Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Water Sewer Finance topic
No spam. Unsubscribe anytime.
Council approves 7% water, 3% sewer rate increase and hires bond counsel and financial adviser for infrastructure bonds
Summary
The council adopted a proposed water/sewer rate package (7% water, 3% sewer) to rebuild fund balances and approved hiring Dickinson Wright and MFCI for a planned $3.9 million bond package covering clear wells and a ladder truck, with bond fees to be paid from bond proceeds.
Alpena council members voted May 19 to adopt proposed water and sewer rates that would raise the water rate 7% and the sewer rate 3% for the coming fiscal year, a combined average increase of about 5% across both utilities.
Steve Schultz, city engineer, presented rate options and recommended the 7%/3% split to accelerate rebuilding the water fund balance while limiting sewer increases. Schultz said the proposed rates assume 292,601 water gallon units and 274,101 sewer gallon units and would generate approximately $2.3 million for the water fund and about $2.06 million for the sewer fund. Using that option, Schultz said the average utility customer would see roughly a $20–$25 increase per quarter, depending on usage.
Council members and staff emphasized the purpose of the increase is to rebuild reserves after recent capital projects, including the Second Avenue and Fair Avenue work, and to support the large clear-well project now underway. Finance staff projected the water fund balance would be about $449,000 by June 30, 2026 under current plans and the sewer fund about $1.85 million; council members said they would like to build fund balances to a higher target over time.
Separately, the council approved proceeding with a bond issue to fund infrastructure projects and related costs. City staff described a proposed $3.9 million bond package intended to partially fund completion of a clear well project (staff said the total clear-well cost has grown toward $10 million and the city previously received a $6 million state appropriation in 2022) and to acquire an aerial platform fire apparatus (a ladder truck) with an estimated cost of $2,007,980.48 and a two- to four-year build time.
Council approved entering into an agreement with Dickinson Wright for bond-counsel services in the amount of $19,250 and with MFCI for financial-adviser services (fee equal to 85% of the bond-counsel fee, $16,362.50). Staff said bond-counsel and advisory fees will be added to the bond proceeds so the city will not pay those costs from the general fund. The council asked that the selected advisers return to present the bond issuance process and timetable.
Why it matters: The rate increase and bond authorization fund near-term operations and large capital projects (clear well replacement and fire apparatus) and will affect utility bills paid by city ratepayers. The choice to attach issuance fees to bond proceeds affects how the city finances borrowing costs.
The council adopted the rates and authorized the bond-counsel and adviser agreements by recorded motion; staff said sales timing will be determined by the adviser process and that any state appropriations obtained later could be used to pay down bonds earlier if possible.
