2010-03-01 Water Meeting

Printed as submitted

Page 1 of 28 – Special Water Workshop - March 01, 2010

State of Michigan

County of Shiawassee

Charter Township of Owosso

Be it known that the Owosso Charter Township Board of Trustees met in special session regarding a Water Workshop on Monday, March 01, 2010 at 6:00 P.M. in the Township Board Room, at 2998 W. M 21, Owosso, Michigan 48867.

Call to Order: Supervisor Miller led the Pledge to the Flag.

Members in attendance: Roll Call: Supervisor Miller-Yes, Trustee Campbell-Yes, Treasurer Cudney-Yes, Trustee Krajcovic-Yes, Trustee Schultz-Yes, Clerk Gute-Yes. Trustee Archer-Absent. Other present: Attorney Lynn Bowne.

Agenda: Moved Trustee Schultz, Second Treasurer Cudney to place “Agenda Approval” on the agenda and to accept the agenda as printed with the addition. Ayes: All. Nayes: None.

Public Comments: Opened at 6:02 p.m. - Closed at 6:02 p.m. – None.

Water Agreement Discussion:

Supervisor Miller: States Clerk Gute had requested the water workshop.
Clerk Gute: Asks if Miller would like her to start or if he (Miller) would like to update the board first.
Supervisor Miller: The last meeting they (committee) had was, a very good progressive meeting and things were moving along. We (committee) are in the midst of doing some rewrites here and there. That was about it. We (committee) is still working with basically the same contract that has been proposed and two (2) TA’s came from it.
Trustee Campbell: When did the committee meet last?
Trustee Krajcovic: February 1st and February 17th.
Supervisor Miller: Trustees Krajcovic and Schultz could not make the meeting on the 17Th, so himself and attorney Bowne met. They (Miller & Bowne) had some good discussion and made some good progress on things like the MOU and etc.
Trustee Campbell: Is there any new news you can bring to the board?
Attorney Bowne asks to speak…

Attorney Bowne: There is an attempt to blend the agreement from what the township provided back to what the original agreement was. Hopefully another agreement will be ready by the end of the month by the city so that everybody here can look at it one more time. The committee had 2 sessions in February. One for about an hour and the other an hour and a half and he felt they are making some headway. When the document comes back the language may be arranged a little bit different than what you have before you right now. This final document will be new and improved.

So we will have another agreement asked Trustee Campbell. She wants to know where we are at with the new Mayor the new City manager and all that.

Page 2 of 28 – Special Water Workshop - March 01, 2010

Trustee Schultz states the city had another board change too. We’ve not let them talk, that’s why we met twice in February said Supervisor Miller.

It just appears that a lot of the stuff that the board took out is coming back into the agreement said Clerk Gute.

Water Presentation by Clerk Gute:

Water proposals have been discussed at not less than 16 meetings over the past 13 months.

My guess is that we have received not less than 10 proposed agreements.

I was dismayed to find wording reinstated in the latest agreement that this board collectively decided to remove back in May 2009.

Since the May 2009 rewrite the board as a whole has never agreed to have this wording put back into the agreement.

IMO, it was wrong for 3 board members to take it upon themselves to rack up attorney fees by having our attorney reinstate language back into the agreement without …
the consensus of the board.

These water negotiations cost the township $100 each time the intergovernmental committee meets and an additional $350 each time a 3rd monthly meeting is called.

We have paid over $1,500 in engineering fees. We have paid extra attorney fees for rewrites and for his attendance at special meetings.

All of this money and we are nearly back to square one again.

I am disappointed in that every agreement I have received is a win situation for the city while there is no win for the township and I am equally disappointed in that our Supervisor continually chooses to take our Township one step forward and two steps back regarding our votes in all of this.

 It has been said that I do not support municipal water. That could not be further from the truth.

 The truth is …it is not that I am against it …it is that I am duty bound to make certain that my decisions are in the best interest of the Township as a whole.

 As an elected official it would not be fiscally responsible, nor would it be productive for the Township for me to vote on a whim or with strings attached.

 As elected officials we are the gatekeepers of the Township. Therefore we need to properly administer the affairs of Owosso Charter Township,



Page 3 of 28 – Special Water Workshop - March 01, 2010

 We need to promote decisions that benefit those we serve.

 We must evaluate all decisions so that the best service or product is obtained at a minimal cost to those we serve without sacrificing quality or fiscal responsibility.

To date there have been so many proposed agreements that I am not certain everyone is working from the same proposal. Though tonight, I will address the latest proposal given to me.

Page – 1 – Paragraph 4 (I numbered these points on your agreement. This is your #1)

Corunna – “Whereas, for the purposes of public health, welfare and safety, it appears that it is desirable to provide a treated water supply to the City of Corunna.”

Caledonia – “Whereas, for the purposes of public health, safety and welfare it appears it is necessary and desirable to provide for water supply to portions of Caledonia Charter Township.”

Owosso – “Whereas, it is necessary for the public health, welfare and safety and desirable to provide for water supply for portions of Township.”


1) The Owosso Township contract is the only contract that states municipal water is “necessary.”

2) I viewed at least 12 other municipal water contracts on line, not one of them addressed municipal water as being a “necessity” or an “apparent necessity.”

3) Our negotiating committee has not proven the “necessity.” Nor can they because, the State and Federal government does not even mandate municipal water.

4) At our May 20, 2009 Water Workshop the consensus of the board was that this language would be changed. Obviously it hasn’t.

Most board members should remember that the Owosso Drain was determined a necessity too and Owosso Township took a financial hit because of that. In fact, our residents will be paying on that so-called necessity until 2025.

IMO, this language is binding in that it more or less mandates Owosso Township to provide municipal water on a continual basis.

My opinion is – Remove the entire paragraph.

Page 1 - Paragraph 5 (Your #2)

Here, the committee has negotiated P.A. 34 of 1971.
There is no P.A. 34 of 1971.

Page 4 of 28 – Special Water Workshop - March 01, 2010

Page 2 - #3 (Your #3)
Owosso Township Contract:
3. The provision of water service to customers on the boundaries of the City and Township when such service does not require the extension of water mains “shall be permitted as of right;” but notice must be given to both City and Township.

