Clinton Township Public Services Director Mary Bednar stands in front of a map of township drain systems in her office at the Civic Center.

Clinton Township Public Services Director Mary Bednar stands in front of a map of township drain systems in her office at the Civic Center.

Photo by Donna Agusti


Water, sewer rate changes to be reflected on November bills in Clinton Township

By: Nick Mordowanec | Fraser - Clinton Township Chronicle | Published September 13, 2019

Advertisement

CLINTON TOWNSHIP — A five-year water and sewer rate plan has been implemented in Clinton Township, eliminating usage minimums while improving monthly financial consistency.

The change in methodology, which was unanimously approved Sept. 9 by the Clinton Township Board of Trustees, presents a forecast between this year and 2024 in accordance with township revenues and expenditures.

Previously, the township water rate structure cost $3.29 per unit for a minimum of five units, in addition to a $4.31 fixed monthly fee from the Great Lakes Water Authority, or GLWA. Sewer usage charges cost $6.12 per unit for a minimum of five units, including a Macomb County interceptor fee of $4.36 per month.

As part of the newly approved model, water rates climb to $3.33, while sewer rates climb to $6.49 — an approximate total increase of 1.4% for customers in the fiscal year ending in 2020. The model proposes the same increase every year until 2024.

Brian Camillar, a CPA with Plante Moran, was hired last fall to help analyze existing rates and remedy the process by instituting a simpler, fairer system. That includes providing the township with a cash flow necessary to pay bills, while maintaining the system and giving customers cost-effective options.

Camillar said he worked with Public Services Director Mary Bednar and the township Finance Department to build five separate models, weighing the pros and cons of each. He said “the devil is in the details” as it relates to fairness and bought and sold system units. Debt service and capital needs are a big part of the formula.

“We wanted to see how these different assumptions that we used play out,” Camillar said. “How does it affect different classifications of customers, whether it is residential, the little old lady down the street, or a family of four, or a commercial property? It all changes depending on how you change these assumptions.”

This new structure eliminates the five-unit minimum requirement and other monthly fixed charges, while including a monthly variable charge and a monthly ready-to-serve, or RTS, charge — one for water and one for sewer.

The model’s intention is for the RTS charge to pay for a portion of administrative costs and system capital needs, regardless of how much water is used by customers. The RTS charge is tiered by meter size, so for example a household with a 5/8-inch meter will pay the lowest monthly amount in RTS charges.

“The idea behind it is, whether you buy one drop of water or a million gallons of water, there are costs before you turn on the faucet, or there are costs to administer that service regardless of how much water you use. … A larger-volume user, because they have a larger meter size, they should bear a greater cost of some of those fixed charges because just by their very existence, they are putting more stress onto the system,” Camillar said.

Clinton Township Supervisor Bob Cannon said the township hired Plante Moran and then double-checked the firm’s calculations with its own engineering firm, Anderson, Eckstein and Westrick. Low-end water users should see reductions, he said, but larger households may not.

“(Our engineers) concurred with (Plante Moran’s) analysis, getting to it from a different angle,” Cannon said. “When our accountants and engineers, who get the same answer, agree coming at it from a different way, we’re doubly assured that what you’re giving us is very accurate.”

Assistant Finance Director Mary Hein said there was a decrease this year through the GLWA due to a renegotiation, although county rates increased about 4%. She said future fluctuations are unlikely, leading to more consistency for customers’ planning needs.

“Now it’s based on the assumptions that we put into our projections,” Hein said. “So we’re trying to keep it consistent with the 1.2, 1.4% over the projection period.”

Throughout the next five years, an estimated $45 million in planned capital outlay is prognosticated. That money keeps the system running as intended, with aspects of capital outlay including the purchase of equipment, subdivision replacements, main replacements, facility improvements, sanitary sewer rehabilitation projects and lift station maintenance.

The goal is to maintain capital improvement reserves of $6.5 million for water and $9.1 million for sewer throughout the next five years. Reserves allude to operating reserves, or the difference between payment timing between the township and customers. There are also debt reserves, reserves to replace broken parts or provide maintenance, and long-term capital improvement projects.

As of March 31, 2018, the township had approximately $27.2 million of modified working capital. This model calculates rates sufficient to maintain that number in 2024.

Camillar said the township, as opposed to other communities, has promoted stability in rate structure due to how reserves have been maintained. He conducts eight to 10 of these analyses per year.

“You’re in a good spot,” he said to the Board of Trustees. “We want to maintain it five years down the road. We don’t want you to start to decline; we don’t necessarily want you to raise a bunch of capital, either. We’re trying to ensure stability, ensure and maintain the money that you have today.”

Clerk Kim Meltzer said the new formula “puts the power in the lap of the people.”

“There is accountability by the consumer,” Meltzer said. “The consumer now can make a decision on whether or not they want to conserve. If they want their lower bill, they can contribute to making that happen.”

Bednar said the new formula will begin with customers’ October usage, with residents seeing changes on their November bills.

Advertisement