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Posted: 09/19/12

Village sewer debt prompts
increase to rates

by CHRIS GRAY
Observer Staff Writer

      In an attempt to make its sewer system pay for itself, sewer rates in the Village of Romeo are expected to increase by 8.5 percent.
       At its Sept. 17 meeting, the Village Board of Trustees voted 5-0 to raise sewer rates as well as hike up water rates for industrial customers. Trustees Mike Cregar and Russell Rinke were not present.
       The rate increases will take effect Oct. 1.
       The board requested its auditors, Stewart Beauvais and Whipple, to examine the village's water and sewer rates to see whether any increases were necessary. Village President Mike Lee said the goal is to eventually have the system pay for itself instead of using the general fund to subsidize it.
       "Of course we don't want to increase anything, but we do have to look out for the full village itself, so I think this is going to help out a little bit at a very minimal cost," Lee said after the meeting.
       Paul Bailey of Stewart Beauvais and Whipple said the estimated 2012 sewer fund will come up short by $53,000 since the village is transferring fewer funds from the general fund. He said the village transferred $311,000 last year for the sewer debt, though it reduced the transfer to $215,000 for the budget ending June 2012 due to financial constraints. About $200,000 is estimated to be moved in 2013.
       "Over a two-year period of time your sewer funds had to absorb $100,000 of debt service costs," Bailey said.
       Because of this, Bailey said the sewer rate needs to be bumped up from $5.09 to $5.80 for the first 10,000 gallons. The rate for using more than 10,000 gallons will increase from $3.49 to $4. This calculates to a $3 per-month increase (8.5 percent) for the average user.
       Residents using the minimum 10,000 gallons will see a $2.37 per-month increase (8.7 percent) in their sewer bill. Bailey confirmed most senior citizens fall into this category.
       "You still are one of the lowest water and sewer rates in the area," Bailey said.
       In a letter, the auditors said the sewer rates would've required a 30 percent increase if the village didn't transfer $200,000 to pay for the debt in 2012-13. The sewer bond is expected to last into 2029.
       Board members expressed concern about the possibility of the state eliminating personal property taxes, as it would hinder the village's ability to pay off its bond debt from the general fund.
       "We lost 25 percent of our money coming in, and who knows what we're going to lose in the personal property tax that they might be eliminating," Lee said after the meeting.
       The auditors recommended reviewing the rates once again in May when the village has a preliminary budget to determine how much of its 2004 bond debt will be paid by the general fund.
       For water rates, Bailey said an increase from $3.14 to $3.45 per 1,000 gallons will cover the City of Detroit's rate increase and the costs of a booster station the industrial users employ. No changes were suggested to the residential water rates, which are currently at $3.
       Bailey noted the village is transferring money from the general fund to the water fund, though it is expected to shrink by just over $100,000 between 2011 and 2012. Village Clerk Marian McLaughlin said the decrease comes from the village finishing off a bond from 1998 this fiscal year.