ALPENA — A rash of service-line breaks and other unexpected water system repairs in 2021 and 2022, has caused Alpena Township to spend $410,480 more than what it had budgeted for.
The township allocated $250,000 for a maintenance allowance for its water services contractor F&V Operations, but costly repairs pushed the expenditures to $660,480.
There are also four projects the township has not been billed for so the shortfall will increase before the end of this month.
The township is awaiting word on a $15.8 million, 40-year loan from the state that would allow the township to replace all of its service lines. If approved, the money for the loan would come from the state’s Drinking Water State Revolving Fund.
Township Supervisor Nathan Skibbe said the unexpected system failures needed to be fixed in order to restore water service to customers and reduce the amount of water that was wasted in the ground.
He said unfortunately, the added costs will hinder the planning of other projects, but, he added, the unexpected system replacement projects mean that more reliable parts and materials are now in the ground for customers who were impacted by the service-line breaks.
“It definitely puts us in a financial dry spot, but it is not entirely bad because we are making improvements,” Skibbe said. “It stinks though because it limits what we can do for scheduled digs. In a perfect word, we would like to have the projects scheduled and not just pop up unexpectedly.”
The maintenance allowance afforded to F&V is supposed to last from Sept.1 through the end of August. If F&V doesn’t utilize all of the $250,000, the balance carries over to the following year. If there are overruns, the township is on the hook for the cost overrun, which comes from the water fund.
According to the township’s most recent audit, it has a touch more than $5 million in its Proprietary Fund, which acts as the township’s water and sewer fund.
Skibbe said it is impossible to anticipate how many more service lines will need to be replaced in the coming months, but he added the board of trustees has allocated more than $100,000 more to F&V for repairs and maintenance for the next year. He said hopefully, the state will approve the loan request and work can begin to replace service lines township-wide.
“A total of $13.1 million will go into changing all of the lines,” he said.
Skibbe said he likes the township’ chances of receiving the low-interest loan because the state has already tabbed the township a disadvantaged community, which gets special consideration. A disadvantaged community can also receive a level of debt forgiveness, which could lower the township’s payments if it receives the loan.
“It could be zero, it could be as high as 70%,” Skibbe said. “We won’t know what our payment would be until we find that out.”
Skibbe said he expects word on the loan in the next 60 days or so.
In the 1970s, the township used blue polybutylene pipe which breaks down much more quickly than copper water lines. Skibbe said copper is being used now, and the goal is to have all service lines be copper in the future.
“Unfortunately, they used the blue poly, which was a poor material,” he said. “If I’m not mistaken, there was a class-action lawsuit against the company, but the township didn’t participate in it.”
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