Caledonia Township Contract:
3. The extensions of water mains to any customers or areas outside the corporate boundaries of the City shall be limited solely to those customers or areas within the boundaries of water service districts or other municipal entities contracting with City for water service; provided, however, that provision of water service to customers on the boundaries of water districts when such service does not require the extension of water mains may be permitted by mutual consent of the parties.

1) The consensus of the board at our May 20, 2009 Water Workshop was that this language would be removed. Obviously it wasn’t.

2) Allowing this language to remain will adversely affect the Township when 425 agreements expire. (Customer collections and land reverting back to township)

3) The city water distribution map falsely claims township-incorporated land as water main boundaries. (Water St, Stewart St and Vaunguarde)

Page 5 of 28 – Special Water Workshop - March 01, 2010

4) Per an MTA Attorney – The Township Board needs to define its water boundaries at our borders and if we do not do this, the Township would never know where their water delivery boundaries begin or end. Thus the Township would consistently have problems knowing which parcels the Township is to collect on. (More so of a problem when leadership changes)
5) By allowing the City deliberate access to our border customers by “NOTICE ONLY” will negatively impact our boundaries and collections. Currently the negative impact consists of the area of Baker College and South St. on the southeast. Davis Cartage, Bock Dr., Chestnut, Marion, Keifer, Babcock and Cleveland Ave on the west and to the north at Smile Keepers, Dr. Chapin, VG’s, Chipman Rd., North St., Mason Rd. and etc.
6) Though it would not be necessary for the City to install water mains along our border
streets …it would remain necessary for the city to install water lines across the street to serve Township border customers. Owosso Charter Township is the municipality that should do that.
7) If we allow the City the “Right” to continue serving our border customers this means the Township would “NOT” have a say regarding Township customer water rates and; the Township would not receive the required 25% revenue, nor, would we receive connection fees, front footage fees and etc.
8) If we allow the City the “RIGHT by NOTICE ONLY” then, Township customers currently served by the City would not come back to the Township as currently promised by the City according to Supervisor Miller.
9) By allowing the City the “RIGHT” to complete control of current Township customers at our boundaries the City could offer those customers single City rates per annexation. This could cause a domino effect of annexations of neighborhoods for cheaper water rates as well.


Page 6 of 28 – Special Water Workshop - March 01, 2010

10) Supervisor Miller stated we should allow Baker College to remain as a city customer because the Township already collected a lot of money on Baker permit fees. I disagreed. The city collects on both permit fees and water bills as well. Why wouldn’t Owosso Township do the same? If the Township arbitrarily starts giving Township customers to the City, the Township would not have any customers if they ever built their own treatment facility.
11) By giving the City the right to service our boundary customers would be giving up township road rights of ways. Also through the State Boundary Commission the City could possibly seek to square up boundaries that would ultimately incorporate Township land into the city.

(See Exhibit #1 pg. 4 & Exhibit #2 & Exhibit #5 pg. 2 )

Page 2 - #5 - 3rd sentence - was to be #4 after Oct meeting: (Your #4)

After the distribution system, or portion thereof, has been installed and accepted by Township and City, City will operate said system, furnishing water to the water customer in the same manner used in furnishing water to the water customers within the city boundaries except as hereinafter provided. All water furnished shall be measured by meters located on the premises of each customer in the same manner as is required by the Code, Ordinances and Rules and Regulations of City for measurement of water used by water customers in the city. Water meters shall be furnished, maintained and replaced by City, and title to the water meters shall remain in the Township if installed after this Agreement is signed. The initial meter cost shall be included in the customer connection charge.

1) Common sense tells us that it is important for us to put all Township customers entirely into the Township water system. This would include water meters as well.
2) Should the Township ever decide to build its own treatment facility or ever decides to enter into a wholesale agreement …the Township will need these meters to support the Township water system. The Township needs to buy back all previously installed meters at the depreciated value in order to place Township customers back under Township authority.

Page 7 of 28 – Special Water Workshop - March 01, 2010

3) It is imperative that we do not lose site of the fact that if this proposal becomes a signed document it could very well bind the Township for nearly a century. I cannot speak on behalf of the entire board but IMO …it would be wrong for this board to bind their hands or; bind the hands of future boards for generations to come.

Page 3 - #6 (Your #5)

City agrees as part of its operation, to keep the distribution system in good repair…

Further it states: The Township shall be deemed to own that portion of the water distribution system within the Township, that preexisted this Agreement, when the Township substantially repairs or replaces such system.

This means current customers would not divert back to the Township until pipes and etc are replaced. That could be 100 years. What if the City arbitrarily replaced them?

Water infrastructure the City has placed in Owosso Township belongs to Owosso Township because the city never had Township approval to place the infrastructure in our Township in the first place.

Page 3 - #1 (Your #6)

8) Township further agrees that City shall have full access to all of its streets, rights-of-way and utility easements within said water districts for the purposes of repairs and maintenance to the ^ water system. City shall give notice to Township for any projects in which streets will be closed for repairs to ^ water system, and notice to the Township when water is provided to any Township legal entity.


1) This obviously this S/B numbered #8 not #1.

2) The purpose for the City to use Township rights-of-way should specifically state for the
repairs & maintenance to the “Township” water system only.

3) The word “Districts” needs to be deleted. Per the city distribution map it shows a city
water main district boundary on Township incorporated land. (Water St, Vaunguarde,
Baker etc). These are not boundaries these are water mains on township incorporated
land. - Reference the water map.

4) The language after the comma in the last sentence is irrelevant to the rest of the
paragraph. It’s ambiguous and is similar to #3 on page 2.

Page 8 of 28 – Special Water Workshop - March 01, 2010

5) It states the Township will only be “Noticed” when a legal entity connection is made. My concern is that a legal entity could contract separately with the city and it would only be necessary for the City to Notice the Township of the connection. Again the Township would not collect any fees should that happen.

Common sense tells us that the Township needs to make it very clear that all Township “Legal Entities” remain under control of the township water system.

