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Date: 8/3/2021
HOLYOKE – Members of the Holyoke City Council heard concerns from the public regarding the proposed sewer rate increase during an Ordinance Committee Meeting on July 28.
The meeting, which had a simple two item agenda, began first with members of the Ordinance Committee opening a discussion about a special permit application for a marijuana growth facility at 111 Mosher St. Committee Chair Councilor Rebecca Lisi, Acting Mayor Terrance Murphy and Councilor Joseph McGiverin attended the meeting in person while other City Councilors attended the meeting remotely.
The hearing began first with Pleasantrees Chief Development Officer Bryan Wickersham and Design Engineer with Stonefield Engineers Jake Modestow offering a summary of who the company was and what they wanted to bring to the community. Wickersham explained that the Michigan based company, as of the date of the meeting, had just become a multi-state operation with the opening of their first Massachusetts store in Easthampton. He went on to explain their plan was to open a total of three facilities in Western Massachusetts, and the remaining two would be opened in Greenfield and Amherst.
Wickersham said the cultivation facility they hoped to bring to Holyoke would be their 11th cultivation site. He said the facility was due to have the design phase completed within weeks and when that was completed they would begin the process of applying for building permits. The project would employ “somewhere around 150 employees from day one.”
He said they were “committed to being tied into the communities where we serve” and wanted to employ locally for 40-hour workweeks. Modestow went on to explain that the three parcels they had bought make up about 10 acres and the existing building was about 107,000 square feet. He said they were hoping to retrofit the existing building to host a cultivation, office and process facilities.
“We’re bringing this building into the 21st century,” he said, adding that there were about 171 parking spaces planned for the facility. Later in the discussion, Murphy questioned how many of the 150 employees would be making more than $20 an hour, Wickersham said “roughly 60 percent.” He said their minimum pay in Michigan was $15 an hour, but incentives were offered and most people made $16 to $17 an hour. He went on to say the company offered a comprehensive benefits package with full vision and dental benefits where the company covers “75 percent of the premium.” He added that insurance started “on day one” and offers both short term and long term disability.
“We really care for the employees that we have and ultimately one of the things I think is unique about us is when the company was set up, the founders set aside 10 percent of the overall company and equity in the company to be able to allocate to employees for incentive units to actually be able to give employees ownership in the company,” he said.
Ultimately, the special permit was voted in favor of recommending to the full City Council the approval of the special permit.
The council then went on to discuss the second item on the agenda, a public hearing for the ordering of the City Council to raise the sewer fee to a minimum of $8.05 per 100 gallons. Murphy said while he knew this wasn’t an easy thing to do, he tried to provide a plan that would allow the city to move forward with a balanced budget and “no longer have a deficit within the sewer account.” Additionally, he said he hoped to provide relief to taxpayers so they wouldn’t need to pay additional taxes as well as an increased sewer rate.
“I want to emphasize it’s important that we get the enterprise fund balanced. I think it’s important that we recognize there’s going to be additional expense[s] and if we have a way to offset some of that expense in this potential stabilization account for tax relief would be a way that we could do this, get our financial accounts in order, be in a situation where we would have a balanced budget both in the general fund and the sewer account,” he said. “I think the rate that was proposed would potentially provide us with some stability for the next three or four years.”
He said if rates were not raised the city was looking at a potential “million dollar deficit” within the city budget that they would have to address. Additionally, he said this would allow for the next mayor to start their term with a balanced budget and no deficit. Councilor Howard Greaney asked Murphy how much debt the fund had at the time of the meeting, and Murphy stated he believed they were up to $1.1 million “at this point.” Murphy said, “Much of the deficit isn’t from people that haven’t paid their bills, it’s because we’re not getting enough to cover the expenses.”
Councilor Linda Vacon asked if they were able to use some of the anticipated COVID-19 federal funds. Murphy said while there would be some savings, “it would not cover it.” The council then heard comments and received a presentation from the Department of Public Works (DPW) Superintendent Michael McManus. He presented a document with projections for the next year and a new sewer rate recommendation, which he said would be $8.05 per 1,000 gallons “with no minimum payment.”
“So it’s a $1.40 per 1,000 gallons increase from the current sewer rate,” he said. McManus went on to identify expenses the DPW would incur during FY22, which would total to about $9,050,085. This, he said, would need to be offset with revenues that come in. Based on “historical sewer usage,” McManus said there were about 1.2 billion gallons of water “that are discharged to the sewer system from the ratepayers” each year. However, he said he had used 1.1 billion gallons to calculate the sewer rate as the discharge had been going down each year.
“So if we take that 1.1 billion gallons and the needed necessary revenue from the sewer rate of $8 million, the break even sewer rate at 100 percent collection would be $7.23 per 1,000 gallons,” he said. “But we know we don’t get 100 percent collection rate, we get about a 93 percent collection rate. So using about a 93 percent collection rate, our break even would be $7.77 per 1,000 gallons.”
However, he said the break even rate wouldn’t allow the DPW to “build up a reserve in case our collections are worse, or if there’s a cost that wasn’t budgeted,” or if “sewer usage were to decline further than what we’ve projected.”
“So to build a little bit more contingency, we’re recommending $8.05 per 1,000 gallons,” he said. McManus added that should the increase be approved and they have a 93 percent collection rate, they anticipated a surplus of $285,000 at the end of FY22. He went on to say with the current rate of $6.65 per 1,000 gallons ratepayers” quarterly bill was $97.46, which translated to a monthly bill of $32.49. “At the proposed sewer rate of $8.05 their quarterly bill would go up to $117.97, so about a $20 increase, and a proposed monthly bill would go to $39.32,” he said, adding that while they didn’t give monthly bills it was another way to analyze the cost increase. The yearly impact, he said, would be an additional $82 to ratepayers, about an additional $7 per month.
