Muskegon Heights Council Reworks Water Proposal With Lower Rates, Longer-Term Stability

Andrew Trzaska | June 25, 2012

After directing its city manager to cease negotiations with Fruitport Township two weeks ago, the Muskegon Heights city council voted unanimously Tuesday to send the City of Norton Shores and Fruitport another revised water contract that is dependent on Fruitport rescinding its contract termination notice from 2011.

Council members, Mayor Darrell Paige and City Manager Natasha Henderson discussed the latest developments in saga of water service that has lasted a year and a half thus far.

The new terms presented by Muskegon Heights’ negotiation team, which includes mayor Paige and Henderson, are as follows:

• The previously proposed rate multiplier of 25% for Fruitport and Norton Shores would be edited to 10%.  Currently the rate multiplier is 25% for the two towns.
• The proposed water advisory committee that would have Norton Shores and Fruitport representatives would gain ability to make recommendations on who would do capital improvements and reliability studies on the Muskegon Heights water plant.
• The amount of notice given to Muskegon Heights of future water contract termination would increase to eight years from four years. The four-year number is in both the current contract and the previously-sent proposal.
• A condition of all other points is that Fruitport rescind its letter of termination to agree on this new contract with Norton Shores and Fruitport.

The council voted to ask for a response by July 25, 2012.

When asked by councilman Keith Guy why the 10% number was picked, Henderson indicated that the city’s Finance Director and the City Manager’s office arrived at the number together:

“With our Finance Director, it was an effort to say ‘Hey, we want you as a customer’ and we worked out financially how we’d be able to operate with that… It’s a major effort to keep the customers of the Muskegon Heights plant. In effect it is a standard, as the lowest rate in the county.”

Henderson’s claim concerns the multiplier on the rate; except for residents of the cities that actually produce water (who receive the base rate with no multiplier), the city’s proposed 10% rate multiplier is in fact the lowest within the county for residents on top of the lowest base rate in the county of $1.42 per 1,000 gallons.

Councilman Guy did caution that the City might be “lowballing” itself at ten percent. Henderson did indicate that thought went into all discussions and negotiations.

“I don’t ever want to come here and seem like we are desperate. I don’t ever want to come here and seem like we’re giving things away.”

Henderson suggested the city can get by on the reduced rate and could plan long-term with the extended 8-year notice as the trade-off.

“Financially, this is something we can work with if we get off that four year clock [set by the Fruitport termination notice]. This is something we can plan with for now.”

Mayor pro tem Kimberly Sims supported the 10% number, saying that the loss of Fruitport and Norton Shores would hurt the city greater than a lower revenue stream.

Should Norton Shores or Fruitport opt to decline the new terms, Henderson indicated that the council would need to look toward next-steps, as Fruitport’s April 2015 termination is less than three years away.  Henderson indicated that the city would have the power to set new terms, as the current contract becomes null for all if any one of the three players exits the contract.
Agreements where Norton Shores may resell water it buys from Muskegon Heights were one idea discussed briefly on Monday.

When asked by councilwoman Bonnie McGlothin about finding new customers for Muskegon Heights, Henderson indicated it was not taking precedence over the negotiations with Norton Shores and Fruitport.

“We don’t have other customers per se that we’re going after right now, but that is an option,” said Henderson.