Page 5 - #13 – 3rd sentence (Your #7)

Further it is provided that if it appears that an area within the supply system is contaminated and Township fails to timely act after notice from City, under Township Ordinance, to isolate said contamination, then City shall have the right to shut off water service or isolate the same as City shall deem necessary for the protection of the general health, safety and welfare of the public.

1) Need to add “Township” before water supply system.

2) The committee has not supplied the board with language regarding what “fails to timely act” consists of. I prefer to know what our responsibilities are before signing

3) My concern is that the City would have the right to permanently shut off water supply to the Township and possibly place it under the auspices of the City. It should state the City has the “right to temporarily shut off water service and/or isolate” until the contamination has been remedied.

Page 5 - #15 – second line... (Your #8)

It states the contract shall automatically renew for two 30 period extensions. Obviously it needs to specifically state two 30 “year” extensions.”

Page 6 - #4 Unless one of the following occurs: (Your #9)

4. Upon the implementation of provisions of an agreement between City and Township pursuant to which City would provide water to Township on a wholesale basis.

I remain uncomfortable with this language. I prefer it to specifically state, “upon the implementation of a wholesale agreement initiated by the Township and the city could not deny the Township a wholesale agreement.”

Page 6–#17 – 2nd sentence – Rates: (Your #10)

New provision added Dec 4, 2009 is - “that township customers will pay two times the rate that city customer’s pay.”

Page 9 of 28 – Special Water Workshop - March 01, 2010

1) Double rates will capture more money for the city than just the unit price of water. A cost comparative for a business in our Industrial Park appears to look like this:

Township Rates
1 Unit = 1,000 gallons of water
6 Units @ $2.50 @ (1,000) = $15.00


1” line = $60.00
6” line = $210.00
Hydrant Rent = $60.00
$345.00


City Rates
1 Unit = 750 gallons of water
6 Units @ $2.40 (gallon difference
would need 8 Units = $ 19.20
1” line Demand Charge = $ 112.50
6” line = City largest 4” @ $2,250.00
Hydrant Rent (twp Suggested)__?__

$2,381.70 (+ Hydrant Fees)



That is a $2,036.70 increase per quarter or an additional $8,146.80 per year for just one business in our industrial park. More when you add hydrant fees back in.

Late Fee Charges are – City 10%. Township 3%.

2) I question why we would allow the city to charge our Industrial Park customer’s double rates for the pipes that service our businesses when they are Township installed and owned pipes.

(See Exhibit #3)

3) As a direct result of the verdict in the Oneida case, Supervisor Miller and Trustees Krajcovic and Schultz now feel it is okay for the city to charge us double rates. Though the statute used in the Onedia case did not apply to Owosso Township, I emailed my questions and concerns to Attorney Fahey who fought the Oneida case. His response was:

“If you are looking at a new water agreement, even though the statute does not apply, there is still a lot of case law holding that a city cannot charge higher rates outside the city unless those rates are based on higher costs to serve residents outside the city. An arbitrary 2x or 1.5x rate factor is not reasonable under applicable case law unless it can be substantiated based on higher costs.”


Our negotiating committee has not provided the formula that substantiates the need for double rates.

(See Exhibit #1 pg. 2 &3 Headley Amendment & Exhibit #4)

3) All costs for maintenance, repair, replacement, system storage and etc. to deliver water to city customers are included in the single rates that city customers pay.

Double rates obligate Township residents to pay duplicated costs for such service.

IMO, this is price gouging for the purpose of increasing city revenue.

Page 10 of 28 – Special Water Workshop - March 01, 2010

I say this because the City Council Minutes of January 3, 2005 state:


“Explore alternate sources of revenue. In general, Council seems reluctant to

impose new taxes or fees for existing services. Exploring alternate sources of revenue,

then, contemplates creative endeavors to utilize organizational capabilities to generate

additional funds. Such endeavors might involve the production of a product or service

based on unique strengths that might be in demand by others outside Owosso’s

jurisdictional boundaries. To be of value, these sources of revenue must exceed the

City’s cost of producing the revenue.”

(See Exhibit #5)

5) If case law states it is unlawful and improper to attempt to double recovery costs on expenses already included in original rates how can the Township charge back 25% of the double rate to replace, improve or add system storage that is already included in city single rates?

Since this would be a duplication of charges my concern is what would happen if Township residents later won judgment against the duplicate charges?

a) Which municipality would reimburse our customers? b) Would both parties need to lower their rates or would it be necessary for the township to stop collecting their 25%?


6) Per Attorney Fahey double rates could cause annexation and/or 425 Agreements by those that want single rates(especially by developers). The Township does not need to

lose anymore land. The more land we lose subjects our homeowners to increased taxes and user fees.

(See Exhibit #1 page 4 and Exhibit #4)

Page 11 of 28 – Special Water Workshop - March 01, 2010

7) To the best of my knowledge only 4 Industrial Park businesses out of 13, were represented at the special water meeting we held for them. Since then, I’m told one has gone out of business.

As the record keeper of the Township, I have not received anything to verify that all of our businesses were notified of that meeting and I am not comfortable with that. (I should have received certified mail signed receipts)

During that meeting the committee informed our businesses that they could be charged double water rates to that of City customers. They were not given the exact dollar amount. They were not informed that rates for demand charges and pipe sizes would double as well. Nor were they told that the Township would continue charging hydrant fees.

The negotiating committee has not informed us as to what will happen to our industrial park customers that currently use city water. We are told those businesses will come back to the Township but IMO, #3 on page 2 and #1 that s/b #8 on page 3 states they will not.

It also appears if we approve the City infrastructure listed in the MOU those customers could be considered part of the city water boundary and remain city customers.

Common sense tells us that our industrial park customers are not asking for city water.

The Township would be forcing it on them and due to current economic conditions I disagree with placing any additional financial burden on our businesses.

IMO, we need to provide our businesses with exact water cost comparatives from both municipalities.

Once they receive those comparatives we need to obtain a signed document from them stating they want city water no matter the cost. Such a document would serve to prevent annexation for single rates.

Page 7 – 1st paragraph (Your #11)

Fire hydrant service or rental charges shall continue as previously established wherein the City invoices the Township on an annual basis for each publicly owned and maintained fire hydrant in the Township. The current charge is $108 per hydrant per year. The charge is intended to cover routine hydrant maintenance costs, water used for hydrant flushing and fire fighting or training, and a portion of the overall system costs attributed to meeting fire flow demands.

