Michigan City officials propose two-step sewer rate increase to fund aging sanitary system

Michigan City sanitary-district officials on June 9 proposed a two-phase increase in sewer fees to address a projected operating shortfall, aging lift stations and a multi-year capital improvement program, while announcing a federal funding award for septic-cluster removal.

The presenters told residents that the sanitary district serves about 12,000 customers and reported roughly $8.2 million in annual revenue but faces a projected $700,000 cash operating deficit on 2024 test-year figures and insufficient depreciation funding for capital renewals. The mayor also said the House Appropriations Committee included $746,868 for a Michigan City septic-elimination project in its measure now moving through the legislature.

Why it matters: Sanitary staff said the district has extensive aging infrastructure — roughly 46 pump (lift) stations, many decades old — and that routine maintenance and deferred capital work have left limited reserves and poor bond creditworthiness. Presenters argued modest, staged rate increases plus interim financing are needed to fund engineering and priority projects and to position the district to borrow at better rates for larger plant upgrades.

What was proposed and when: Presenters described a two-phase plan. Phase one would raise in-city sewer charges by about $10 per month at the 4,000-gallon rate-making level (implementation targeted for September), and phase two would add about another $10 (proposed effective January 2028). Officials said these increases are intended to (1) cover operating and maintenance expenses, (2) begin funding depreciation for capital renewal, and (3) improve creditworthiness to pursue a bond-anticipation note for engineering and early work.

System development charges and fees: Staff also presented a proposal to expand system development charges (SDCs), one-time impact fees for new development intended to shift growth-related capital costs away from existing ratepayers. Examples were cited from neighboring communities where SDCs have funded major projects and generated significant one-time revenue.

Affordability and assistance: Officials acknowledged affordability concerns and said they are developing an assistance fund modeled on programs used in other cities and guided by U.S. EPA recommendations. Potential funding sources discussed included city general allocations, SDC revenue and one-time contributions from large local projects; staff said details and eligibility criteria will be developed before any program is finalized.

Public reaction: In the public-comment period, former council member Paul Prince Binsky urged immediate implementation of impact fees and disciplined use of redevelopment and riverboat/TIF funds to lessen rate pressure. Resident Scott Melon said deferred maintenance explains Michigan City’s position and said the plan was reasonable, while former district employee Brendon Tisdale pressed for operational efficiency gains and preventive maintenance to accompany any rate increases.

Next steps and process: Staff said the sanitary district board will consider a recommendation at the end of June; if the board supports the proposal, the ordinance would move to the City Council for readings, a public hearing and a final vote. Presenters emphasized that the figures are preliminary, that multiple comment channels remain open, and that no votes were taken at the June 9 workshop.

Officials’ framing and caveats: Presenters repeatedly described the proposal as the minimum needed to avoid further deferred maintenance, shore up working capital and permit interim financing for engineering. They cautioned that larger plant upgrades are anticipated beyond the two-year plan and that full engineering will inform final cost and schedule for those projects.

The board adjourned after public comment; staff posted materials and said they will continue collecting input online ahead of the June board meeting and subsequent council hearings.