Owosso debates options to pay for $200 million water and sewer plan as council approves DWSRF bond

Owosso officials on Wednesday presented residents with alternatives for funding a roughly $200 million water and sewer capital improvements program and approved a bond ordinance to finance a portion of that work.

City Manager Nathan Henney and Public Works Director Ryan Suhanik told the Owosso City Council that the full five‑year capital plan, as modeled by Baker Tilly, would raise the average quarterly residential water bill (assumed at 18 units per quarter) from about $266 now to roughly $710.33 by 2030 if the council adopted the plan without cuts. Henney said council members and staff have been exploring lower‑cost options after hearing resident concerns.

The city offered three broad alternatives: the full plan that produces the $710 quarterly estimate; a 25–50% reduction scenario that would lower projected bills but postpone work; and a targeted “specific project deferment” plan that the city says would reduce the year‑five average to about $554 per quarter. Henney said staff and Baker Tilly built the scenarios to show tradeoffs between near‑term rate pressure and deferred project risk.

Why this matters: the improvements include major work at the water treatment plant and wastewater facility, replacement of aging mains and lead or galvanized service lines, and other system upgrades that the city says are necessary to meet regulatory requirements and to avoid a future plant failure.

Director Suhanik reviewed projects and costs the city is considering deferring under the reduced scenarios, including a proposed replacement of an aging underground water reservoir (the city estimates the reservoir project at roughly $20 million as a major item), a raw water main river crossing, mechanical lime sludge dewatering, and other water‑plant upgrades. For wastewater, Suhanik identified three costly items—secondary clarifier construction, digester demolition and sludge drying—totaling roughly $12.5 million in the plan. He told the council that deferred items across the plan total about $66.5 million out of the roughly $200 million inventory of projects.

"Council heard you, and here we are today going over some alternative options," Henney told the room as he explained staff efforts to pair down the program and maximize grants and principal‑forgiveness loans. The city has been pursuing federal and state funding, Henney said, and staff reported they have obtained roughly $21 million in grants and principal forgiveness since 2021 for water and sewer projects.

State and federal constraints: Suhanik said the state requires replacement of lead service lines and is also addressing galvanized services; lead is the top priority. He said the city operates under a 20‑year compliance timeline for replacing customer service lines and that EPA/state timelines are subject to change.

Public comment and affordability concerns: more than two dozen residents spoke during a lengthy public‑comment period. Speakers said the projected increases would be unaffordable for many Owosso households on fixed incomes and could harm local businesses and rental housing. Examples residents gave included a single‑mother household whose current quarterly bill is near $400 and who could face bills near $1,000 under steeper scenarios, and multiple seniors who said water costs already exceed portions of their monthly income.

Resident Russell Thompson raised lead and galvanized supply‑line concerns, saying he had been told the city would address galvanized lines but feared long waits; Director Suhanik responded that lead is prioritized and that the city has 20 years to replace all lead and galvanized service lines.

Several residents pressed the council to seek alternative revenue approaches—sales or local income taxes were discussed by commenters and in audience remarks—but Henney and other staff explained state law limits how municipal taxes can be levied or used. Henney and staff emphasized that water and sewer are enterprise funds by law and must be supported primarily by rates; general‑fund revenues cannot be used as an ongoing substitute for water/sewer revenue without repayment or other legal processes.

Council action: councilors voted to adopt a bond ordinance under the Michigan Drinking Water State Revolving Fund (DWSRF) program for project number 7880‑01. City bond counsel and staff said the authorization allows issuance of up to roughly $11.6 million in bonds for a package that will cover water‑main replacements on named streets, lead service line replacements and selected water‑plant electrical and well‑related work. The city manager said that of the DWSRF package, about $1.8 million would be loan forgiveness and approximately $459,000 a grant under current award terms.

What wasn’t decided: councilors and staff repeatedly said the meeting was for deliberation and that council would not adopt a final rate decision that night. Henney and Suhanik said staff would return with more detail on which projects would be deferred if council chose a reduced program and on the precise schedule for lead/service replacements tied to state mandates.

Where things go next: councilors signaled they will continue to pursue grants, apply for low‑interest DWSRF funding and consider staged project lists that aim to reduce the initial rate shock while addressing critical plant and main‑replacement needs. The council scheduled a town‑hall meeting two days later specifically to hear more public comment on utilities.

Ending: councilors, staff and residents agreed the situation was difficult: officials said the city must invest to avoid plant failures and regulatory enforcement, while residents urged the council to find ways to protect low‑income households and small businesses from steep utility increases.