It states the Township will pay on “each publicly owned and maintained hydrant” at the previously established rental charges of $108 per hydrant.

Page 12 of 28 – Special Water Workshop - March 01, 2010

Cost to maintain hydrants in the city are included in the single rate, city residents pay.

Why would our Township businesses want to pay triple rates for hydrant maintenance and repair? (double city rates plus the township hydrant charge)

The Township has only ever rented 22 city hydrants placed in our township. That totals $2,376.00 per year. The township currently has 12 Township owned hydrants in the industrial park. In the first year the cost of hydrant rent to the fire department would immediately increase to 34 hydrants or $3,672.00 per year.

Obviously in time the Township system will grow. For fire suppression purposes hydrants are generally installed every 400 ft. If we install 500 hydrants, hydrant rental would cost our fire department $54,000 per year. 1000 hydrants is $108,000 per year. That does not include periodic cost increases by the city. (100 hydrants $10,800)

IMO, the township should not pay rent for water use on any more than the 22 hydrants they have paid on for years. Hydrant maintenance and repairs should already be included in the single city rates.

Page 7 - #18: (Your #12)

“City shall quarterly transfer to Township, for deposit into a separate Township account entitled “Owosso Charter Township Water “District” Fund…,”


There has been conflicting discussion whether it would be the City or Owosso Township holding this account. Therefore I will address both.

We already hold an Owosso Charter Township Water Fund account which monies from the fund can only be used for water projects. Why would the Township set up a new account and order new checks and deposit slips just to add the word “district” to the account name?

If the city controls this account nothing states how long it would take the Township to access their very-own account in an, emergency. I also envision lawsuits when both parties disagree with the expenditures or interest collections on this account.

Which municipality gets this money when the contract dissolves or expires?

The Township needs to be held accountable for their-own funds. Therefore, I am opposed to any municipality controlling Owosso Charter Township finances for disbursement or investment purposes.

Consensus of the board was that the Township would retain control of this account but the contract does not specifically state that.

Page 13 of 28 – Special Water Workshop - March 01, 2010

Page 8 – 1st paragraph states: (Your #13)

“This fund shall be used solely for making replacements and improvements to the distribution system in the Township districts, including extensions and provision of system storage. An annual report detailing the expenditures from this fund shall be made by Township to City upon request of City.”

Common sense tells us the word “solely” is extremely restrictive.

1) Consensus of the board was that this language would be removed. I was amazed to see that the committee took it upon themselves to reinstate such language. It raises questions in my mind when I envision how well it would go over if the Township were to manage City funds.

2) The contract needs to specifically address Owosso Charter Township’s water supply system and how the Township plans to manage it and finance it …not the City.

Township Water collections have always been used for any water project the Township chooses. There is no reason to set precedence now.

3) We will acquire additional bills with this project. Such bills could include payments for lawsuits, attorney fees, road repairs due to water main installations or damages, liens, insurance, audits, checking account maintenance, planning commission meetings, committee meetings, help with fire hydrant rentals, publication of public notices, secretary to draft reports for the city upon city request, possible computer programs and etc.

What fund will pay for such bills if we allow the City to “solely” restrict our money?

4) An educated guess is that the purpose for this language is to prevent the Township
from using our money to build our own treatment facility if city rates become outrageous.

The monies we collect will be resident and business user fees. That means it’s …their money! For us to “Solely” limit the expenditure of this money handcuffs our users in that they could not stipulate that the money be used to build a treatment facility at a later date.

Township elected officials, are the gatekeepers of the Township. Though the Township has no interest in building a water treatment facility at this time, we remain duty bound to prevent a hostage situation for our constituents in the future.

Deleting this language will keep city water rates in check when the City knows we can use our collections to build our own treatment facility.

Common sense tells me I owe my constituents rate protection. Not a Detroit-Flint deal.

Page 14 of 28 – Special Water Workshop - March 01, 2010

Page 8 - #19 (Your #14)

Bad Debts – For any bad debt expense experienced by City in the sale of water to customers in Township, the City may employ customary collection methods including the establishment of liens for the collection of unpaid utilities. City will cooperate with Township in establishing and enforcing liens for collection of bad debts.

Water service charges, shall be collected by City. The rates and charges as established herein shall constitute a lien on the properties located in the Township receiving water services.

Further in the MOU pg 3 # 18 – “With respect to water charges to District customers that are not recoverable by standard collection method (ie) bad debt, City and Township will work together to collect such charges through lien and collection via the property taxes. The intent is for the collection method to work the same as currently in place with the Township and the Township Utility Authority for collection of unpaid sewer use charges. The City would annually provide a list of uncollectible District water charges by property and amount for lien prior to the winter tax bill preparation. The City would also invoice the Township for the total amount of lien. The Township payment would be deposited to the Township Water District Fund. The Township would apply the liens and be reimbursed through the property tax system.”

1) The language in both the Agreement and the MOU is cumbersome and ambiguous.

2) IMO, the Language is not completely clear and could be misconstrued regarding who would hold the liens and at no time should we allow the city to place liens on Township incorporated land.

3) An Attorney General Opinion states liens cannot be placed on properties where a tenant signed a lease agreement for which the tenant was responsible for the water bill. (Trailer Parks, Apts. Etc).

It concerns me that timelines are not listed in regards to how long a customer can receive water before they are cut off. When businesses close the parcel is still charged pipe fees even though they no longer use water and if so what fund will pay for that if we cannot locate the property owner? That did happen with Chieftan.

According to PA 178 of 1939 liens are void after 3 years. Since there is no way for us to know if all liens will be collectible what fund would absorb those charges if we retain the language on how our 25% collections can be “solely” spent on?

(See Exhibit #10)

Page 15 of 28 – Special Water Workshop - March 01, 2010

Page 8 - #21 (Your #15)

Memorandum of Understanding: That attached hereto is a Memorandum of Understanding, that is made part hereof.

