said.