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Monday, August 16, 2010

City Closes on Water and Sewer Loans

On August 11, 2010, Rogers City closed on two loans from the United States Department of Agriculture (USDA) Rural Development (RD) to make improvements to City water and sewer systems.  The water system loan is for $3,098,000.  These funds will pay for the work to replace 12% of the water main system, build a new water tower, and drill a replacement well.  The sewer system loan is for $3,771,000.  It will pay to rebuild the Wastewater Treatment Facility, install a new sewer lift station, and replace 4% of the sewer main system.  The loans are actually municipal revenue bonds.  Due to USDA-RD's low interest rate and due to provisions of the Build America Bonds Legislation, the effective interest rate for Rogers City's bonds is 1.55% for 40 years.  The bonds will be repaid from water and sewer fees to system customers.  A grant from the Michigan Economic Development Corporation (MEDC) in the amount of $750,000 will also be used to pay for sewer system work. 

While no one wants to pay increased water and sewer rates, the rate increase was necessary to keep the water and sewer systems working safely.  The new rate went into effect in April 2010.  The work will begin over the next two weeks and will last for over a year.

Along with the rate increase, there was a change in the billing practice.  Customers are now charged a base rate, regardless of the on/off status of their service or metered consumption.  This base rate ($38.25 per month) reflects the cost to be able to turn on/off your water service and dispose of your wastewater.  The largest part of the cost to operate the water and sewer systems is the infrastructure to deliver the water and sewer and safely process it.  There is now no charge to turn on or turn off service. 

The rate increase makes the average customer's bill (for water and sewer) approximately the same as the average customer in Cities throughout the State of Michigan. 

If you have questions about infrastructure, water and sewer service, rates, or the Revenue Bonds, please contact me.  

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