When hired to review this contract Township Engineer Tom Newhof stated: “the

agreement is somewhat unusual in that the eleven page agreement is followed by a

seven page Memorandum of Understanding (MOU). In some cases, the MOU elaborates

on statements in the agreement. In other cases, it changes the conditions in the

agreement. It is my recommendation that these two documents be merged so that each

of the conditions in the Agreement is clearly stated and the Agreement can be stated in a

single document.”


Consensus of the board was that the MOU would be merged with the water agreement. To date that has not happened.

I cannot understand why some board members would agree to pay for Engineer Newhof’s opinion only to circumvent it. Especially after Tom stated the agreement was somewhat unusual.

(See Exhibit # 6)

Page 9 - #26 – Effective Date: (Your #16)

This agreement is effective upon signing, however Owosso Charter Township and the City of Owosso shall then form an operating connection between their respective existing water supplies, and Owosso Charter Township shall comply with DEQ rules and regulations for safely disconnecting their current well and pumping system. The City and Township shall share the costs for connecting the two systems together. The Township alone will be responsible for disconnecting their current water supply.


Our water system in the Industrial Park is integral to Owosso Charter Township’s tax base.

Our negotiating committee has failed to provide the board with the cost to disconnect the
Township system. I disagree with signing a blank check.

Page 16 of 28 – Special Water Workshop - March 01, 2010

During a previous discussion regarding our water tower Supervisor Miller stated the City was interested in purchasing our tower.

According to the Township’s 2002-2003 Engineered Water Project the Township would need an additional tower to boost fire suppression across the river and/or to the northeast portion of the township. (Area of Rich Simpson on Cleveland Ave. or N. M 52)

During those talks Gary Burk also stated the Township would need a water tower to boost fire suppression beyond Wilkinson Rd at M52. However, for some unknown reason Trustees Krajcovic & Schultz who were both involved with that project now agree we need to sell the tower as well. They need to contact Tom Newhof regarding that.

IMO, we as a board do not have the “right” to sell our water tower without a vote of the people. Owosso Charter Township taxpayers own that water tower. Not the board.

(See Exhibit #7)

Again, common sense tells me not to disconnect our water supply system in the industrial
park without our businesses having complete knowledge as to the exact water costs to them.

Nor would I disconnect them without first obtaining a signed document from each property owner stating they want city water and are willing to pay for it no matter the cost.

Obtaining such a document will serve to protect Township land from annexation for single rates and/or protect us from losing customers according to page 3 - #1 that S/B #8 whereby the city by “right” could obtain a legal entity as city customers.

If we disconnect our water tower what provisions are there for the businesses that do not want city water or rates?

MOU:

Outside of the infrastructure listed on page one (1) common sense tells us the MOU is not necessary.

The language on pages 2-5 of the MOU clouds certain areas of the actual Water Agreement and needs to be incorporated into the respective sections of the Agreement so
that the Agreement is clear and concise in all areas.


The 1st page of the MOU should be a franchise agreement and in my opinion having one will serve to reduce water rates to Township customers.

Page 17 of 28 – Special Water Workshop - March 01, 2010

Page 1 - #2 of the MOU – states: (Your #17)

“Certain water mains and facilities, in the Township, are “integral to the City water transmission and distribution system” and will remain under the control and ownership of the City “UNLESS”, hereafter modified”

“Integral” – means the infrastructure is essential and necessary to complete the City water system.

The city is currently using this infrastructure to circulate water through our Township to distribute water to customers in Owosso, Corunna and Caledonia Township and they make good money using our right of ways to circulate their water.

“UNLESS HEREAFTER MODIFIED” Think about it.

Could this mean, until they modify their infrastructure by placing larger or additional pipes in Township owned rights of ways. Could it mean until they modify by adding wells to pump water out of our Township?

Or, could it mean until the City removes it.

No matter what or how much we question we cannot lose site of the fact that it was mandatory for the City to obtain a franchise agreement or license agreement prior to entering Township right of ways.

By not having an agreement pertaining to city owned infrastructure in Township rights of ways guarantee’s a possible lawsuit between both parties in the future.

The major part of this infrastructure is the feed lines that run to and from the City water tower that cross or run along Township right-of-ways and other Township incorporated land.

These lines run down M21, cross in the area of the Independent and down Dowling Dr., across Vaungarde property and to the west side of Chestnut St. and crosses back over into City rights of way.

These lines complete what is called a loop that continually circulates water which is
necessary to prevent bacteria and etc. in municipal water. The tower also provides boosting power for fire flow protection to the west quadrant of the City as well.

All extremely crucial, beneficial and integral to the city water system while lying
along or crossing Township owned road right of-ways and Township incorporated land.

Page 18 of 28 – Special Water Workshop - March 01, 2010

I know a franchise agreement is necessary because of the several Franchise Agreement classes I attended at MTA Conferences.

My guess is that Attorney Bowne is very familiar with franchise agreements because of our Charter Communications agreement and the fact that it was necessary for the township to get rights of way approvals when our Township Sewer System was installed.

I have continually brought the Franchise Agreement to the board’s attention. Three board members just laugh when I mention Franchise …even after they received a copy of the “Understanding Township Franchises & Right of Ways Consents.

(See Exhibit #8)

I’m quite sure Supervisor Miller knows this as well because one of his notes I had to obtain through the Freedom of Information Act states:

“MTA Legal Council – Franchise approval to use the public rights of way w/contract, w/municipality for water. Recommend: Do Separately.”

This is not infrastructure about to be installed if they sell us water. This is infrastructure already installed that is integral “important” to the city water system.

Notice the MOU states - A 12-inch water main on S. Delaney Rd “as required” to serve 210 S. Delaney (Woodard’s)

“As REQUIRED” – Think about it. This is the only infrastructure on this entire page that states “as required.” The only reason that line is required is because, of the Woodard’s 425 Agreement. Since the line is already addressed in the 425 Agreement there really is no need to address it here.

Common sense tells me …there is absolutely no reason for this infrastructure to be included in any Water Agreement.

Unless it was created to mask the real intent, in that by us signing it, it gives them the right to use our rights of-ways for the “non-required” infrastructure they placed in our Township.

Signing this MOU gives the City the authority to be in our rights of ways and for them to do so without paying the Township a rightful franchise fee for using them.

