City Commission approves water and sewer, millage increases

By: Joshua Gordon | Woodward Talk | Published June 19, 2013

PLEASANT RIDGE — In approving the 2013-14 combined city budget at the June 11 meeting, the Pleasant Ridge City Commission also approved a 0.3-mill increase for the next fiscal year, as well as a 3-percent increase to water and sewer rates.

The city has had 1 mill levied on residents since 2004 to pay off bonds used to build the city’s pool and community center. The bonds are unlimited-tax general obligation bonds, meaning the city can levy a millage increase so it has enough to make the payments on the bond.

“Well basically, the 0.3-mill increase goes to the debt for the construction of the community pool and the complex,” City Clerk Amy Allison said. “Because it is an unlimited obligation bond, we can levy enough to cover the obligation, because we have to make sure we have enough to cover the debt.”

The initial bond was for $2.5 million and it cost the city $2.2 million to build the pool and community center in 2004. The city refunded $300,000 because it was not needed.

Payments on the bond are made annually, fluctuating around $150,000 and $160,000. The millage increase will bring about an additional $30-per-year increase for residents on a $100,000 taxable-value house, or 30 cents for every $1,000 of taxable value. In total, Scott Pietrzak, assistant city manager, said the millage increase would bring in about $160,000, or about the cost of a year’s payment.

“We had to be able to cover the costs of payments on the bond, and in past years, we have used a little bit of the fund balance to be able to levy it,” Pietrzak said. “But, we are at a point now that we need to raise the millage to 1.3 so we can cover the payment and keep the minimum amount in that repayment account by law.”

The bond is a 26-year bond, and depending on how payments go the next couple of years, the bond is scheduled to be repaid in 2029 or 2030. Residents will see the tax increase for the first time in July.

Pietrzak said the city keeps between $6,000 and $7,000 in the repayment account throughout the year because it doesn’t need much, just enough to levy whatever is needed to make payments. This millage increase is the first since 2004, he said, and only because it was needed.

“Five years ago, when the housing market took a crash and the (house) values went down, we could have raised the rate to whatever we needed to collect the money,” Pietrzak said. “It is full faith and credit of the city. Fortunately, we have kept the rate at 1.0 since we built the pool and this is the first time we ever had to go up. It is an unfortunate reality of an unlimited-tax obligation bond.”

The City Commission also amended the water and sewer rate ordinance in the Pleasant Ridge City Code to offset rising costs from the county’s rising water and sewer costs and to maintain the city’s system.

Pietrzak said the rate increase is the lowest in years, with doubt-digit increases happening in the past few years.

“We had to pass along the costs from the Detroit Water and Sewerage Department, Southeastern Oakland County Water Authority and Oakland County Drain,” he said. “We also have our own costs here in Pleasant Ridge to have maintenance repairs, staffing and billing.”

The water is billed on cubic feet, and one unit, which is 1,000 cubic feet, will cost $125.36 per billing period. Pietrzak said the average household in Pleasant Ridge uses between two and two-and-a-half units.

“As everyone knows, as the cost goes up, the price to maintain that goes up, as well,” he said. “We are a small city and sometimes there are different costs that come along that cost our residents more because we are a small city. A water main break costs as much to fix here as it does in a larger city; we just have less meters to spread the cost along to.”