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Cool (and not so ) Clear Water:
The Politics of Water Policy in
Saginaw County
By Mike Thompson
Review Investigative Reporter
With the elections over, we can get out of the mud and into the water.
Your water bill. And water supply.
They mean more in Saginaw County than you
may think - especially in the City of Saginaw, which controls the
metropolitan water prices and supply for 17 suburbs and outer burbs.
Many local leaders describe water policy
as the Number One issue that will affect our everyday lives in
mid-Michigan, far more important than the bogus flash points you saw on
TV in the muddy stank of this past election.
City Hall charges each outlying community
for wholesale water prices from a 65-mile pipeline to Lake Huron's shore
near Au Gres. Major changes took effect this month, displayed in a chart
on these same pages of Review Magazine, although you may wait a
while to see a difference in your bill.
Meanwhile, bargaining over supply - the
amount of water that City Hall will provide each community for
development - is moving at a slow pace.
And the impact goes far beyond water
itself.
Will police & firefighters be there to
respond in a time of need? Will Saginaw have resources for youth
recreation, or for tearing down abandoned homes? Water revenue could
help pay the costs in a new sort of way.
And what about jobs? Economic development
requires water, first and foremost.
1) What are your views? Should the
City of Saginaw continue providing water for development of more housing
subdivisions in Freeland and more retail outlets in Birch Run? Is this a
positive form of 'regional cooperation', or rather a self-destructive
conduit for 'urban sprawl'? And when they get the water, should those
outlying areas start giving the city a little bit of budget profit for
public safety, for recreation, for housing?
2) Beyond your views, will you
push public officials to act? The water bargaining since the late 1990s
has crawled at a pace akin to Middle East peace talks. Money for
consultants and attorneys, from the taxpayers and ratepayers of the
various communities, has surpassed $500,000. There seems scant
sense of urgency to settle the water questions that will play a major
role in our region's future.
Seven Years, One Contract Saginaw city leaders have stamped only one water agreement after all this time. That's with Thomas Township, and it happened only because of a strict deadline to assist Hemlock Semiconductor's expansion in Shields. Saginaw, as a 'distressed city' under state tax abatement law, was able to offer a far bigger break than Thomas Township could have done on its own.
Semiconductor annually will share more
than $100,000 of the tax break with Saginaw. This is an example
of the tradeoffs in city leaders' strategy. The jobs will go out of
town, but the budget (mostly for public safety) will get some cash. In
other words, urban sprawl is promoted at a price.
Let's say that down the road, City Hall
manages to gather about $1 million per year in exchange for
supplying water to various suburban development deals such as
Semiconductor. This revenue would equal about 1.5 mills in city
property taxes, helping to offset the 6-mill public safety levy
that city voters approved last May.
Of course, some of Saginaw's neighbors
don't want to hear this. Subsidize the city? No way. But guess what?
City leaders ay they have been subsidizing the outer areas, through all
these years, with cheap water. They say its time they get some cash back
in return.
Boosting the Budget Many local communities and school districts face tough times, but the City of Saginaw is especially hard up.
Police? The city has less than 100 cops,
compared to 154 back at the turn of the millennium. The 6-mill tax
simply prevented the number from dropping closer to 70.
Fire? Fewer than 70 firefighters are in
the ranks, compared to more than 100 a few years ago. City Hall barely
sustains four 'quadrant' fire stations. There were once 11.
Youth recreation? There's still a tiny
subsidy of $25,000, but it's a far cry from the $800,000
annually in the recent past. This is during a tragic year with eight
teenage homicide victims so far.
Abandoned housing demolition? Saginaw has
about 500 vacant structures, the most ever, even after an arson
spree that has turned a couple dozen to cinders. We can find up to eight
eyesores on one city block.
To cope with these troubles, city leaders
have a hard time figuring out where to turn.
Federal & State aid continues to dry up.
Local taxes now are tapped out with those public safety 6 mills from
last May, tacked on with the Saginaw School District's construction bond
issue.
So we come back to water, and it's
potential for city revenue.
This basic need is so essentially
fulfilled here in Mid-Michigan that we take it for granted. We don't
associate water with politics. But there's politics involved, big time.
Saginaw built the Waterworks near
Hoyt Park in 1929 for water treatment, but the supply still came
directly from the polluted river and households still went to corner
pumping stations.
City Hall, in cooperation with Midland,
installed the Lake Huron pipelines back in 1949 for what has been hailed
as 'The World's Best Water'. Outlying communities - ranging from Buena
Vista to Birch Run, from Freeland to Frankenmuth - also became
customers. This today amounts to about 60,000 city residents and
another 120,000 from outlying communities.
Some of us in Saginaw County drink 'city
water' from the tap. Others among us perceive we get better quality from
plastic bottles that carry soda pop prices. But we all rely on city
water for our lawn and garden care, for our car washes, for our swimming
pools, even ultimately for our baths & showers & toilet flushes.
The issues today?
1) How much should the water cost?
Saginaw city residents have gotten the best deal through the years,
because Saginaw owns the water system. But now city residents have to
pay for replacement of old pipes. And how much should everyone else pay?
