Retail Service / Wholesale Service

Who Pays What

• Township pays for the construction of its water distribution system
• Township customers pay same rate as City customers Township pays a wholesale rate plus surcharge to the city and passes that cost onto its customers
• City operates and maintains the township water distribution system Township operates and maintains its own water distribution system
• City bills and collects water revenue from the township customers Township bills and collects water revenue from the township customers
• Specifically defined water system boundary Township water system
• Better management of the water system under a single entity
• Difficult management of the water system when managed by two separate entities
• City provides operations, maintenance, and billing through existing staff
• Township hires its own operations, maintenance, and billing staff

Coming Together

Although both options were analyzed and discussed, both parties preferred the retail option. The township determined that its residents could purchase water at a lesser cost as a retail customer of the City as opposed to the increased costs of duplicating staff and equipment to operate its own water department. The City determined that it could add the township customers to its system since it has the appropriate billing software, staff and equipment to manage the township system without additional staff. From a cost perspective, the retail option provides the most efficient and cost-effective manner to deliver water to the Larkin Township customers for both the City and the township.

Land Use Control

Another aspect of the retail option has to do with land use control. Both parties agreed that land use planning and implementation is a very important component of a water agreement. Based upon the premise that the City and township should not be competing with each other, but instead should be complementary, it was agreed that the City should provide urban services characteristic of high density development and the township should provide low density (rural) residential services. To protect this premise, the proposed water agreement stipulates a mutually agreed upon development density level within the township’s water district as allowed by Larkin Township’s current zoning map and ordinance. Additionally, the Township’s consulting engineer indicated that the soil conditions in the Township’s water district with respect to the current environmental regulations of the Michigan Department of Environmental Quality (MDEQ) prohibit a higher density of development than what is specified in the number of anticipated water connections in Exhibit B of the proposed water agreement.

Land Use Protection

As the City’s urban growth policy evolved, a missing aspect has been land use controls outside of the MUGA, which are complementary to the central city. This has been, perhaps, the only weakness of the MUGA policy. Although land use protection exists within the MUGA by not allowing City utility services without annexation, the City has faced potential development competition over the years within the immediate vicinity of its surrounding townships outside the MUGA. The proposed water contract with Larkin Township resolves this weakness in a manner of mutual agreement as opposed to a unilaterally imposed policy. Therefore, the existing MUGA policy and the mutual agreement of development density outside the MUGA in Larkin Township combined with the City’s control of water connections as a retail supplier of water ensure that the interests of the greater community are not compromised by the individual interests of speculators.