By By JOHN EBY / Dowagiac Daily News
Dowagiac City Council gave first reading Monday night to 4.92-percent water and sewer increases that average $1.73 per month per household based on a community average of 6,000 gallons per month (city actual average is 5,600 gallons).
The proposed average bill, $36.84, is 46 percent below the survey average, $53.79 per month.
Increases will generate an estimated $12,964 of additional revenue in the water fund and $43,601 in the sewer fund.
Pending final council action May 9, the increases will take effect with utility bills due on or after June 10.
Ordinance changes propose hiking late-payment penalties from 5 percent to 10 percent and charging $25 for re-connection.
City Manager William H. Nelson Jr. said Dowagiac water and sewer rates remain below the average of 11 area towns that responded to a survey done by Rehmann Robson Certified Public Accountants for Buchanan.
Dowagiac reviews utility operating costs each year to make modest rate adjustments.
Nelson said this regular yearly review serves two important purposes.
First, it assures everyone that the city is being fiscally responsible by making necessary investments in maintaining and upgrading its systems to assure that customers will always have services they need and expect.
Second, "If we were to review rates on a less frequent basis, say every five years, as some cities do, the increases become very large and much more difficult for our customers to handle," Nelson said.
Something Dowagiac does that city officials believe is unique is to allow utility customers two late payments each year.
If you're unable to pay your utility bill prior to the disconnect date, you may come to City Hall and request a 10-day extension.
You will be required to sign an extension agreement. You will still be charged a 10-percent late payment fee, as well as an additional $10 service charge.
You may not request more than two extensions in any calendar year. Failure to pay the amount due in full within the 10-day extension results in immediate disconnection.
City officials are just in the process of implementing the refunding of every customer's utility deposit who goes for 12 months without a late payment.
Additional revenues are needed to accomplish:
Annually fund a maintenance/improvement reserve in the water fund. This will be critical over the next several years as maintenance of water tanks is undertaken. The city also needs to establish sufficient funds to pay for routine system repairs and improvements from operational reserves, as opposed to subsidies from other funds.
Fund annual debt service required by water and sewer bond issues for system improvements that included water plant renovations, water tower repairs and rehabilitation and reconstruction of old water lines.
Develop an adequate revenue base to set aside reserves for future capital improvements.
Move toward a more equitable "cost of service" rate structure that more closely reflects the actual cost of serving each customer with water and sewer service.
Maintain competitive rates relative to other region utilities.
The city's rate consultant, Mark Beauchamp of Utility Financial Solutions, recommended the proposed adjustment. His study supports previous city discussions that modest annual increases should be considered over the next several years to meet anticipated expenses and service demand. "This is particularly true," Nelson stated, "when factoring some of the long-term capital maintenance and replacement that will be necessary within the next seven to 10 years."
Another feature the city manager highlighted is that an ordinance codifies terms and conditions of the electric utility for the first time.
Unlike water and sewer utilities, electric terms and conditions have not historically been adopted by ordinance.