It is blatantly obvious that the MOU is structured as a standalone document with no expiration date. This means the MOU would remain in full force and effect throughout eternity.

In speaking with Tom Newhof regarding this he told me he believed I was right but I would have to talk with an attorney.

Page 19 of 28 – Special Water Workshop - March 01, 2010

Since Attorney Bowne seemed disinterested in this I then spoke with a Michigan Township Association Attorney.

The attorney told me that yes the City was wrong to cross our borders and use our rights of ways without a franchise agreement and that the Township should be compensated for it.

He also stated if the City pumped any water out of the Township that the Township should be compensated for that through a franchise agreement as well.

Road right of ways are owned by the respective municipalities they fall in. Some municipalities don’t even allow a person to solicit in their road right of ways.

Think about this Charter Communications has signed Franchise Agreements with all the municipalities they do business in.

The reasoning behind these agreements is to give them non-exclusive rights to place cable and etc in the municipal owned right of ways and to allow them to make money doing so. All the municipalities receive a franchise fee in return.

Such agreements also serve to protect municipalities in case it is necessary for them to install new essential service lines in their rights of way.

Our Franchise Agreement with Charter states if their equipment is ever in our way it would be necessary for Charter to either move or remove the equipment at Charter’s expense. That would not be the case with the City if we arbitrarily sign off on this.

I seriously doubt the City would have sat idle while the Township arbitrarily crossed their borders. The city already said they needed to explore ways for sources of revenue and they found another way to do this by way of a license agreement. Which is, the same as a Franchise Agreement.

The City now has a license agreement with Invisalink whereby the City has allowed Invisalink to place an antenna on their water tower that is in our Industrial Park.

Per that agreement Invisalink must pay the City 3% of their total revenue to the City on a tower that would not be beneficial to the City had their water lines not been placed in Township right of ways.

(See Exhibit #9)

What if an entity came to us and offered to pay the Township 3% of their total sales if we allowed them to place infrastructure in our very same right of-ways the city is currently using but the Township had to tell them NO because the city infrastructure was in the way. Obviously, that would be detrimental to the Township General Fund.

IMO, if this board arbitrarily signs this MOU it would adversely affect our tax base.

Page 20 of 28 – Special Water Workshop - March 01, 2010

Violation of the Michigan Constitution also concerns me whereby

Article 7 of the Michigan Constitution
Sub Section 19 Township public utility franchises. States:

“No organized township shall grant any public utility franchise which is not subject to revocation at the will of the township, unless the proposition shall first have been approved by a majority of the electors of such township voting thereon at a regular or special election.”


IMO, if this board signs off this stand alone MOU it virtually gives our rights of ways to the City without public vote and in doing so, this board could/would be in violation of the Michigan Constitution and our oaths of office.

According to P.A. 107 of 1941 it is not legal for us to contract for municipal water without first receiving a petition from 60% of the recorded landowners in the water service area

(See Exhibit #10)

Page 4 #21 of the MOU –


“Owosso Charter Township agrees that upon signing this Water Agreement, it will proceed forward with replacing undersized water lines on Babcock St between Chestnut St and Cleveland Ave, with eight (8) inch water mains and extending eight (8) inch water on Cleveland Avenue, from Babcock, south to Keifer and north to Marion Street to interconnect with mains on those streets. The Township shall contribute up to One Hundred Thousand ($100,000.00) Dollars but not to exceed One Hundred Thousand ($100,000.00) Dollars to complete these priority projects. These projects shall be completed within three (3) years from the date of signing the Water Agreement.”



1) Collectively the board removed this language long ago. I was appalled to see that the negotiating committee reinstated it without full board approval.

2) I question whether an 8” main is large enough for fire suppression to this area. If “NOT,” why do it at all. To do it right we need both drinking water and fire suppression.

3) It has been said that these pipes were installed 40 or 50 years ago. According to Engineer Tom Newhoff the life expectancy of water lines is about 100 years. If these pipes are only 40 or 50 years old then they have only reached half their life expectancy.

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4) IMO, the City’s purpose for wanting us to install larger lines in this area is so they can capture water sales from both Cider Mill and Orchard Manor Apartments. Personally I do not feel this board should take on the responsibility of drumming up business for the city.

5) $100,000 is a lot of money. None of us know financially if we will be available to afford $100,000, 3 years from now. Or, what if the Township would much rather start installing pipes in a different area first. (Example: Emery Pratt or Ardelean Apts.)

6) I question why we would allow the City to dictate how the Township is to spend money installing water mains when the City itself makes between 20 and 50 water main patches per year.

A good share of City water lines, are nearly a 100 years old. In fact when they had a break in 2008 a DEQ employee stated he had never seen a pipe that old.

7) Of approximately 90 miles of water pipes in the City Gary Burk stated only 2% had been replaced and at that time Mr. Burk stated that due to the economy he did not envision upgrade anytime soon. I see no reason for them to place such demands on Owosso Township.

(See Exhibit #11)

8) Why would the Township pay to upgrade these pipes when the city has already collected the money for the maintenance, repair and replacement of them by way of double water rates to our Township residents for some 40 or 50 years now? What did the city do with that money?

We have been told that it was highly unlikely that the Township would collect enough from this area in 3yrs to absorb the $100,000 price tag. This will involve roadwork. If it costs more than $100.000 who is going to pay the remainder of the bill?

Something we have never talked about is chemical’s used to treat municipal water or the possibility of water being delivered through lead pipes.

Both of which can be hazardous to human health.

Lead is harmful to humans if inhaled or ingested. In fact Lansing Board of Water and Light is currently in the process of removing lead pipes throughout their water distribution system.

Should the Board decide to obtain City water I would respectfully request that for the health, safety and welfare of our constituents that the City sign, a document declaring that the water delivered to the Township will not circulate through any lead pipes!

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Reality is …with the exception of our Industrial Park the Township does not have to provide water to anyone. All others are at liberty to install their own wells, their own reverse osmosis system or other filtering or softening systems of their choice.

(See Exhibits 12, 13, & 14)

City of Owosso Water Distribution Map:

1) Notice what the city calls its boundary water mains. One is Vaunguard, which is in Owosso Township. There is a 425 agreement on this property. The property is to revert back to the township one day. If we agree to this map it gives the city a clear water boundary line.

