Users won’t see a difference until next year, but the Lansing City Council did approve a hike in its wastewater rates last week.
The new schedule of fees was approved Dec. 20 and stems from a wastewater rate study reviewed by the council at its Nov. 8 work session. As approved, the user rates for wastewater services in the city are set to increase by about 5 percent, though not right away, according to Tony Zell, the city’s wastewater department director.
“Ordinance 910 would enable rates will take effect in May of next year after the billing cycle and we get the water usage reports from Lan-Del,” he said.
The aim of the new study is to correct revenue shortfalls that have grown in the wastewater fund since the last rate schedule was enacted in 2009. Designed as an enterprise fund that generates revenue needed to cover operational costs, Lansing’s Wastewater department currently requires a transfer of about $300,000 from the general fund each year. Both the 2009 and 2012 rate studies were meant to erase that budget gap by adjusting users’ wastewater rates upward incrementally each year. The 2009 study fell short of that goal, according to officials at Professional Engineering Consultants who performed both studies, because the adjustments were based on predicted rates of new home construction in the city. Actual rates fell short of those projections following the bottoming-out of the housing market in 2008 and 2009.
With the new rate schedule, PEC predicts the fund would be solvent by 2017, allowing the department to invest in capital and equipment reserve accounts and boost spending to improve the city’s wastewater infrastructure, according to a briefing from Zell. Previously identified deficiencies in that infrastructure have caused flow and capacity problems, including near a potential development site off Eisenhower Road.
Under the 2009 rate adjustment plan, residential users in the city were set to pay a base rate of $12 a month and $3.75 per each 750-gallon “unit” used. The new schedule will increase the base rate to $13.25 and a per-unit cost of $3.85. Each year under the new plan, the base rate would increase by $1.25 annually and the per unit rate would increase by 45 cents each year.
“It represents a 5-percent increase,” Zell said, over the previously scheduled rate.
Councilwoman Andi Pawlowski wondered about the other peg mentioned in PEC’s study to
bring wastewater into the black — negotiating a higher rate with the utility’s largest single user — Lansing Correctional Facility.
Mayor Ken Bernard said the city met with LCF officials for the first time recently, and the prison’s legal counsel is currently looking over the PEC study. Zell was confident that the city would be able to agree on a higher rate on LCF’s part.
“With their cost of service analysis that was done, it clearly shows what it costs the city of Lansing taxpayers to provide that service to the Department of Corrections,” Zell said. “I feel we have a very valid argument.”