Gary Sanitary District presents long‑term control plan and seeks industrial/commercial rate increases

Representatives of the Gary Sanitary District presented the committee with the district’s combined overflow long‑term control plan (LTCP), described the rationale for a proposed commercial and industrial rate increase and answered council members’ questions about alternatives and customer outreach.

An attorney and sanitary‑district staff said the district has long operated under a federal consent decree with the U.S. Department of Justice and the Environmental Protection Agency because the city’s combined sewer system has historically discharged overflows to the Little Calumet and Grand Calumet rivers during heavy rains. The LTCP presented to the council proposes a phased approach to reduce overflows, principally by adding roughly six large holding/treatment tanks at lift‑station locations that routinely overflow; those tanks would hold excess flow until the system can process it. The LTCP cost was described at about $155 million over 15 years (and approximately $300 million over 30 years) as a practical path to compliance given the prohibitive cost (the presenter estimated about $1.3 billion) of fully separating storm and sanitary sewers citywide.

The sanitary district said it commissioned a cost‑of‑service study that recommended keeping residential rates steady and raising industrial and commercial rates from $8.50 per 1,000 gallons to $14.38 per 1,000 gallons; contract communities that send wastewater to Gary (Hobart, Lake Station, Merrillville and New Chicago were named as examples) currently pay far less than Gary customers and are in litigation over proposed increases. The presenter said contract communities historically paid about $1.40 per 1,000 gallons and that an appropriate contract rate would have been about $2.42 per 1,000 gallons prior to the LTCP adjustments. The sanitary district said commercial and industrial customers currently supply roughly one‑third of district revenue and that a 44% revenue increase had been identified by the cost‑of‑service analysis.

Council members discussed alternatives raised by the presentation: conducting a second opinion on the LTCP, prioritizing investments in existing plant and collection system assets, exploring projects that reduce inflow to the plant rather than relying solely on satellite storage, and assessing the risk that large industrial customers could build their own treatment capacity if rates rise. The sanitary district respondents said the district’s plant, built in the 1950s, was originally designed to serve residents and a limited number of large industries, and that losing large customers would lower flows and could reduce the need for some improvements — but they also said the district’s immediate priority is to show regulators it is taking credible steps toward compliance.

Presenters emphasized that the district is funded by user fees, not taxes, and that the rate proposal aims to reflect the relative treatment cost and pollutant load of industrial and commercial discharges. The sanitary district asked the council to approve only the industrial and commercial rate adjustment and noted that the contract communities are contesting their proposed increases in litigation; the district withheld the full cost‑of‑service exhibit from the packet because it will be used as an exhibit in those proceedings.

Council members requested additional documentation: a roster of commercial/industrial customers and a written summary of outreach to those customers. The sanitary district agreed to provide an email list and to continue one‑on‑one outreach with large customers. Some council members urged the district to consider alternative technical approaches before approving large rate increases.

No formal council vote on the sanitary district rate change was recorded in the transcript excerpt; legal counsel in the room cautioned council members about asking questions that might jeopardize ongoing litigation with contract communities.