Bond debt and aging infrastructure adds up to high water bills

Photo by Sue Suchyta. Mayor Stacy Striz (left) responds to a homeowner's questions, while Councilman Steven Densmore (second from left) listens following an Aug. 27 meeting to explain water bills and system problems to residents.

Photo by Sue Suchyta. Mayor Stacy Striz (left) responds to a homeowner’s questions, while Councilman Steven Densmore (second from left) listens following an Aug. 27 meeting to explain water bills and system problems to residents.

By SUE SUCHYTA
Sunday Times Newspapers

MELVINDALE – Bond debt and aging infrastructure contribute to high residential water bills, and finding relief presents a challenge, Mayor Stacy Striz told residents at an Aug. 27 meeting at City Hall.

Striz explained the components of a quarterly residential water bill, which, in addition to household water usage, includes bond payments, which some cities add to property taxes, and water lost through pipe leakage and main breaks throughout the city.

A minimum water bill for three months, based on 10 units of water, is $146.89, which includes $65.10 for sewage disposal, $9 for recycling, and $40.45 for water, $26.13 for cost of operations, and a $6.21 meter fee. The last three items total $72.79, and appear on a bill as one item.

Most residential quarterly water bills are much higher, with some residents complaining of $500 water bills.

The 10-unit minimum lets the city recover bond debt issued to raise capital for infrastructure improvement, and system water loss, which has dropped from 34 percent in 2013 to 25 percent in 2016. Striz said the city’s goal is to reach a 15 percent water loss goal, which is considered a standard amount.

“As part of our bond obligation, we have to charge 25 percent above what we get charged for all water costs to cover the covenant,” Striz said. “The city of Melvindale pays the Great Lakes Water Authority for the water that is used by Melvindale consumers and for the additional 25 percent water loss.”

Four 20-year bonds, issued by past administrations, are reflected on water bills: 1997, 1998 and 2001 water supply and sewage disposal system bonds, and a 1999 drinking water program bond.

The 1997 bond, for $1.5 million, will be retired this year; the 1998 bond, for $900,000, in 2018; the 1999 bond, $1.1 million, in 2019; and the 2001 bond, $995,000, in 2021.

“A lot of other cities put those bond debts on their taxes so that they don’t run into this problem,” Striz said. “But when Melvindale issued these bonds, I wasn’t here. I don’t know why they opted to do it on the water bills.”

Striz said city personnel researched whether the bond repayment could be transferred to tax bills, but discovered the issue dates of the bonds did not allow the city to do that.
The city now budgets $50,000 annually for capital expense to repair water main breaks.

She said in 2010, the city was billing residents just enough to service the bond debt and pay the water authority.

“There wasn’t anything over for repairs, for wages, things like that,” Striz said. “There were a couple years when we made no (water bill) increase at all, which didn’t mean that the city of Detroit that was providing our water wasn’t going up. We just weren’t staying on course with that and increasing like we needed to on a general yearly basis.”

Striz said it would cost more than $80 million to replace the city’s sewer and water mains.

“Our system is almost 100 years old,” Striz said. “That’s a lot of the reason we have leaking pipes underneath, we have the water main breaks, things like that.”

A 2014 millage identified three streets with the worst pavement and water mains and sewers for repair. About $1.9 million was spent on Eddon, $1.4 million on Clarann and $1.9 million on Harman.

Striz said water bills will be lower when water leakage is reduced, and bonds are paid off and are no longer added to the bills.
She hopes to find grants and funding for conversion of homes and businesses to smart meters, which provide customers with real-time water consumption information, and don’t have to be read by a city employee, since data is transmitted by radio signal.

Striz said the city does not have enough employees to read the traditional meters on a monthly basis, which would be needed to convert to monthly water billing now, which some residents would prefer from a budgetary standpoint.

“We are looking into the cost of (smart meters) and petitioning our elected officials on the county, state and federal level to seek out grants and other financial support,” Striz said. “I met with the county, and Rep. (John) Conyers (D-Detroit) to work on grants and funding in the hope that this can happen.”
She said smart meters can help the city spot leaks sooner and react quicker to prevent costly water loss.

Striz said the city needs to come up with an ongoing, manageable capital outlay program funded through taxes, not water bills.
“If we had a renewable bond every year for $1.5 million, it would cost an average homeowner between $200 and $400 per year on their taxes based on their assessed value,” Striz said. “We would be able to begin replacing sewers, mains and roads every year.”

Striz said she knows no one wants to hear about tax increases.

“Eventually our system is going to fail, and we can’t continue to just ignore it and use that money to do water main break repairs,” Striz said. “We have to come up with some more permanent ideas to make this more long-standing plan of replacement.”

She said she told Conyers that Melvindale has a socioeconomic status that is very similar to Detroit with respect to resident income and average household income, but is ignored because it is a small community.

She also asked Wayne County representatives why some cities are granted funds annually but Melvindale is not receiving any.

“They can’t keep doing this to us just because we are a small community,” Striz said. “We have just over 10,000 residents; 400 voted in our last election.

“If Melvindale is their area, it is not going to make a difference to them whether they get elected or not, because we’re not holding a strong enough voice to determine that. It doesn’t impact their outcome at all. So we’ve got to get involved in our government.”

Striz said she hopes the city never finds itself in a situation where the system starts failing and sinkholes develop and water main lines disintegrate.

“The break we had on Harman, the company came out and said, ‘Your pipe shredded,’” Striz said. “It was so hot this year, when Great Lakes (Water Authority) had to up their pressure, we are one of the first ones that receives the water because we are in such close proximity.

“It is within the agreement that they can up that pressure, but as soon as they did, our lines just started blowing. And so it is kind of scary to think about, and it stinks that we haven’t been doing (replacement) every year ongoing, and now it has kind of come to a head.”

(Sue Suchyta can be reached at sue.suchyta@yahoo.com.)

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