2) How should the city manage the
supply of water? The Waterworks can receive and treat about 50
million gallons per day, and average use is about 30 million
gallons. Should the outlying areas get as much water as they want, for
as much development as they want?
'Uphill' in the Saginaw Valley?
We will start with prices.
The City of Saginaw historically charged
two prices for water. Suburbs and outer burgs all were paying twice as
much as the in-city rate.
By and large most everyone was happy from
the 1950s and '60s all the way into the 1990s. Saginaw leaders had used
their Great Lakes access to create one of the nation's best and most
inexpensive fresh water delivery systems. Even at double the in-city
cost, the region's outlying areas were getting a better deal than most
other communities across the United States.
But then some protests started.
Administrators from the inner suburbs - most notably Jerry Francis
in Saginaw Township, who died last year - asked why city leaders were
charging the same out-city rates across the board.
Results didn't come until January 2004,
and then the anxious outlying customers were in for a shock tied to what
seemed like an odd question: Is the Saginaw Valley really a valley?
Consultants calculated not only the
distance that was an issue with Francis, but also 'elevation'. They
asserted that water not only had to go a lot of miles to the small towns
- such as beyond Saginaw Township to Tittabawassee Township - but that
the water also had to go 'uphill'. In other words, Freeland was uphill
from Saginaw Township.
Jaws dropped when the consultants said a
long overdue 'cost of service' adjustment would more than double
the prices for such outlying areas as Tittabawassee, Birch Run/Taymouth
and Frankenmuth. The Waterworks near the river is about 600 feet above
sea level, compared to 630 feet for the quote-unquote 'Saginaw Valley'
outlying areas. How could 2 feet per mile make such an impact on water
prices? Nonetheless, the consultants insisted that uphill is uphill.
Price Study Sparks Protests Ten of the outlying communities formed a review group, the Saginaw Area Intermunicipality Water Committee. They raised about $100,000 to hire their own attorney and consultant. The chairman remains Ken Bayne, even though Kochville Township voters recalled him as supervisor in August and even though Kochville was not among communities that faced the huge increases in water prices.
"Without the efforts of our group, the
ridiculous rates imposed by the first city study probably would still be
in place," Bayne told Review Magazine. "When you look at the
arbitrary nature of the different studies and proposed increases, there
will be an ongoing need for townships to continue to monitor the city's
rate-setting. That's why I was acting to protect Kochville Township."
The consultant for the Intermunicipality
Committee ripped the city consultant's water price study. In response,
city reps took a second look and acknowledged a pair of problems.
First, the heights of the various water
pumps were not factored into the city consultant's calculations for the
uphill elevation factor. This may seem like no big thing, but when
'distance elevation' was measured at 2 feet per mile, the height of the
pumps came into play.
A second error was stunningly simple. In
calculating 'maximum daily use' - a key factor in setting new prices -
city workers went to pump stations and recorded daily numbers. On
Mondays, they failed to account that they also were counting the weekend
off days of Saturdays & Sundays. This made many dollars of difference in
the escalated water bills for hundreds of families in the outlying
areas.
City Hall hired new consultants who
decided 'elevation' was a false factor that should not have been
considered in the first place.
Number Rise, Then Fall When city leaders finally made adjustments this month, Tittabawassee's water-price hike dropped to 15 percent instead of the original 190 percent. Frankenmuth's increase now stands at 7 percent instead of 112 percent. Birch Run actually gets a 4 percent decrease instead of a 170 percent boost. Obviously, these are huge changes.
In contrast, the new city study is less
favorable for wholesale water prices to the inner suburbs. Saginaw
Township's reduction is 5 percent instead of 24 percent.
Thomas Twp. Faces a 26 percent increase instead of the original
8 percent decrease.
Saginaw city residents face the largest
'cost of service' increase, 100 percent. Some city residents
are complaining that their own consultants hit them harder than
residents of non-city areas. Tom Darnell, city public services
director, says this is because many of the city's 300 miles of pipes are
a century old, but the city was replacing less than one mile per year.
Catch-up work is required to replace more pipes, and it will come at a
cost. The suburbs have newer pipes.
A point in the City of Saginaw's favor is
that even when water prices doubled to replace those old pipes, rates
still will remain lower than costs in the suburbs. The main burden on a
city ratepayer's bill is not for water supply, but for sewage retention
basins that the federal & state governments dictated back in 1989
in response to Bay County complaints that Saginaw was sending polluted
water up the river. So-called 'water bills' are actually water-sewer
bills. (Editor's Note: Bay City was able to obtain federal
grants to assist with the multi-million dollar cost of replacement pipes
when they were available, but Saginaw did not even have a grant writer
to apply for federal assistance when the window of opportunity was
open).
Tittabawassee Manager Brian Kischnick
says water talks eventually produced success. "We finally came up with a
pretty good water-rate study based on a lot of peer review," says
Kischnick, a key member of Ken Bayne's Intermunicipality Committee. "The
process showed how subjective the various rate studies could be, even
when done in context with Michigan law."
Tom Darnell agrees.
