By ZEINAB NAJM
DEARBORN — The City Council voted 4-1 to pass an ordinance change amending the city’s water rates June 18 with changes aimed at benefiting residents.
Councilman Michael Sareini voted against the amendment with both Council President Susan Dabaja and Councilman Brian O’Donell absent from the meeting.
Prior to the meeting, the council held meetings and discussions with the city’s Water and Finance departments and administration to determine a water rate. Discussions were held at a June 5 special meeting and June 13 Committee of the While meeting.
For the upcoming year starting on July 1, the water rate will be a 65-35 percent split with 65 percent being the use cost and 35 percent as the fixed cost.
According to council documents, there will be an overall 1.4 percent decrease in sewer rates, overall 4.9 percent increase water rates, overall approximate 0 increase to average residential bills, and a reduction in fixed charges from 40 percent to revenues to 35 percent of revenues with changes benefiting smaller water users with larger meters.
Councilman David Bazzy said the council spent a lot of time on the water rate changes trying to get the perfect mix and best method that was going to work as water reduction continues across all cities, which was difficult.
“There’s kind of this discussion of everyone benefits by having water availability, at some point, whether you’re using water or not using water, you have to pay for a part of the system,” Bazzy said. “We pay $10 million in fixed fees regularly just within the city itself as we pay the Great Lakes Water Authority for multiple things that again we are paying on a fixed basis.
“We’ve all done such a good job of conservation that rates go up because we’re conserving more than we’ve ever conserved and we’re doing what we’re supposed to be doing. It actually feels backwards that you’re penalized for doing it but there’s still such a great fixed cost that GLWA that unfortunately we’re not in the position of a brand new structure where the cost can be reduced.”
Bazzy added that one of the things he thought the council did wrong in the models was that they were not put in place correctly and moving too many pieces at once.
“So, we’ve moved a lot of the pieces back, we moved rate structure based on meter size, which is a necessity,” he said. “Somebody with a 10-inch meter has to pay a much different rate accelerator than somebody with a 5-inch meter. It’s just the demand of water that needs to be there when it has to occur and that’s normally in the business sector — the business sector is still paying a bigger piece, they were the winners in this rate structure change last year.
“We spent a lot of time to make sure there was no winners and losers this time, and we won’t know again until we get in the first quarter and I think if that occurs we have to get right back up here and say what we did again didn’t work like it was supposed to.”
During the meeting, Bazzy also said the council should come back after 90 days to see how the first water billing cycle works.
“If it does what all the models now say it’s going to do over time we’ll be back where we should be and if it doesn’t we have get to where we’re supposed to be.”
While Sareini said he agreed with Bazzy’s comments, he said a lot of the time the council looks at things and say they’re complicated when they’re not.
“We have $30 million annually, $10 million is expensed guaranteed, that’s one-third,” Sareini said. “We just received a chart Thursday that indicated the rates of other surrounding communities, and almost a vast majority have three-quarters of their rates on the use part. Just so I could clarify for the residents, the way it’s portioned — the dollar of your bill is in the past, which has been for at least eight years, 27 percent was a fixed cost and 73 percent was on your use.
“So what happened last year, the same data was brought forward by our water department saying there was a need for change. We all agree that change did not work. There’s companies that saved hundreds of thousands of dollars in water where the users and the 26,000 homeowners were actually foot the bill for that because that doesn’t disappear, it gets passed along to the residents.”
Sareini said the change to go from 40 percent of the fixed cost bill to the 65-35 percent split didn’t go far enough for him.
“I don’t see how I can justify telling a resident, if they don’t use any more water, they’re still going to pay higher,” he said. “We have an obligation to try to get them the best service we can at the best cost and then take the business owner who is using the water to profit on and make money, which they should do, but they can cost it into their business and then turn around and give them breaks.
“It wasn’t just winners or losers, it was multiple commercial businesses that saved over hundreds of thousands of dollars. I believe we are better served to go back to the way it was eight years in a row when the water reduction rate was much steeper at a 72-28 split.”
He didn’t agree that the city should take a shot and look at how the water rates play out 90 days from now because it was what the city did last year and it didn’t work based on the same data.
“So, I really think that this proposal should go back to the way it was in 2017-18 where we had the same cost that have been going on.”
Bazzy responded by saying the 65-35 split is not simple and is complicit because it involves about 11 different meter sizes that the city uses variable rates to get to.
When speaking about 28 other cities surrounding Dearborn, Sareini listed percentages of 96, 75, 98 and 82 based on use as examples from cities like Warren and Ann Arbor.
He said Dearborn would be the third or fourth highest on the list, but DPW Director James Murray said the former 73-27 rate would also be one of the highest on that list if compared.
Murray said the city, including himself personally, spent a lot more time on water rates than last year and thinks a sweet spot was found.
“I disagree that it’s a shot in the dark because we’ve looked at all the consequences from last year,” he said. “We’ve changed a lot of things in this rate structure and we think this is the sweet spot. With any change we need to continue to look at it.
“We always need to continue to re-evaluate what we do and how we do it. We expect it’s going to play out the way all the models that we have from consumption and change in the meter size predicted would be.”
Councilwoman Leslie Herrick also said setting the water rates is very complicated and not just a matter of how someone is paying per gallon of water.
“Infrastructure is very complicated and we’re different from other cities,” she said. “We are right next to Detroit. We’re not paying for some of the services to get the water out to our city the way they do in Livonia or Novi and farther away. Our infrastructure is a different age than those cities so are things that set us apart from the other cities is that it’s not as easy as just comparing numbers on a spread sheet.”
Herrick added that the presented model will address concerns from residents who were upset to see water bill increases from 25 to 50 percent and that the model will take homeowners back to the rate they were paying two years ago.
Councilman Robert Abraham stated he looked at it from two different aspects, working directly with the Water Department to try and understand what caused some of the outliers, and working directly with a few residents who were the outliers.
He said out of 33,000 water customers the city had relatively low complaints, below 1 percent, and that they didn’t have 300 calls.
“So I think for the most part the modification to the previous rate structure was somewhat effective and the fact that we went back and made it even better,” Abraham said. “I look at that as learning and education. Not everybody knows everything at the right time and we made the decisions based on the information we had in front of us.
“I’m in favor of the rates that are in front of me today and I think that it’ll fix the problems for some of the residents I personally talked to and fix some of the outliers at the high end that were unexpected consequences.”
Councilwoman Erin Byrnes said her greatest concern with the changes made last year was the savings larger corporations saw at the expense of the residents, but that it was not intended.
“Larger corporations, they have money coming in and can handle themselves,” she said. “I’m not worried about them. I’m worried about our residents, particularly those from a lower socioeconomic status background. So I think that’s what we need to look at, those are the people we need to prioritize and I think this gets at that.”
“I think this is a better structure and I look forward to continuing conversations around ways to improve this and to determine if there is an appropriately comparable city in terms of rates and how we want to look at that,” she also added. “I think that would be helpful for us. If we can have those conversations with other cities that certainly wouldn’t hurt as we move forward to look at a system that’s fair and more equitable for our residents.”
(Zeinab Najm can be reached at [email protected])