MCBAIN — There’s a lot of moving parts when it comes to McBain’s water system and potential funding, but one way or another it’s looking like water rates will go up.
“Will water rates increase eventually? Yes,‘ McBain Mayor Joey Roberts said.
Whether or not this will be because of United States Department of Agriculture requirements or pipe replacement remains to be seen.
On July 1, engineers submitted an application to the USDA on McBain’s behalf for a loan of $1.8 million and a grant of $5.5 million, $7.3 million total, for the city’s water project.
For its water project, the city wants to replace its water tower, replace 14,000 feet of cast iron piping in the water system, install an iron removal plant and install water meters at all services for the city.
These actions were recommended by Fleis and VandenBrink after the company conducted a water system review that examined the water’s infrastructure and chemistry to fix the city’s experience with orange colored water.
A lot depends on if the city accepts the terms of the USDA and if the USDA accepts the scope of McBain’s water project, Roberts said.
He said the USDA might come back and say they won’t give the city anything. The council would also still have to approve what the department offers them.
“It’s kind of a waiting game at this point,‘ he said.
Will there be a water rate increase if both parties accept the terms? Yes, he said.
The current rate for water in McBain is $73 a quarter, or $24.33 per month, and $63 a quarter for sewer.
When Manton did its water project, the USDA said it had to raise its water rates to a certain price, like hypothetically $40 a month, Roberts said.
So there will be a financial plan set up, like the loan amount could be set up for 40 years and the city has three years to get up to the point of $40 a month. The USDA would also have the city go to monthly billing whereas right now it does billing quarterly, he said.
Roberts said the USDA could change the water project’s numbers though, which could change the whole aspect of where the rate needs to be. There are a couple of different scenarios that could play out, but Roberts doesn’t know which scenario will happen.
However, even if the USDA doesn’t give the city money, the city's water rates will still eventually need to go up to help offset the cost of the city replacing pipes.
“Stuff gets old and breaks,‘ Roberts said. “That’s just the way it is.‘
The city did have three service lines leak, all on the customer side of the valve. These are galvanized pipes and with new Michigan Department of Environment, Great Lakes, and Energy, formerly Department of Environmental Quality, lead and copper rules, the city has to be the one to fix them, Roberts said.
“These are costs nobody would’ve ever planned for,‘ Roberts said.
He said it used to be the customer’s cost, but now it’s the city’s.
The city sat down with engineers and tried to map out everywhere that has a galvanized pipe, which will need to be replaced and which will cost thousands of dollars to replace, Roberts said.
“That’s a big added cost that nobody would have budgeted years ago,‘ he said. “It puts us in a very, very, very difficult position.‘
City council has raised rates in the past but when they did so they never expected the state to add this cost. The council and Roberts made a promise in January that they would not increase water rates for four quarters, and they will keep that promise, Roberts said.
However, he doesn’t know if water rates will have to increase by the first quarter of 2020.
He said if the city does go with the USDA terms, they will hold public hearings and have people understand what they’re doing, why they’re doing it, and will be upfront and honest about it.
The city is hoping to hear from the USDA in the next month or so, Roberts said.