The St. Ignace sewer project will now need to be paid off by residents in one year instead of four, with an annual rate increase of about $57 for the average residential user, City Manager Eric Dodson reported at the City Council meeting Monday, June 7. To further discuss the rate change for the project, Council is holding a public hearing at its next meeting Monday, June 21.

Council also passed amendments to its 2010 budget plan, approved a new contract for employees represented by the American Federation of State, County, and Municipal Employees, and authorized permits for special events this summer.

Under the new 12-month payment plan for the wastewater treatment project, which would take effect in 2012, residents would pay a flat rate of $1.75 a month and a commodity rate of $1 for every thousand gallons of water used, resulting in an average monthly payment of $4.75, based on 3,000 gallons of use . That would be added to an average homeowner sewer bill of $30 a month.

The original four-year payment plan for the project was rejected by the United States Department of Agriculture (USDA), which stipulated that the rate increases would need to be earmarked for 2012 instead of implement- ed over four years, Mr. Dodson said.

Council would need to approve the new payment plan for the $2.78 million USDA Build America Bond by the end of December. The 40-year USDA bond would have a 2.5% annual interest rate, and the city would acquire a rebate of 35% to 40% of the interest paid on the bond each year. The project would include building a backup draining pond in the wastewater treatment system, expanding one of its storage cells, and purchasing new drying beds to remove sludge.

At the meeting, Public Works Director Les Therrian explained that the USDA now requires the city ordinance for the rate increase to be in effect before they ratify the contract, which the city didn't anticipate when submitting its payment plan.

“The USDA used to allow a city ordinance for the money, but this past year they've changed their demands so that the full rate increase has to be in place,” he said. “They don't work with communities like they used to.”

Mr. Therrian said an alternative option would be to apply for a loan through the State Revolving Fund (SRF), but he thinks the USDA loan would be less expensive. The interest rate for the SRF loan would be 2.6%, which would be substantially higher. In addition, he said, the SRF awards funds for projects based on a point system that is hard to predict.

Councilman Don Gustafson suggested that the project might be done in two separate phases to avoid requiring the public to pay for the cost in one year.

Mr. Therrian responded that splitting the project up would cost considerably more.

“When you do two separate projects, you would have to pay for bond counsel, and you're talking $150,000 to $200,000 more,” he said. “The best overall plan for the people of St. Ignace is to do the USDA project.”

In other business, Council passed an amended 2010 budget based on cuts made at a meeting Wednesday, June 2 (see budget story). Based on an adjustment in general fund expenditures of $128,675, the 2010 general fund balance is projected to be $248,030, up from the 2009 balance of $112,000 that was reported by auditors in May.

Council also approved a wage increase of 20¢ an hour for 36 employees represented by the American Federation of State, County, and Municipal Employees. Employees will maintain their current health benefits, and will have a rate schedule similar to 2009 for payments. The one year pay increase will amount to $14,976 a year. The city will begin negotiating 2011 wages soon, Mr. Dodson said.

Special event status was designated for Antiques on the Bay June 19 and June 20, the St. Ignace Car Show June 24 to June 26, the St. Ignace Fish Feast July 24, and Movies on the Bay, held every Sunday from July 4 to September 5.