"We brought in Raftelis (the new
consultant) because there were some mistakes and things that we tried to
fix," Darnell says. "The elevation changes in our area really were not
enough to justify proposing such major changes in the price of water.
We're not like the Detroit area, where there can be hundreds of feet of
difference in the elevation."
Jerry Francis' home community of Saginaw
Township will now get a smaller rate break compared to the city's first
study, but Manager Ron Lee says he understands.
"The city officials all along have simply
been trying to 'right size' the water rate structure," Lee says. "We
support their efforts to get a more fair distribution formula and a more
fair system of rate changes. When you put a large number of engineers
and technical geeks in the same room, they will find different ways of
looking at things, but in the end the city's formula for water prices
makes sense. We would like to have gotten a rate-study break in Saginaw
Township, but I'm just trying to be objective."
In the end, says Kochville's Ken Bayne,
the City of Saginaw should not have needed two consultants to review
water prices and water supply policies.
"This all led to a lot of unnecessary
headaches for everyone involved," Bayne says.
The Next Chapter: Supply State law historically has prevented core cities like Saginaw from making profit on water sales to suburbs & outlying areas. Any surplus had to go back into the water system, not into a core city's general budget for public safety and other services.
Then a decade ago came a new state law,
Public Act 425, in an effort to help struggling cities, allows
profits to supply water for new developments such as Semiconductor,
housing subdivisions and retail stores. City leaders still can't make
money from regular water sales, but they now can make a profit from new
projects.
The Semiconductor-based contract in
Thomas Twp. Is our region's only firm Act 425 agreement, but City Hall
has two other tentative pacts. One is with Tittabawassee for new
housing. The other is with Birch Run for a new Meijer store and
other retail expansion.
But if you buy one of those new homes in
Tittabawassee, you will face a $2,000 water hook-up surcharge. If
you get a job at that new Meijer in Birch Run, you will find yourself
paying the city's .075% nonresident income tax. You may live in
'sprawl' territory, but under the terms of these new agreements you
still will subsidize Saginaw city government through Act 425. Water
supply is the reason.
Jeff Kingzett, Birch Run's former
village manager, received notice in April 1999 that Saginaw City Hall
was ready to begin water talks. He started on an office chalkboard to
record the days of slow bargaining. By 2004, when he departed, he said a
'snail's pace' in water supply talks had caused his chalkboard count to
exceed 1,800 days. He said progress was blocked for "a new Meijer,
other big-box stores, added commercial, added tourism and entertainment,
and 1,400 units of housing."
Kingzett made an analogy to an old-time
TV game show.
"You can call me Monte Hall," he said.
"Let's make a deal."
Birch Run now has a tentative water pact,
and the Meijer store is slated for construction on Dixie Highway at
Birch Run Road.
Throwing Down the Gauntlet Some outlying leaders are taking tough stands. Ken Bayne says Kochville leaders, despite their differences, "never" will agree to share Act 425 water revenue with Saginaw. And Frankenmuth's City Council has invested nearly $100,000 with a consultant to explore cutting ties with Saginaw's system and getting water from somewhere else, says Manager Charlie Graham.
Saginaw's adjustment to Frankenmuth's
water rate, back down to 7 percent, has calmed some of the sentiment to
withdraw from the Saginaw water system.
Still, the question of Frankenmuth Act
425 development agreement to share water supply revenue with Saginaw
continues to loom large.
"People in Franknemuth simply would not
accept it," Graham says. "Our citizens at first were concerned about
their water prices, but I don't think initially they understood about
the Act 425 supply agreements and the long-term implications for sharing
revenue with Saginaw."
The challenge is tough, says Graham,
because precedents are set through Saginaw's permanent or tentative
water agreements with Thomas, Tittabawassee and Birch Run.
"Saginaw can't exactly come to us and
offer more of a compromise for us," Graham says, "because then they
would have to go back and face the entities with the previous
agreements. I'm assuming that there' snot a whole lot more they can do."
And so water supply will remain Saginaw's
top issue for the jobs & economic development that could make a big
difference in our lives.
Your Water Bill Outlying communities rely on Saginaw's city water system. Consultants in recent years started to look at a more specific 'cost of service' for each community.
Saginaw's first water-price study in 2004
contained huge increases for the outer suburbs based on 'distance
elevation' to pump the water. A follow-up study revoked the factor of
'elevation' and sharply reduced the price increases for the outer areas.
Leaders of Saginaw neighbor communities
endured these various studies and changes for water prices. We are
showing you the results and how they changed form one study to another.
Take note of the huge changes for distant places such as Birch Run,
Frankenmuth, Thomas Township, and Tittabawassee Township. The
numbers below are based on changes in basic prices that stared with the
2003 rates, and based on average use of 7,000 gallons per month.
The prices you see below are only for
water. Your bill also includes sewer charges.
November '06 increases reflect the
final word in fierce water contract bargaining that gave major benefits
to the outlying areas.
City water prices start lower because the
city owns the water system, but the in-city 100% increase is
rooted in a need to replace pipes that are older than those in the
suburbs.
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