People utilizing the municipal sewer system in the village of Northport and Leelanau Township will most likely see an 8% annual increase in operations and maintenance fees over the next four years.
Northport Village Council trustees unanimously approved the Northport-Leelanau Township Utility Authority (NLTUA) annual rate increase as well as an additional loan request Thursday evening at its regular board meeting. After the NLTUA conducted a comprehensive utility rate study with the assistance of Utility Financial Solutions (UFS) under the guidance of Dawn Lund, it approved “scenario one” of three options of the study, which proposed the 8% annual increase. The report concluded that the NLTUA system is “currently cash critical,” and that “inflation and capital costs are increasing at unprecedented rates and the projection should be updated every year with the budget process to ensure the findings in this report are on track.”
“This was the rate study to sort of give us some projection of what capital improvements are necessary over the next 10 years and what our financial obligations are to be able to maintain the system’s status quo going forward,” said Chris McCann, Northport Village Council president and NLTUA member.
“This new schedule is going to allow us to do the maintenance that’s required to maintain the system because we have to have the system for the community.”
Despite the village approving the resolution for an annual 8% increase, the Leelanau Township board shot down the same resolution on Tuesday evening at its regular board meeting in a 4-1 vote. McMillan was the only board vote in favor of the NLTUA rate recommendation. He said while it wasn’t a decision to take lightly, NLTUA spent nearly $13,000 on the study that clearly indicated they “had one obvious option.”
“The village had the vision to recognize the urgency, our board will need more time but the clock is ticking. I’m just hoping they can come around to recognize the financial realities of owning a sewer,” McMillan said after Tuesday’s meeting.
“As an NLTUA board member, I am completely shocked by what I see as an irresponsible ‘kick the can down the road’ vote by the Township board. I have to wonder if any of them actually read the rate study that we paid $13,000 for,” said NLTUA member and Northport Village Council trustee Will Harper. “It takes a special kind of hubris to ignore this expert advice and insert your own ignorance.”
The NLTUA’s purpose is to operate the municipal sewer system within the village and the township, and according to its articles of incorporation first adopted in 2006, has the authority to manage finances with constituent municipalities such as Leelanau Township. There is a higher percentage of sewer system users within the village, but there is also a portion of residents connected and on the sewer in the township.
The NLTUA also identified a need for additional funding to complete necessary capital improvements highlighted in the utility rate study report, and requested a loan in the amount of $190,000 from the Village of Northport to facilitate these capital improvements. The loan is to be repaid in full to the village by February 2028, and will align with the final bond payment for the sewer project.
“We’re realizing what the cost of putting things off for a number of years has come to, so now we’re living with that fact and asking ‘how do we live with that and how do we move forward?’ and try to keep Northport in the best position for economic development and residential development if that suits our community,” McCann said. “We have to have a sewer for that… the sewer has to be ready to handle anything that comes our way.”
In January, the NLTUA approved an increase and its biggest hike yet of operations and maintenance sewer rate fees to $256 per quarter for system users, up $80 from the rate in 2022 of $176 per quarter. According to the UFS study’s proposed rate design and impacts at 8%, the operations and maintenance charge will increase to $276.48 in 2025, which is a quarterly increase of $20.48. In 2026, users are expected to be charged $298.60, then $322.49 in 2027, and $348.29 in 2028.
“The (three) scenarios provide base cases, and it is assumed the system will implement inflationary increases as costs change,” the NLTUA wastewater report read. “In addition, the rate track can be changed to help work toward the board’s desired cash target. The current debt for the system will be paid off in 2028, which leaves a financial opportunity for the board to consider. The equivalent debt payment could still be collected for operating and maintenance revenue since the system is facing critical infrastructure needs as well as a possible plant rehab of $1.6 million in 2038.”
“The one thing we do have to learn from looking back is the NLTUA did go eight years without an increase at a time when there needed to be,” McCann said at last Thursday’s board meeting. “We had to increase the rate 45% this last year just to get us to a point where we could actually tread a little water. So the one thing the NLTUA board is definitely in agreement on is we are looking long-term, and it can’t just be year to year… that is what we have to do and that is our commitment to this community to keep the sewer running.”
