2012-06-07 / Front Page

Increase in rates could be coming

DDA obligations could have effect if MPI taxes lowered

MANISTIQUE – Residents could be looking at possible increases in their water and sewer bills, due to the bankruptcy of Manistique Papers, Inc. The possibility was discussed during a recent meeting of the Manistique City Council.

According to City Manager Sheila Aldrich, the rate increase would be the result of the Downtown Development Authority’s potential loss or decrease of personal property tax revenue from MPI. With this change, the DDA’s obligations to the city, in both the water and sewer funds, would be affected.

“The mayor and I actually talked about whether it was appropriate to even bring you the water and sewer projected budgets at this time,” Aldrich explained. “Cory (Barr, water/wastewater superintendent) and I also spoke about it, and we thought it was pretty imperative that you realize that what happens in DDA is going to affect your water and sewer.”

The DDA is currently waiting to finish its own budget, she noted, and is waiting on a reevaluation of Manistique Papers’ personal property taxable value. Aldrich explained, since the last approximately $9 million valuation in 2011, the mill has updated their list of property. This could possibly result in the mill paying less of its approximately $200,000 personal property tax to DDA, leaving the organization to make only mandatory payments and cut down or cease its commitments to the city, Aldrich said.

One of these commitments occurred on a project years ago, when the DDA pledged to pay $60,000 to the sewer fund each year until the organization’s end in 2018, she explained. Until the DDA budget received final numbers from the mill and completes their budget, near the end of the month, city officials estimated a worst case scenario for both the sewer and water funds.

“The $60,000 on the sewer (if not received), would raise a typical residential, with a usage of 3,875 gallons … by $2.82,” Aldrich explained.

According to Mayor David Peterson, the rate increase would be directly related to the bankruptcy fillings at the mill. However, he noted that the city, including the DDA, had to make these financial concessions in order to preserve the company and retain local jobs.

“We’re hoping that they’ll (the DDA) be able to put in the whole $60,000 … because, with that, we’d be looking at no increase,” Aldrich added.

In the water fund, Aldrich explained the potential DDA loss amounts to approximately $200,000. The organization had pledged to make the last two payments of about $100,000 each to the city’s water bond, relating to the current infrastructure project.

Should the DDA be unable to pay these last two payments, Aldrich and other city officials estimated the average residential water customer’s bill to be increased by $3.14. She added any money received from the DDA for these payments, even if less than the full amount would be applied to the water fund and lower this increase.

Barr, also present during the meeting, noted the infrastructure project, with the placement of new water pipes, could potentially result in repair cost savings over time – which would be passed on to consumers. He added the pipes may also improve the Fire Suppression Rating Schedule for the city, potentially resulting in savings on residents’ homeowner’s insurance.

Council agreed to table approval of the water and sewer budgets until the June 11 meeting, when firm numbers would be available.

In other business, council members unanimously approved the budgets for other funds in the 2013 fiscal year. Funds approved included: general, landfill, ambulance, recreation, and major and local streets.

A net of $193.75 will be seen in the general fund, after $2,047,870 in expected revenue and $2,047,676.25 in expected expenses. A number of factors contributed to city officials’ calculations for 2013, Aldrich noted.

The Economic Vitality Incentive Program, enacted by Gov. Rick Snyder in 2011, requires cities to meet the criteria of three categories in order to receive statutory payments from the state. Manistique has been doing its best to comply with these requirements, Aldrich said, and get funding, which hovered near $162,000 in 2011, back.

“We’re working with those EVIP plans … right now, we’ve gotten $66,000 of it back,” she explained. “We budgeted for $50,000 for next year, because we’re hoping to get the same amount back, based on the accomplishments that we’ve made at this point.”

Flat property taxes and lowered equipment rental revenue also contributed to the net of only $193.75. According to Aldrich, the city hasn’t been able to count on snow, so they have been forced to lower their expected equipment rental income.

On the expense side of the general fund, she noted the city continues to see savings from the use of part-time administrative employees, and also the conservative nature of the department heads.

The 2013 fiscal year budget, beginning July 1, 2012 and ending June 30, 2013, was unanimously approved, with the exception of the water and sewer funds, by council members.

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