2) The city ran a water line across property from Stewart St to Bock Dr. Why isn’t this on the map? Another boundary line?

3) A boundary line is defined down N. Water St. That is not a city boundary line.


This map needs a lot of work regarding Owosso Charter Township.

(See Exhibit # 5 pg. 2)

Experts warn that …conflicts and wars facing the world in decades to come will be over water. One such conflict is happening right now in Tennessee.

(See Exhibit #15)

That article alone tells us that if we are going to contract for municipal water we need to make sure we do it right.

Privatization of Public Water Systems is always a threat. Municipalities in the U.S. that have privatized their water systems have seen their water rates increase astronomically while infrastructure and safe drinking water has taken a back seat.

There is not a privatization protection clause in the contract.

(See Exhibit #16)

Page 23 of 28 – Special Water Workshop - March 01, 2010

In an October 18th press release …Supervisor Miller stated the city said “They are ready to act and sign the agreement, they expressed they are ready to deal.” Instead, we received a new proposal in December that is nearly the same proposal we received in 2006. We continue to go backwards.

At our November meeting Supervisor Miller stated he sees the board questioning their ability to make a decision.” Is there any wonder why?

When reading the proposal closely, it raises questions in your mind.

Who owns Owosso Charter Township? The taxpayers!

Who paid for the water infrastructure in Owosso Charter Township?

The taxpayers and that infrastructure is owned by the taxpayers, not a 7-member board.

What does “in the spirit of cooperation” mean?

Does it mean we bind our neighbor’s hands?

Does it mean we tell our neighbors how they will solely spend their money?

Does it mean we tell our neighbors when and how much money they will spend when we ourselves are financially strapped?

Does it mean we charge our neighbors double?

I hardly think so.

My opinion is …if this board is not able to obtain a fair and equitable proposal than what has been presented thus far then …stop negotiating …until the City is ready to negotiate
in the spirit of cooperation reasonably and equitably.

I am a firm believer that if you have a problem with something you need to help resolve the problem.

Therefore, I am presenting a proposal rewrite. Some language still needs to be tweaked but it’s a better agreement than what has been presented thus far. I also drafted a sample Franchise Agreement for review.

These are the proposals I believe Owosso Charter Township should be working with.

Page 24 of 28 – Special Water Workshop - March 01, 2010

I have been in contact with Tom Newhof for the past month and a half. Tom has been the Township Engineer actively involved with all Township Water Projects for some 40 years now.

Tom and I have discussed Grants and Stimulus Monies that the Township might be eligible for.

Monies the Township might be able to acquire for infrastructure or monies available to upgrade the level of water service in our Industrial Park including the possibility of building our own treatment facility if we are not able to obtain a win, win agreement with the City.

At no cost to the Township Tom is willing to talk about this with the board. He has set aside March 8, 9 and 11th. (10th if necessary)

I believe it is important for us to talk with Tom and we should do this separate from our regular meeting so that we devote our complete attention to Tom.

We can either hold a special meeting or just invite him and those that can come – come.

I apologize for taking so much of your time but I want to thank each of you for taking the time to listen and being an active participant in the future of Owosso Charter Township.

Note: End Clerk Presentation/Concerns and begin board discussion:

Double rates are addressed. Double rates have not been nailed down yet said trustee Schultz. Trustee Krajcovic said she has asked them (city) and they won’t sell for less than double rates but that doesn’t mean we have to agree as a board.

Supervisor Miller: Double rates were taken out according to Oneida vs. Grand Ledge and when the committee got together we said we don’t know what Oneida is going to bring, we don’t know what the Court of Appeals is going to do or the length of time. So at that time we took it out. Grand Ledge and the Court of Appeals brought it back in Oneida’s favor. We put it back in there. Double rates have been in here since it’s inception.

When we had Lynn tweak that $100,000, we as a committee decided we would and then we said okay lets look at the original contract after 4 years of discussion with this contract that’s where it stood. But to discuss what has been presented tonight verses what we’ve done I’d rather have the opportunity to go through the material that was presented tonight. Everyone he has talked to concerning the $100,000 at a meeting, that $100,000 was made as a proposal. We have been talking about this for 4 or 5 years. The former Supervisor came into that meeting and said okay if we can get a deal we will throw $100,000 into this. At that meeting people talked, people shook hands, people smiled, people greeted each other and people said Wow it looks like we have a deal. That is what is what was told to me. But we took that out and then staying with good faith with what we put in there a number of years ago we put the $100,000 back in during some of the rewrites. Some of what was talked about tonight we have, taken care of some of that language. It is up to this board. What is, the boards pleasure asked Miller.

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Clerk Gute: Asked the negotiating committee if the agreement came back different after they shook hands (the committee agreed it had). So, even though they shook hands the agreement came back different. The contract changed and that was against the handshake said Gute.

Trustee Krajcovic: Agreed that it changed and stated that she and Dick (Gute) would always read it word for word every time the contract changed.

Trustee Schultz: Remembers helping the prior committee go back through the contract as well.

Clerk Gute: Asked the committee if they ever thought of telling the city if they don’t want to give a little we’re done talking (the committee said yes).

Trustee Schultz: Feels the city has the right to make money off their water because it is a business.

Clerk Gute: Asks who was going to pay our people back if they win a court case. They are not supposed to make money on it and it would be a tax to our people. Our people would have no way to stop the tax and no way to vote on it. You’ll see that in all the exhibits said Gute.

Supervisor Miller: The Oneida vs. Grand Ledge the Appeals Court said reasonable costs to deliver the water. Now that reasonable cost can be ascertained to be at certain point then that’s what you go. If we charged them 1 1/2 or 2 times the rate it will still go up because of the township 25% collection. I have a 2005, a 2005 rewrite, a 2006 and a 2007 agreement and yes there was a 2008 and 2009 and then there was a couple more. That’s how you negotiate. You write and rewrite, you write and rewrite. Now I can’t defend everything tonight because I want to read through this (what clerk had presented).

Trustee Campbell: Asks Miller if he knew when the negotiating team would be meeting again with the city. Miller did not know.

