Sanitary district proposes two-phase sewer rate increase to address $700,000 shortfall and fund capital plan

Wendy Vache, Michigan City's public works director, told the council the Michigan City Sanitary District is in a weakened financial state and presented a two-phase ordinance to raise sewer rates, implement system-development charges and adjust fees. Vache said audits show a roughly $700,000 cash-flow deficit and insufficient depreciation funding, and that the district cannot access long-term bonds without improving its financial metrics.

"We proposed the rate increase in 2 phases," Vache said. She described Phase 1, to take effect Sept. 1 and appear on bills in October, as intended to cover current operating and maintenance expenses and restore depreciation funding; Phase 2 is planned for January 2028 to build creditworthiness for long-term borrowing. The combined increases are projected to generate roughly $3.8 million per year after both phases (about $1.9 million per phase), she said.

The proposal includes new system development or impact fees for new development and proposes a 14.9% surcharge on accounts outside Michigan City limits. Vache said the district proposes phased rate increases of roughly $10 per month (at a 4,000-gallon consumption baseline) with Phase 1 bringing a residential bill closer to $40.35 from about $30.

Public commenters at the hearing were split. Some residents urged the council to approve rates to avoid state intervention; others said they were alarmed at the potential household cost and asked for more transparency on prioritization. After discussion the council scheduled the ordinance for a second reading rather than taking immediate final action.