The cost of water rates for Northport residents is projected to increase by 20% between the years 2025 and 2028, according to a recent Utilities Financial Solutions study presented to the Northport Village Council on Thursday, Sept. 12. In 2029, the water rate is projected to increase by 10%.
The increase of rates over the next five years is anticipated to help cover bond debts for projected large capital improvement projects like the Shabwasung project in 2026 to replace 2,000 feet of main, two hydrants, and 30 service lines for a total of $430,000. In 2029, another large capital project, the extension of Mill Street, is estimated to cost $800,000. Bond issuances will help to support those capital projects.
Village council trustees heard the results from the water cost of service study at its regular meeting, presented by Dawn Lund, Utility Financial Solutions vicepresident. The international consulting firm focuses on cost of service studies, financial plans, and rate designs for utilities across the country. The firm has also assisted the Northport Leelanau Township Utilities Authority (NLTUA) with its own utility study in the past year. No action was taken by the council at the meeting to give the public more time to review the study, but trustees plan to take a look at the information again in October.
Northport Village Manager Jim Dyer said in his monthly written report that village records show there has only been “one water rate increase, either to the service rate or the commodity rate, in approximately 14 years.” The lack of rate increases has resulted in both a declining operating cash balance and a reduction in value of the water funds’ assets.
“To have both of these indicators in a downward trend signals development of a potentially critical financial status,” Dyer said in his report. “Combining that with an aging infrastructure, with some water mains between 75 and 90-years-old, a fairly drastic remedy is necessary.”
With the water system currently operating at losses, cash and balances decreasing, and an overall aging system/infrastructure, Lund said the village is not investing in the system at the rate they’re depreciating. If no rate adjustments occur in the years ahead, it’s projected that expenses will outweigh revenues coming in.
Lund’s goal, however, was to present rate solutions and what that would look like over the next several years. Depending on the size of the water service line, for example, rate increases will vary. For those with existing meter sizes of ⅝”, ¾”, and one inch, the current quarterly rate of $36 will see a proposed increase rate of $42 in 2025. Also in 2025, it is projected that two inch meter lines will see quarterly rates go from $141.50 to $165, three inch lines will increase from $186 to $215, and four inch lines from $278.50 to $325.
“Obviously without rate increases, you’re projected to continue to operate at losses,” Lund said during her presentation. “Cash will go negative by 2028 and that is with the bond issuances and with the current capital improvement plan that you have… The first year of rate increase would be needed regardless of what you do in the future with capital.”
Council trustees voiced in discussion that they were ultimately satisfied with the study and information presented, but agreed on waiting to take action not just to give the public time to look at it, but to also have time to research if there were any other solutions to help people afford the projected increases in the years to come.
“My biggest takeaway is the status of where we are that Dawn presented to us. Our system is aging and we are not reinvesting the capital necessary to bring the age of that system down, and most importantly, our water rates are not meeting the needs of our financial obligations,” said Northport Village Council President Chris McCann. “The reason these rates are coming forward is because they are needed… this is because these incremental increases have not happened over time... Rather than kind of just waiting for these things to continue to age and age, it’s time that we put money into the system so that we can really service the community to the best of our ability.”
To view the entire Northport water cost of service report online, go to villageofnorthport. net/village-council.
