City of Kalamazoo - September 10, 2026 Utility Policy Committee Meeting

Updated 2 days ago

The Kalamazoo Utility Policy Committee convenes to review the 2024 Water Rate Study, titled 'Kalamazoo Utility Policy Committee - Water Rate Study Review Meeting.' The meeting covers key points such as ongoing capital improvements, regulatory changes post-Flint water crisis, and increasing operational costs, particularly chemicals for water treatment. Stantec presents cost of service analysis and rate increase options, with discussions on smoothing rate impacts across customer classes. The Committee considers the balance between maintaining infrastructure and managing ratepayer impacts. Forestry and land management at well fields and the importance of sustainable practices are also discussed. The meeting sets the stage for final rate recommendations in upcoming sessions.

Chapters

Approval of Agenda (00:00:50)
The agenda for the meeting is approved without changes.

A motion was made to accept the agenda as presented. The motion was supported and passed unanimously with a vote of six to zero.
Approval of Minutes (00:01:31)
The minutes from the previous meeting are approved.

A motion was made to accept the draft minutes as presented. The motion was supported and passed unanimously with a vote of six to zero.
Public Comment (00:02:11)
A member of the public thanks the community for their support.

During the public comment section, Cooper Township Supervisor Jeff Sorensen expressed gratitude for the community's well wishes and prayers following an accident. They thanked everyone and asked for continued prayers for their recovery.
Director's Report (00:02:51)
The director reports on ongoing city projects and operational updates.

The director provided an update on city commission actions, including routine operations and progress on projects in Kalamazoo and other townships. They also highlighted the challenges faced due to dry weather and announced upcoming hydrant flushing activities.
Hydrant Flushing Discussion (00:03:59)
Details about the hydrant flushing process are discussed.

The meeting included a detailed discussion about the hydrant flushing process, including the frequency of flushing, the methodical approach used to ensure system efficiency, and the subsequent repair work orders generated for any identified issues.
Financial and Consultant Billing (00:07:01)
Discussion on financial reports and consultant billing discrepancies.

The finance director addressed previous misunderstandings about consultant billing reports and provided an updated version for review. Questions about missing payments and the timing of payment processing were discussed.
Unfinished Business: Utility Financial Policy Amendment (00:09:52)
Update on the utility financial policy amendment.

There were no updates on the utility financial policy amendment, but it is expected to be discussed in relation to the rate development process in the coming months.
Water Rate Study Presentation (00:11:06)
Presentation on the water rate study and cost of service analysis.

Stantec presented the draft results of the water rate study, including the methodology used, cost of service analysis, and projections for future rate increases. The focus was on ensuring revenue adequacy and equitable cost distribution among customer classes.
Discussion on Cost Drivers and Rate Increases (00:23:18)
Discussion on factors driving rate increases, such as chemical costs.

The discussion highlighted the impact of increased chemical costs and labor expenses on the proposed rate increases. Detailed examination of budget line items and financial assumptions were also discussed to better understand the rate proposal.
Discussion on Raw Material and Fuel Costs (00:36:47)
Discussion on the increased costs of raw materials, specifically phosphates, and the impact of fuel costs on distribution.

The meeting discussed the rising costs of raw materials, particularly phosphates, which are widely used in various products. The increase in fuel prices has also significantly impacted the cost of moving chemicals, as these are often transported using diesel-powered vehicles. Distribution challenges were highlighted, with the need to break down large shipments into smaller sizes to accommodate the remote locations of stations.
Rate Increases and Financial Impact (00:38:01)
Concerns about significant rate increases and their financial impact on consumers were discussed.

The conversation shifted to the financial implications of rate increases on consumers, with reflections on the historical context of such increases. The potential for consumer pushback was considered, alongside the broader economic factors like inflation that drive such decisions. The discussion also touched on the balance between necessary costs and consumer affordability.
Capital Plan and Station Improvements (00:39:11)
Discussion on the capital plan focusing on station improvements and regulatory requirements.

The capital plan was discussed, emphasizing station improvements and regulatory compliance. Topics included treatment enhancements, lead service line replacement, and the differentiation between expansion and replacement projects. The financial impact of these projects on the system and their necessity for maintaining reliability was considered.
New Developments and Customer Growth (00:44:24)
The impact of new developments and customer growth on revenue and infrastructure was discussed.

The conversation covered the anticipated effects of new developments and customer growth on the system's revenue and infrastructure demands. The role of capacity buy-in fees and the financial contributions of new customers in expanding infrastructure were examined. The discussion also considered the potential revenue from large customers like event centers and the broader implications for system planning.
Water and Sewer Billing Practices (00:48:00)
Billing practices for water and sewer services, including seasonal and quarterly billing, were reviewed.

