Title
Resolution Regarding Approval of FY 2026 Schedule of Service Charges
Body
Agenda of: February 26, 2025
Item No.: 2025-020
Amount: N/A
TO: The Honorable
Board of Directors
Great Lakes Water Authority
FROM: Suzanne R. Coffey P.E.
Chief Executive Officer
Great Lakes Water Authority
DATE: February 26, 2025
RE: Resolution Regarding Approval of FY 2026 Schedule of Service Charges
MOTION
Upon recommendation of Nicolette Bateson, Chief Financial Officer/Treasurer, the Board of Directors (Board) of the Great Lakes Water Authority, approves the following actions, which require a supermajority affirmative vote of at least five (5) members of the Board, and the attached Resolution 2025-020 with an effective date of July 1, 2025:
1) FY 2026 fixed monthly charges and commodity charges included in the water supply system schedule of service charges as well as the lead and copper rule sample testing fee;
2) FY 2026 fixed monthly charges included in the sewage disposal system schedule of charges as well as the FY 2026 schedule of industrial waste control charges, pollutant surcharges and septage disposal fee included in the sewage disposal system industrial specific charges;
3) FY 2026 City of Detroit allocated wholesale water revenue requirement of $30,028,800 which is the net of $50,728,800 gross revenue requirement less the Ownership Equity Credit of $20,700,000 pursuant to the terms of the Water and Sewer Services Agreement (WSSA);
4) FY 2026 City of Detroit allocated wholesale sewer revenue requirement of $215,324,400 which is the net of $220,840,400 gross revenue requirement less the Ownership Equity Credit of $5,516,000 in accordance with the WSSA;
5) FY 2026 City of Detroit allocated indirect water revenue requirement of $50,772,300 (preliminary), in accordance with the Regional Water Supply System Lease;
6) FY 2026 City of Detroit allocated indirect sewer revenue requirement of $38,434,100 (preliminary), in accordance with the Regional Sewage Disposal System Lease; and
7) authorizes the Chief Executive Officer to take such other action as may be necessary to accomplish the intent of this vote.
BACKGROUND
Pursuant to the water system and sewer system leases signed between the Great Lakes Water Authority (GLWA/Authority) and the City of Detroit, the GLWA began operations of the regional water supply and sewage disposal system on January 1, 2016. Consistent with the terms of those leases, the Authority shall, for each fiscal year fix and approve rates and charges to its customers in an amount that is expected to produce revenues sufficient to satisfy the Authority revenue requirement. The attached, proposed schedule of charges meets that requirement.
Leading up to this charge recommendation, staff presented the proposed FY 2026 and 2027 Biennial Budget and five-year financial plan for FY 2026 through 2030 and an analysis of proposed water and sewer system charges at its January 22, 2025 Board meeting. A Public Hearing was opened for the FY 2026 Water Service Charges and Sewer Service Charges on February 26, 2025.
JUSTIFICATION
The water and sewer system charges support the proposed FY 2026 water system revenue requirements budget and the proposed FY 2026 sewer system revenue requirements, respectively. The FY 2026 water and sewer revenue requirements reflect GLWA’s commitment providing our Member Partners with wholesale water and wastewater services of unquestionable quality at a fair and equitable cost.
Establishing the budget and charges each year is an impactful decision which merits public discussion that spans several months and encompasses stakeholder groups. A summary of discussions related to the FY 2026 & FY 2027 Biennial Budget and FY 2026 Charges is provided below.
Board of Directors Public Engagement
ü October 9, 2024 - Board Workshop - In-Depth Budget & Charges Briefing
ü January 6, 2025 - Audit Committee receives proposed budget and charges presentation
ü January 22, 2025 - Board Meeting - Board receives a proposed budget and charges presentation and refers the matters back to Audit Committee for further review
ü February 17, 2025 - Audit Committee continued review of budget and proposed charges
ü February 26, 2025 - Board Meeting - Board conducts public hearing related to the proposed budget and charges
Member Partner Engagement
ü October 17, 2024 - Charges Rollout #1 - Capital Improvement Plan (CIP) Review
ü November 12, 2024 - Charges Rollout #2 - Units of Service (UOS)
ü January 9, 2025 - Charges Rollout #3 - Proposed Charges Overview and Introduction of Budget
ü January 13, 2025 - Member Partner specific email with preliminary calculation worksheet and letter from Chief Executive Officer
ü January 16, 2025 - Charges Rollout #4 - Feedback on Proposed Charges and further discussion of the Budget with the Long-term Financial Plan
ü January 27, 2025 - Member Partner specific email with proposed calculation worksheet, letter from Chief Executive Officer, and one pager related to FY 2026 Proposed Charge Increase
A Notice of Public Hearing was published in the Detroit Legal News on February 12, 2025. That notice, along with related supporting materials throughout the budget and charges development process, is available online at www.glwater.org/financials.
Proposed FY 2026 Water Charges
The proposed FY 2026 water service charges reflect a proposed FY 2026 Water budget increase of 6.14 percent along with increased investment earnings and reduction in estimated sales volumes. Therefore, the average water system charges increase is proposed to be 5.90 percent.
Proposed FY 2026 Sewer Charges
The proposed FY 2026 sewer service charges reflect a proposed FY 2025 Sewer budget increase of 4.67 percent along with the increased investment earnings and reduction in estimated industrial charges. Therefore, the average sewer system charges increase will be 4.5 percent.
BUDGET IMPACT
The recommended FY 2026 Schedule of Water Service Charges and Sewer Service Charges as presented produces the necessary revenues to fund the FY 2026 Water System and Sewer System Budget.
Coordination with DWSD’s Budget - Under the terms of the lease agreements and related financial commitments, key inputs are required from DWSD. An analysis of the DWSD budget inputs and related reconciliation based upon some of the changes above is reflected in the attached schedules.
COMMITTEE REVIEW
The Audit Committee has reviewed the FY 2026 financial plan, including charge setting matters, at its meetings on January 6, 2025 and February 17, 2025.
SHARED SERVICES IMPACT
This item does not impact the Shared Services Agreement between the GLWA and the City of Detroit.