We’ve been told by the Baker-Tilly consultants that a Special Assessment to fund our Sewer debt repayment is not an option because it can only be levied on new water and sewer connections. Connections fees levied by the Village were some $8,000 last year and raised to some $9,000 this year.
Question here is where is the money for new service connection fees going? Can we dedicate these new connection fees, in the form of a Special Assessment, to paying down the Sewer bond debt?
More to the point, what does the Village do with the monies received for “the privilege” of asking the village to connect your property to the village water and sewer mains? As a former Village Treasurer, these monies are expected to remain in the Village water and sewer accounts and be used to support maintenance and repair to our existing water system.
Can these connection fees, as new connections, now be dedicated to our pending Sewer debt repayment? As a Special Assessment, not a Connection Fee?
The argument here by the Village, and the consultants assisting, is that higher per gallon usage fees will result in folks cutting back and reduce debt repayment revenue. The current plan here is to use ridiculously high ready to serve fees (per REU) to manage a significant portion of the $9.1 million dollar debt repayment.
But let’s be clear here, that both a Special Assessment, or a dedicated Property Tax, will require a 2/3 majority vote of the Village council and publication of intent in the Benzie Record Eagle.. The kicker is that a council passed Special Assessment or dedicated Property Tax will allow Beulah voters a chance to demand a petition driven Referendum allowing these repayment options to be voted up or down by Beulah voters. To date, our Village council has been anything but transparent on our debt repayment options.
As discussed in previous posts, a petition driven Referendum on the recent council decision to reduce the size of our Village council is currently pending. This issue, after verification of the petition format and validation of voter signatures, is still unresolved some two months after petitions were submitted. Can we expect that Referendum petitions on a Special Assessment and/or a Dedicated Millage will suffer the same fate as our council size Referendum?
Beulah Sewer and Water Utility Project 2025
I’m rather dismayed that the council is taking a “one size fits all” approach to setting Water and Sewer utility rates. The current, and proposed fee structures are draconian and fail to address the affordability impact on moderate, low, and fixed income households in our community. Additionally, the current fee structure does not differentiate between residential and commercial users.
Numerous studies show that tiered water rate structures are the most affordable and equitable for community water and utility rates. Furthermore, when funding a new water or sewer project a tiered rate structure combined with a dedicated property tax mileage is the fairest way to pay for the improvements.
Tiered Water and Sewer Rates
Communities across Michigan and the country use tiered rates and property taxes to fund and maintain their water and sewer utilities. Many cities and villages set up customer class categories that are based on waterline size and/or annual water usage. This can also be combined with block rates (price per gallon goes up with every 1000 gallons used).
Below is one example of a tiered rate structure:
Commercial Rate: (highest usage and base rates). The properties that fall into this category are those that use the most water and/or have larger waterlines. Such as, industrial/manufacturing, large office complexes (i.e. government center), hotels/motels, brew pubs, restaurants etc.. These businesses put the most strain on the water and sewer system, which leads to higher maintenance costs.
Business Rate: This category would include properties with standard waterlines like small store fronts, offices, short term rentals etc.. Basically, any building that the owner can deduct utility costs and property taxes as a business expense.
Residential Rate: Single family properties NOT used for short term rentals or a home business. Also, some communities include multi unit, year-round rentals in this category (to encourage long term rentals due to affordable housing, rental, and worker shortages).
CAP Rates (Customer Assistance Programs): These are special discounted rates for fixed and low income households, senior citizens, and the disabled. Some communities use a 3% of income cap on rates for qualifying households. Others use block rates where the base rates are reduced and the first 1000 gal is at a very low rate (the number of people in the household needs consideration). The water use costs then go up per 1000 gallons used.
It’s only fair that commercial and business properties pay higher water and sewer rates than a single family residence. Businesses and rental properties actually pay less for utilities under the current pay structure than residents. This is due to a business’s ability to write off the expenses on their taxes. Residents cannot get a deduction for utilities. Most local businesses also use more water then the average residential household. The growth in business and short term rentals also require a larger expansion of Beulah’s water and sewer system.
A tiered water rate structure is not complicated to set up. Utility billing software is readily available. Most municipalities in Michigan use the cloud based BS&A accounting and billing software. There are modules within this software that are specifically for water/sewer billing.
Multi-Unit billing
Another issue is the way Beulah bills multiple unit buildings. Currently year-round, multi-unit, rentals with a single waterline and meter are charged a water and sewer base rate per unit. However, a multi-unit, short term, rental property only pays one water and one sewer base rate. This is completely unfair.
By giving a break to short term rentals the village gets less revenue and encourages landlords to convert year-round rentals to short term rentals (which will cause further revenue losses).
This policy along with the draconian raise in water/sewer base rates will only exasperate the shortage of affordable rentals and housing in our community.
Many communities only charge multi-unit properties with one metered waterline, one water and one sewer base rate. Then, a per unit surcharge is applied. The surcharge is for long term and short term rentals alike. For example, Elberta, charges by waterline size and then $30.00 per unit. Beulah would obviously have to charge a higher per unit fee. This method is far more equitable. Short term rentals should not be given a break.
Dedicate Property Tax Millage
A dedicated sewer property tax millage of at least 50% (if not 75 or 100%) combined with a tiered water and sewer rate structure is the most affordable and equitable way to pay for the new sewer system. Property taxes in Michigan already have equitable cost structures built into them. A millage will also give Beulah a guaranteed, yearly revenue stream for the sewer bond payments. This revenue will allow Beulah to lower the onerous base rate charges and spread the costs out in a fairer manner.
For the registered voters of Beulah, a dedicated sewer millage is in your best interest. Homesteaded property owners and long time summer residents will have lower taxable values on their property than a commercial or a real estate investment property (short term rental). Therefore, you pay lower taxes than a business or second home. Also, a millage has built in protections for moderate, low and fixed income renters and residential property owners.
There are numerous low/fixed income homestead tax programs that Michigan residents may qualify for. Home owners and renters may meet eligibility requirements for the Michigan homestead property tax credit. Some residents may also qualify for the State of Michigan Poverty Property Tax Exemption (apply at the township office).
Overall, a dedicated property tax millage of 50% to 100% of the sewer bond, combined with a tiered rate structure is in the best interest of the residents of Beulah. The village council needs to restructure our water and sewer rates in an equatable and affordable manner. Clean Water and Sewer access is a Right and not a privilege.
A detailed budget for this project should be published. For that matter, a detailed Village budget and actual spending should be published monthly or quarterly on the Village website.
Mitch this is very insightful. Can it be put in the form of a question or two?Like: 1. What percentage of the bill increase will be on usage vs base charges. ? Or 2. Can the monthly income and expenses be transparent? Something on the website? Currently I don’t even see a budget on the website and that is standard practice for other towns and villages.