Lathrup Village council adopts new 'ready‑to‑serve' utility billing as staff warns of steep deficits

Lathrup Village City Council approved a change to the city’s water and sewer billing structure on June 15, moving from a four‑unit minimum to a ready‑to‑serve plus usage model as part of the FY2026 budget package.

City staff presented the proposal and a rate study done in partnership with the Michigan Rural Water Authority, telling council the current structure does not recover fixed system costs and would leave the utility facing “almost a $500,000 deficit” next year if left unchanged. Staff said roughly 73% of the system’s costs are fixed — employee costs, bond payments and charges from regional providers — while sewer treatment alone costs the city “over $1.1 million” annually.

The change replaces the longstanding flat four‑unit minimum with a monthly ready‑to‑serve charge based on meter size plus usage charges tied to actual consumption. Staff walked the council through examples showing how customers who currently pay the four‑unit minimum but use less water would see bills fall in some months, while heavy users or those with larger meters could see increases. The presenter said the bond charge previously established by council would remain and that meter size (for example, a common 5/8‑inch meter) determines the baseline ready‑to‑serve fee.

"Our current utility rates are not sustainable," the presenter said, summarizing the financial risk of leaving rates unchanged and the need to build reserves for aging infrastructure. The presenter added that the city buys water through SAW/SAQUA and removes sewage through Evergreen Farmington Sanitary District (EFSD), and that those external charges are a major driver of the city’s fixed costs.

Council members pressed staff on specifics: one member said the city has roughly 15 miles of mains about 100 years old and another asked whether savings from no longer subsidizing utilities by other funds would flow back into the general budget. Staff responded that the city’s enterprise funds have separate fund balances and that larger, grant‑eligible projects (staff cited an EPA grant of about $980,000 requiring a ~20% local match) would still rely on outside funding.

Staff said the new structure would take effect July 1 and that residents would see the change on the first water bill mailed in August. The presenter also said finance will review initial outcomes after six months and the council will revisit rates annually.

The council approved the FY2026 budget, which staff presented as including the updated rate structure. The action moves the city toward greater alignment between customer charges and the real cost of providing water and sewer service while aiming to rebuild reserves for repairs and planned projects.

The council asked staff to run a public education campaign to explain meter categories and individual customer impacts; staff advised residents to contact the city if they are unsure of their meter size.