Clerk Gute: She would like the meetings posted so that everyone can attend.

Treasurer Cudney: Says she feels a little like Gute and unless you are in on the discussions we don’t know what you’re negotiating. She thinks if Gute has asked questions that we do not know the answers to and you have negotiated that how would we know that.

Trustee Campbell: Has asked before if that could be possible and she was always told it wasn’t possible.

Supervisor Miller: Doesn’t think it would work out having 7 people there. Back three or four years ago the committee was appointed and there was not any contention then. We can’t come back right now tell you what we have and we know we have some issues and we are ready to write them up again and bring them back to you.

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Treasurer Cudney: She is not opposed to a committee. However the questions that Gute has brought up we don’t know what you’re negotiating and she is concerned about the issues she brought to the board and a lot of them are good issues. There would be no way for us to know that you had negotiated these issues unless we have minutes of your meeting or something for us to read as to what you’re negotiating Cudney said.

Trustee Campbell: It is not that anyone wants to be on the committee it’s just that we want to attend and felt if everyone heard what was going on maybe everyone could help move it along.

Treasurer Cudney: Asks how the Townships contract was compared to Caledonia’s.

Supervisor Miller: In the Caledonia contract they have 76 hydrants and they let the city handle each of their hydrants and they don’t have a problem. They get 25% back too.

Clerk Gute: Every time the contract comes back it gets bigger and bigger because all the stuff we took out a long time ago keeps coming back in and then I’m thinking how many more months am I going to have to keep doing this. She would like to move on with Tom Newhof. She asked if everyone could meet the 8th, 9t,h 10th or 11th .

Supervisor Miller: The 8th is our regular board meeting and I have got to give it some time. I have a lot of things going on there.

Clerk Gute: She would have the meeting anyway. It didn’t matter if the supervisor was there.

Trustee Campbell: Asked if he (Newhof) could come to the regular meeting.

Clerk Gute: Yes but she would rather it not be at a regular meeting. She would rather they spent one on one time with Mr. Newhof.

Consensus of the board was to hold a special meeting at 5:30 p.m. on March 8, 2010.

Public Comments: Opened at 7:30 p.m. - Closed at 7:55 p.m.

Jeff Sines – Asked if the city paid taxes on their waterlines and water tower that is in the Township.

Richard Gute – The negotiating committee did not negotiate the $100,000 when he was in office. Initial negotiations started with 2 districts. The city added the 3rd district. After they shook hands the contract came back with the $100,000. When he ended with the negotiations the committee was talking about paring the districts back down. The committee was talking about negotiating it to down to $50,000 or $25,000 or getting rid of it all together. The city is the one that initiated the $100,000 not the Township. It was kind of a shock to us at the time because it was going to tie our hands where other people wanted water. You have Moe Shattuck that wants water and he isn’t even going to get it until your put that $100,000 in up there (Cleveland, Marion, Keifer & Babcock).

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Double rates held all the way through his time negotiating but you need a formula. What is in that rate, what is the city basing that rate on. The Oneida thing brought about the whole thing with double rates, arbitrarily charging them, getting a formula and things like that. And you can’t force people to hook up to water. What if the industrial park people don’t want it? Wonder if 12 out of 13 do want it. You’re going to have to run a system for one person.

Mike Thornton – He attended the meeting the Saturday meeting the city had (regarding city budget cuts, etc.) I was shocked to find out that they are $2.4million in debt. The city has got to find ways to make money. If this water is such a part of it why didn’t they do it years ago! Why wasn’t it important then but it is important now? The problem is that they have been going in debt for over 4years now. He feels that since the clerk had to sign the contract she should be part of the negotiations. If the clerk disagreed she doesn’t have to sign it. He agrees there has to a formula. Whatever that formula is then the city should bring it here. What are they hiding here? Why isn’t the city coming in here with a formula and saying this is why we need double rates. He feels Caledonia isn’t happy with their rates. Gary Burke said at their Saturday meeting that the city was going to raise their rates again. So here we go again they have got to generate revenue. They’re already talking that they need to raise their rates for ambulance fees, fire runs and everything else they do in the city.

Richard Simpson – He used to work for Corunna water department. When shutting people off for delinquent quarterly water bills those delinquent bills were for $300 and $400. Sometimes $500, it depended on where you went. The DEQ figures the average family uses 6,000 to 7,000 gallons of water per month. People don’t understand what kind of water bill they are going to have. He doesn’t feel people are going to hookup to the water when they find out what kind of water bill they are going to get. If you put the system in somebody is going to have to pay for it.

Dave Johnson - If the people and businesses in Caledonia are happy with their contract why won’t it work for us.

Mike Law – Wonders why the Township would talk with a city that is 2.4 million dollars in debt. The city has a chart hanging on the wall that shows how far in debt they are going to be in 4 years. We are going to be right in the middle of it if we to pay this debt. He feels with double rates the Township could lose the industrial park.

Richard Simpson – Talk to Machine Tool and Gear. They use anywhere between 6,000 to 850,000 gallons of water a month. I don’t understand why they don’t just put down an 8” well. The city of Corunna said if they went out they are done. Machine Tool and Gear pays between $2,000 and $4,000 a month for water.

Frank Lorenz – Doesn’t feel a lot of people realize what this water is going to cost them.

Clerk Gute – Agrees. Back in 2003 when the Township was doing their water project she figured it was going to cost her over $7,000 up front just to hookup and she only had 100 ft frontage. She too feels people think they are just going to connect and get a water bill.

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Mike Law – Feels that the negotiating team should be sitting at the table negotiating with the board sitting right behind listening to what’s going on. Like Jayne, the first thing she said tonight is, so have you talked to the city and you said yes we have, we had a meeting. So she said what was hashed out and you said we’re making a lot of progress and things are going on, etc., etc. Well now there’s a load of information for these people that are going to have to vote on it.

Adjournment: Moved Trustee Schultz, Second Treasurer Cudney to adjourn at 7:59pm. Ayes: All. Nayes: None.

Respectfully Submitted,




Judy K. Gute
Owosso Charter Township, clerk




Danny C. Miller
Owosso Charter Township, supervisor