Munising city manager proposes higher water rates to cover $5.4M in projects and rebuild reserves

Michelle Harrison, Munising's city manager, told the City Commission on a presentation that the city's water utility needs a rate increase to cover rising operating and capital costs and to rebuild reserves.

Harrison said the utility serves about 1,030 customers (about 800 residential) and sells roughly 67,000,000 gallons a year. She said annual debt service is about $580,000 and the utility's reserve target is $2,000,000 while current reserves are roughly $1,000,000. Two projects driving near-term costs are a state-mandated lead service line replacement she put at $2,700,000 and the water portion of a Washington Street reconstruction also estimated at about $2,700,000. Harrison told commissioners the utility needs roughly $190,000 per year for repair-and-replacement savings.

Why it matters: Harrison said ordinary CPI-based annual adjustments have not been sufficient to cover increasing parts and construction costs (she cited examples such as a pump that cost about $4,500 in 2012 and about $15,000 in the current year). Without additional revenue, she warned the utility will not meet required repair-and-replace funding or bond-related reserve targets.

Harrison presented an illustrative customer impact table showing that an average residential household (about two residents, roughly 2,000 gallons per month in her examples) would see its water-only bill rise from about $43 to about $49 under the recommendation (roughly a $5.75 monthly increase). She also said the monthly water service fee would move from $24.65 to about $27.96.

Commissioners and the public pressed staff for details. Commissioners asked whether enterprise reserves could be funded from the general fund (Harrison said they could not, because enterprise funds and bond covenants restrict using tax revenues for utility operations). Commissioners requested more detailed line-item budget data; staff said the budget and audit detail would be posted and available for public review.

Public commenters raised affordability concerns. Becky Johnson, who said she owns four rental properties in the city, said one rental's water and sewer charge was $564 last month and that repeated increases force rent hikes that threaten affordability for blue-collar tenants. Other residents asked for clearer, dollar-based examples using local consumption data rather than hypothetical gallons-per-person tables; Harrison said she had based her examples on city usage data and excluded businesses when calculating the household averages.

Several commissioners and one member of the public urged exploring alternatives such as more aggressive grant-seeking or internal budget savings before adopting the full recommended increase. Commissioner (S8) recounted that in the early 2000s the state required the city to meet benchmarks via a consent order and that, since a major bond series in 2007—2008, the city has been required to apply CPI increases annually under bond covenants through 2048 for that bond.

Next steps: The commission agreed to hold a special meeting on May 13 at 6:00 p.m. for additional questions and to consider the water-rate recommendation. No formal vote on the rate increase was taken at the meeting; the session concluded with an adjournment.

Quotes capturing the discussion: "We have to stay on top of our infrastructure to make sure everything is working effectively in our water utility," Michelle Harrison said, outlining projects and reserve needs. "The water portion of your bill is approximately two-fifths of your total water-and-sewer bill," Commissioner (S8) said, noting the proposed 13.4% increase to the water portion equates to a smaller net change on combined bills.

What remains unresolved: The commission has not adopted a rate change; detailed line-item budget information requested by commissioners and members of the public was promised to be published and will be considered at the May 13 special meeting. Several residents urged the commission to consider a smaller increase or alternative budget reductions to limit pressure on renters and low-income households.