Vacon asked if the shutoff program was active at the current time, and McManus said it was and they had already done one round of shutoffs. He said they would be beginning a second round of shutoffs and had begun in June with a list of those who “owed $140,000 in back sewer payments.” He said those who owed $250 or more received an initial letter from the DPW, and if they hadn’t received any payments or communication they received another letter giving them a date on which their sewer services would be shut off. He said at the end of the month, four properties were still shut off “and those properties owe a little over $5,000 to the city.” He said out of the $140,000 the city was owed in back sewer payments, they were able to collect about $100,000 with about another $40,000 in payment plans.
He explained the second round of shut offs also had about $140,000 and had not yet sent out a second notice to ratepayers. McManus said it was typical to get about the “same capture rate.” Vacon said she’d received objections from constituents that felt as though they were paying more because “people are not paying their fair share.”
Councilor Juan Anderson-Burgos said he was not in favor of raising the sewer rate and questioned how the deficit got to the point it was at, how it could be avoided again in the future and how residents on a fixed income could be assisted. McManus said the deficit had accumulated due to a lack of increase for a number of years. He said the last time the rate was increased was in December of 2018, and with a service contract that was held by the DPW there had been a “marginal increase” along with increased costs for personnel over the years. “How we got here was by really not staying on top of an appropriate sewer rate that would balance the books at the end of each year,” he said.
McManus said if the rate wasn’t raised there were still costs that needed to be paid and they would not “be able to generate enough revenue from our billing and from the ratepayers and will have another deficit at the end of this fiscal year.” He said for people facing increasing sewer costs, education about conservation would be important as well as “other best practices.”
The public hearing was then opened, which allowed for public comment from city residents and others. Public comment began first with former City Councilor Kevin Jourdain, who said he felt as though the increase was “not justified.” He said he felt as though the collection rate of 93 percent was low and “to have that money go uncollected and shifted to other people” was unfair. Jourdain added he felt the extra funds or 28 cents that would add surplus to the account should be removed.
He said he felt as though the contract the sewer system was currently under should be independently reviewed as the city was three years away from renewing their contract. He added that in a previous rate schedule the DPW stated that for FY21 and FY22 the rate should be just $6.90. He said he believed that the rate should be as the DPW had stated and they should “stick to the schedule they previously provided city leadership.”He went on to address the lack of street sweeping that he knew of this year and questioned why only $1 million was being allocated for the Jackson Street sewer project.
Another resident who lived in the Elmwood community said as someone who owned property in the city she had done a lot of research and spoke with officials from surrounding communities such as South Hadley, Chicopee, Westfield and Springfield to compare sewer rates and average sewer bills. “What I discovered is that in every single one of the properties I own here in the city of Holyoke, what I paid in sewer fees in 2020 and what I would I would have paid in sewer fees if my properties were in any one of those four surrounding towns, I would have saved anywhere from $6[,000] to $26,000,” she said. “I was absolutely shocked when I came up with that figure.”
She said in addition to increasing her bill, it would increase tenants' bills within the city. “There is something amiss going on here, there is something we’re not being told, there are figures that we’re not being given,” she said. “I cannot understand why these surrounding towns and cities can operate their sewer departments at the rates that they are and not have a deficit. We’re much higher.” She said fellow communities, when they needed to raise their rates, raised them by 2 to 3 percent, and called the proposed rate “astronomical.”
She agreed with Jourdain that the DPW should be more aggressive with shutting off water and collecting rates. “Understand that this increase is going to negatively impact the city of Holyoke. We are just coming out of a pandemic, we are just coming out and beginning to get some kind of normalization into our lives, and you want to hit us with this kind of increase,” she said.
During additional discussion among councilors, Greaney said he’d heard from longtime city residents that with both the tax and sewer increases they were selling their homes due to the impact to their income. He said he felt it was the responsibility of the council to come to an agreement that was manageable and affordable to all. He said he would not support the $8.05 increase and “couldn’t afford” any more tax increases. Councilor Libby Hernandez went on to propose an amendment that would reduce the sewer fee from $8.05 per 1,000 gallons to $8 per 1,000 gallon. However, the amendment failed as it was not seconded.
Murphy then made a motion to reduce the fee to $7.77, but expressed concerns that the budget would not be balanced and that was the lowest he felt they could go. Lisi, however, said she was slightly uncomfortable with the “break-even rate” as it didn’t really resolve the deficit or account for contingencies. She said she felt the $8 rate increase “felt more responsible.”
Vacon went on to say that she felt they should set a rate that was affordable for those in the city. “I think there is nothing worse than for somebody who has worked their entire life, paid off their house, have a retirement and be forced out of their house because they can’t pay the taxes and fees,” she said. “That to me just seems fundamentally wrong, so I want us to come up with the lowest rate that can balance the fund and put the most pressure on us and our department to control the cost, look at the miscellaneous expenses of $305,000, look at the collections, look at the industrial and look at the usage.” She added that she felt they could come up with a rate under $7.77 if they were “aggressively accountable to the taxpayers and within our own budget process” and she would not be voting in favor of the $7.77 fee.
Both Vacon and Lisi voted against the $7.77 increase while Murphy, Anderson-Burgos and Hernandez voted in favor of it, meaning the committee would recommend the $7.77 fee to the full City Council in their next meeting.