Why is the Beulah council taking a “one size fits all” approach to setting our Water and Sewer utility rates? The current and proposed fee structure
- Fails to address the ability of low income households in our community to pay their water and sewer bills.
- Does not differentiate between residential and commercial users.
I submit that a ‘use more, pay more’ rate structure, referred to here as a tiered rate structure,
- With a dedicated property tax millage, is a better way to pay for this new sewer system.
- Is the most affordable and equitable rate structure for Beulah’s sewer rates.
- Resulting in lower quarterly sewer bills to our residents and help provide a stable revenue stream helping the village manage our bond payments.
Communities across Michigan use tiered rates and property taxes to fund and maintain their water and sewer utilities.
- Other Michigan cities and villages set up Customer Class categories based on the size of their water line and annual water usage.
- A tiered rate structure is readily available with cloud based BS&A accounting and billing software specifically designed for water and sewer billing.
- Beulah currently uses this software that will support a tiered rate structure
A tiered rate structure should differentiate between Commercial, Business, Residential, and Discounted customer categories. These rate structures allow varying Ready To Charges (or REU multipliers) based on overall usage. Using an REU multiplier on base (ready to serve) fees allow our Commercial and Business users to be charged a higher base rate and our low income users to be charged less for their Ready to Serve (base) fee.
From our village Rate Consultant, Andy Campbell, we are not allowed to charge more on a per gallon basis across rate categories. These rate categories are used to levy larger, or smaller, base fees only.
Details on these proposed rate categories are listed below.
- Commercial Rate (highest base rates):
- Properties that use the most water and have larger waterlines. These properties put the most strain on our sewer system and will result in higher initial installation and higher ongoing system maintenance costs.
- Examples here are the County Government center buildings, hotels, motels, restaurants, pubs.
- Business Rate:
- Properties with standard sized waterlines which would include small storefront businesses, offices, and short-term rentals. Basically, any building where a business can deduct utility costs and property taxes as a business expense.
- Residential Rate:
- Single family properties NOT used for short term rentals or as a home business
- But to include multi-unit, year-round rentals which to encourage affordable housing and long-term rentals in Beulah.
- Discounted Rate:
- For low income households and the disabled. Examples here include an income based rate cap for qualifying households.
- To include reduced Base rates with lower water usage rates (in line with a use more, pay more rate structure) based on household size.
What I’m saying here is that commercial, business, and short term rental properties should pay higher water and sewer rates. They can write these expenses off on their tax return. Our Beulah residents do NOT get these tax exemptions.
Also at issue here is the way Beulah bills multi-unit properties, characterized by properties with one or more short-term rental units. By effectively lowering water and sewer rates to short-term renters, landlords are incentivized to convert year-round monthly rentals into a short-term rental business.
For Beulah’s year-round, especially long-term residents, a dedicated sewer millage will typically result in a lower tax bill than a commercial or a real estate investment property (to include short term rental). The taxable value of residents purchasing property years ago, and the corresponding tax bill on these properties, will typically be lower.
Overall, a term-limited, dedicated sewer bond property tax , combined with a tiered usage rate structure and a category based REU multiplier, is our most affordable and equitable way to pay for this State mandated $9M bond. With a tiered rate structure on usage ($/1,000 gallons) higher volume users should and will be paying more than our Beulah residents for sewer service.
We’re trying to encourage our Beulah village council here to restructure our water and sewer rates in a manner to encourage long time residents to remain in Beulah. And have our increasing number of short-term rental businesses pay more for the privilege of using Beulah’s sewer and water system. Let’s not turn Beulah into another short-term rental paradise with absentee landlords and short-term visitors outnumbering and marginalizing our Beulah locals.