The meeting reviewed billing practices for water and sewer services, touching on seasonal rates for cooling and irrigation and the implications of quarterly billing for consumers. The discussion highlighted the need for consumers to manage their budgets to accommodate billing cycles and the nuances of calculating sewer charges based on winter water usage.
Multi-Family and Mobile Home Park Water Costs (00:55:00)
Issues related to water costs for multi-family units and mobile home parks were discussed.

The discussion explored the complexities of water billing for multi-family units and mobile home parks, noting issues like profit opportunities for management companies and the lack of transparency in cost distribution. The potential for these arrangements to lead to inflated costs for residents was considered, with anecdotal evidence and regulatory challenges being noted.
Financial Projections and Debt Service (01:03:02)
Financial projections for debt service and the sustainability of rate increases were reviewed.

The meeting reviewed financial projections related to debt service, discussing the sustainability of future rate increases in light of rising debt levels. The analysis considered coverage ratios and the balance between cash-funded capital and debt-funded expenses. The implications of these financial strategies for long-term system sustainability were considered.
Discussion on Water Rate Changes and Capital Projects (01:09:00)
In-depth discussion on the impact of operational costs, debt, and capital projects on water rates. Considerations for keeping rate increases low while balancing necessary capital investments.

The discussion focused on the drivers of water rate changes, including operational and maintenance costs, chemical expenses, and capital projects. Board members explored the challenges of lowering rates while maintaining necessary capital investments. The philosophical aspects of rate management were considered, with discussions on cutting staffing and reducing operational costs. The impact of regulatory changes, like those following the Flint water crisis, on infrastructure was highlighted. There was a recognition of the need for ongoing capital projects to maintain system reliability and meet regulatory requirements.
Customer Experience and Monthly Billing (01:35:02)
Discussion on the disconnect between customer experience and water pricing, and consideration of monthly billing to aid customer budgeting.

The board discussed the challenges customers face in understanding water pricing, especially when the product seems unchanged. They considered the potential benefits of moving to a monthly billing system to help customers manage their budgets better. The discussion also touched on the costs associated with monthly billing and the transition to smart meters as a step towards that goal.
Cost of Service Discussion (01:38:52)
Discussion on cost of service options and their implications for future rates.

The meeting involved a discussion about the cost of service results and the direction for future rate settings. Different options (A and B) were considered, and there was a discussion about the need for possibly more options and the implications of each option on various customer classes. It was noted that the cost of service results should not dictate the rates as they can fluctuate significantly, and there was agreement that the goal is to smooth the rates to avoid large changes. The need for additional data and moving averages was also discussed.
Cost of Service and Rate Setting Options (01:38:52)
Exploration of cost of service outcomes and alternative rate setting options. Consideration of historical demand characteristics and regulatory requirements.

The board reviewed cost of service outcomes and discussed potential rate setting options, considering historical demand characteristics and regulatory requirements. They explored the idea of smoothing rate changes over several years and discussed the challenges of variable demand characteristics. The conversation included comparisons with previous years and the implications of adopting different rate policies.
Unfinished Business: Wellhead Protection (01:49:00)
Update on wellhead protection standards and upcoming meetings.

The city has updated its wellhead protection standards, and the changes include both minor updates and substantive clarifications. There is an ongoing effort to review these changes and hold a subcommittee meeting to discuss and finalize them. The aim is to ensure that all stakeholders are comfortable with the updates and to draft a memo for the townships. There was a mention of emerging technologies such as battery storage and geothermal uses that are being considered in the updated standards.
New Business: Well Field Land Management FAQs (01:52:24)
Proposal for forestry and land management updates at well fields.

A proposal was presented for forestry and land management updates at various well field sites, with a focus on sustainable practices. The plan involves working with the Michigan Department of Natural Resources to manage the land effectively. There is also a deer management plan to control the deer population, which affects the regeneration of old growth forests. The proposal aims to ensure sustainable land management practices that benefit the well fields and the environment.
Professional Services Invoice Approvals (01:57:10)
Approval of invoices for professional services by the committee.

The committee reviewed and approved several invoices for professional services. The invoices included those from Main Meridian, Prime New Hunt, and Hefner Group LLC. Each invoice was presented, discussed briefly, and approved by the committee members with necessary motions and seconds.
Committee Member and Guest Comments (01:59:41)
Open floor for comments and questions from committee members and guests.

The meeting concluded with an open floor for comments and questions from committee members and guests. Some members indicated upcoming absences for the next meeting due to other commitments. There was also a request for a brief meeting after the session with a specific member.