Village of Holly Shares Reasons Behind Water Rates
(Village of Holly, Aug. 23, 2019)
Holly, MI – Recently, there have been quite a few negative statements made on social media regarding the 2% increase to our water and sewer rates. We can understand where you’re coming from and want to set the record straight by making some information clear. Please keep in mind that every member of the Village Council, as well as the three Deputy Clerks live in the Village, and are residents, just like you. They get berated and treated poorly on a regular basis while taking complaints, yet they all pay the same water rates as you.
The Village staff tries to communicate as much as possible regarding events or changes taking place in the community. However, it is difficult because there is not a publication that specifically covers the Village or one that is widely subscribed to by residents of the Village. We communicate through open public meetings, public notices, the website, and our GovDelivery e-newsletter. Regarding the water and sewer rate increases that went into effect in July 2019, they were communicated in the following manner:
A budget study session was held on February 9, 2019 at the Karl Richter Campus. Residents were invited to attend this meeting through a notice that was posted publicly, along with an agenda that stated the purpose of the meeting was to discuss water and sewer funds. The water and sewer study session was attended by Crystal Proxmire of the Oakland County Times who wrote a comprehensive article detailing all the information covered in the meeting. Proxmire wrote a very professional article which was unbiased and factual. Included in the article were quotes from Brian Camiller of Plante Moran, PLCC emphasizing the need for a rate increase. The link to the article is https://oaklandcounty115.com/2019/03/10/presentation-helps-holly-understand-water-rates-and-infrastructure/. We highly encourage you to read it.
A public hearing was held on May 21, 2019 to allow public comments on the proposed budget.
The final budget was submitted to Village Council for consideration at the June 11, 2019 Council meeting. At the time of the budget presentation, staff reaffirmed with the Village Council that a 2% increase in the commodity (use) rate for both water and sewer was necessary. The debt service charge (base rate) of $37.05 per month was recommended to remain the same. The 2% rate increase resulted in residents being charged 15 cents more per 1,000 gallons of water used and 25 cents more per 1,000 gallons of sewer use. As an example, for a family averaging 4,000 gallons of usage per month, the costs increased by $1.60 per month. Previously, the base rate charge per month of $37.05 had been projected to top $50.00 per month in 2019, but due to some bond refinancing authorized by the Council, the base rate remained at $37.05 per month. A graph of the new rates can be found on the Village’s website:
Here is some other information shared in the online posts that need clarification:
AMBULANCE: In 2017, the Holly Village Fire Department purchased an ambulance at the cost of $118,087.66. At the time, discussion took place of whether to use money from the General Fund balance, borrow money from a bank with interest, or borrow money from the water fund and pay it back with interest. The money was borrowed from the water fund and repaid with interest, which benefited the fund. It is permissible to borrow money from Enterprise Funds as long as the money is repaid with interest, which the Village achieved.
ENTERPRISE FUNDS: Water and sewer funds are “Enterprise Funds”. The water and sewer funds are what pays for the operations of the water / sewer treatment plants. The rates are calculated each year based on the direct costs of providing services relating to treatment and delivery of water / sewer services. It is not possible to hold a vote on whether to raise or lower rates because rates are determined based on the costs of delivering the services. Funds collected from water and sewer rates are only used for those individual departments. Enterprise Funds cannot be used to fund road repairs, police, fire or general governmental services.
TESTING EXPENSES AND STATE MANDATES: Ever-changing regulations and requirements for testing also add cost to a water system. During the February 9th budget study session, Brian Camiller of Plante Moran, PLLC explained that the Flint water crisis and recent studies of PFAS contamination have prompted an even more stringent look at water quality and wastewater treatment standards. The new Lead and Copper Rule will require municipalities to perform more testing and repairs to the system if the new standards are not met. Changing treatment plans to comply with new requirements increases the overall cost to provide water to the residents.
LAWSUIT: Another challenge to the water and sewer fund is a lawsuit against the Village claiming unfair taxation.
The original lawsuit was filed June 9, 2017 by Heidi Gumbleton stating that the $5.00 water and $5.00 sewer fees charged by the Village of Holly violated the Headlee Amendment as an “impermissible tax,” and sought $1,000,000 in damages for herself and a class of plaintiffs being water and sewer customers of the Village of Holly, represented by Dale Smith and Peter Deahl, who also live in the community.
The lawsuit was dismissed in August of 2017; the judge ruled that the lawsuit lacked merit. The attorneys appealed and again the case was dismissed in December of 2017. The case has since been appealed twice, each time with the court favoring the Village.
While we are optimistic that the Village will win the case, it is still an expense for the community. To date, the Village has spent over $198,500.50 on attorney fees, $3,859.24 on other related attorney costs, $14,021.45 on a water/sewer rate expert, and $490.00 for accounting. This does not include the cost of staff time spent on the lawsuit.
Oral arguments were just made at the Michigan Supreme Court level in July of 2019 and we are awaiting the court’s ruling. Again, while we are confident that the ruling will favor the Village, it is an added expense to the water and sewer funds which directly affects each user of the systems.
We are fortunate to provide quality water delivery and treatment services to the Village of Holly residents; we own our own equipment and don’t rely on outside service providers. We operate a state-of-the-art water treatment facility and the quality of our drinking water well exceeds the EPA state standards. To learn more, please take a moment to read the 2018 Water Quality Report for the Village of Holly.
If you have any questions, please contact us at the Village Offices: (248) 634-9571. We would much rather answer your questions directly and give you accurate facts than have you be provided with false information.
Presentation Helps Holly Understand Water Rates and Infrastructure (March 10, 2019)
Lawsuit Dismissed Against Village of Holly Over Water and Sewer Fees (Dec. 12, 2017)