Utica discusses water deficit elimination plan

By: Kara Szymanski | Shelby - Utica News | Published May 24, 2019


UTICA — The city of Utica is in the process of formulating a plan to eliminate its current deficit in the water and sewer fund within the next few years.

During a work session before the regularly scheduled City Council meeting, the Utica council and the treasurer discussed the basis on which the plan will need to be set and the amount of debt that will need to be covered over a set amount of years.

A plan is being set up with the city treasurer to reduce and eliminate the deficit, which has built up from past years.

“The deficit was the result of increasing costs over time, for which the rates (were) insufficient to cover. These costs included increases in the rates charged by the Great Lakes Water Authority and the Macomb County Waste Water Disposal District, increases in debt service arising from bonds issued by the MCWWDD for which the city, as a member of the MCWWDD, is in part responsible, and increases in the cost of maintaining the city’s systems,” Phil Paternoster, the Utica treasurer, stated in an email.

“The state statute requires that a unit of government have a deficit plan in the funds at fiscal year end and is required to develop a deficit elimination plan and send it back to the treasurer,” Paternoster said.

He stated that the city has a deficit that will need to be looked at and how it is laid out.

“The city purchases water from the GLWA, which meters the water flowing into the city’s system from the GLWA system; it is under contract with the MCWWDD for sanitary sewer services, which in turn is under contract with the GLWA to treat and dispose of the sanitary sewer effluent. The city owns the water and sewer infrastructure to which individual customers are connected. The MCWWDD meters the sanitary sewer effluent as it enters the MCWWDD system from the city’s system. The city has to recover from its water and sewer customers the full cost of the charges from GLWA and MCWWDD, plus the city’s costs to deliver the services, maintain the infrastructure and replace the infrastructure as needed,” said Paternoster.

“In fiscal year 2018, we spent approximately $735,000 to purchase water,” he said.

Paternoster keeps track of the city’s usage.

“I collect data on the volumes of water purchased from GLWA and sold to the city’s customers, and of the sanitary sewer volumes metered and billed by the MCWWDD, and I graph this data for comparative purposes.” said Paternoster.

The deficit elimination plan will involve the rates that the city charges.

“The plan involves a change in rates and rate methodology. With the current rate methodology, the first 9,000 gallons of consumption are included in the minimum charge; only after 9,000 gallons of water are consumed does the consumption rate take effect. Under the proposed plan, every customer would be charged a ready-to-serve charge based upon a residential equivalent unit factor and a consumption rate charged on every unit of water consumed. In Utica, a water unit is 1,000 gallons,” said Paternoster.

According to the treasurer during the meeting, as of June 30, 2018, the deficit in the sewer and water fund was $536,000, and for 2019, it’s still growing. For 2020, with great changes, the deficit should fall down to $470,000. In 2021, it should be eliminated.

With a deficit elimination plan, the city will have a maximum of five years to eliminate the deficit.

Paternoster recommends adopting a three-year plan and, if needed, they can do an extension of the plan up to two years.

He said that the city is not charging enough for the water that is being sent through the city, and that is building up the deficit.

“Right now you’re (the city) not paying enough (for water) to settle the debt,” said Paternoster.

Councilman Ken Sikora asked if things could be changed to reduce the costs and cover the debt.

“So are things such as having a water and sewer department, a fixed cost, the maintenance on it, are these things you can put on the side?” Sikora said.

A talk about raising the rate, and how it may not help because residents may choose to just use less water, came up.

“If you raise the rates, though, people start to use less water, so we have that vicious cycle, so somehow we have to say, ‘This is the perfect plan.’ We put this into effect, all of a sudden it’s one less day watering,” said Sikora.

Residents may also choose to change their meters to reduce the amount of water going through their house.

“The more you raise the rates, the more people switch to area maintenance meters. Now you have less water running through the house meter to offset the costs of the billings from Macomb County,” said Paternoster.

Paternoster hopes to have a final draft of the deficit elimination plan ready for adoption at the City Council meeting June 11.

“It’s obvious we need to approach things by what were actually best practices (that) we want to see homeowners do,” said Councilman Perry Sylvester.

Utica received a grant from the Michigan Department of Environmental Quality that will allow Hubbell, Roth and Clark, an engineering firm, to film all of the sanitary sewer system to find primary infiltration sites.

Infiltration occurs when water on the ground’s surface enters the soil and ends up entering sanitary sewers through cracks or leaks due to ground movement. This causes dilution in sanitary sewers and may cause sewage volumes to exceed design capacity.

Modern sanitary sewers are designed to transport domestic and industrial wastewater directly to treatment facilities without dilution. Excessive infiltration can cause sanitary sewer overflow during rain. Dilution of sewage directly increases costs of pumping and cleaning. High rates of infiltration can cause backups in homes and street manholes.

“There have been cases of infiltration in the past. For example, when the city rebuilt Van Dyke (Avenue) in the late 1990s, the sanitary system was repaired because of infiltration identified during the preliminary engineering phase of the road project,” said Paternoster.

“We suspect infiltration because the effluent volumes metered by the MCWWDD exceed the volumes of water purchased by the city. Since not all water that a customer purchases from the city ends up in the sanitary drain, due to outside water use, one would assume that effluent volume would be less, not greater, than the volume of water purchased. As part of the Stormwater, Asset Management and Wastewater grant that the city has received, the sanitary system will be inspected, and infiltration sites should be identified then, if they exist,” he said.

“The issue of infiltration is not one that we can immediately address, since we haven’t yet determined if, where and how much infiltration is occurring,” said Paternoster.

The treasurer thinks the city can reduce the deficit within the next three years.

“I think we can do this. We can make these changes, but we have to do it,” said Paternoster.

“The plan will be put into action as soon as the council ratifies it,” he said.