With a potential merger in the works for the Henry County Regional Water and Sewer District and Northwestern Water and Sewer District, the City of Napoleon is asking for a chance to submit a proposal to work with the district.
During a special joint session of Napoleon City Council and the Henry County commissioners Saturday morning, city officials said they would like the opportunity to review financial information about the district and submit a proposal. The district currently purchases water for its customers from the city.
“We’re here. If we can help, we would like to,” Napoleon Mayor Jason Maassel said. “You’re going headlong in with the Northwestern Water and Sewer District and we’re hearing, ‘Well, it’s our only option,’ and it’s not.”
The merger process was initiated by the Henry County water and sewer district at a special meeting May 29, citing mounting financial obligations, as well as long-term issues regarding personnel and finding a more affordable water source. The Northwestern Board of Trustees approved moving forward at its June 13 meeting. Both districts’ boards have since approved an operating agreement, meaning Northwestern assumes operations of the district as a final merger agreement is worked through over the upcoming months.
Overall, Henry County Commissioner Glenn Miller said the merger was sought as the water district is not solvent and has an “extremely heavy debt load.”
Maassel questioned how Northwestern is planning to solve those issues, and Miller said that Northwestern is willing to assume the debt.
“As far as a business move, it’s not a real good business move for Northwestern nor would it be a good business move for the city,” Miller said.
Maassel said the city would like a chance to determine that while Councilman Travis Sheaffer disagreed with Miller’s statement, adding working with the city could allow everything to stay within Henry County.
“Northwest has a history of taking and, once they go into these areas, they gobble up systems,” Sheaffer said. “I foresee the first thing going is they’re going to run a line to McClure and then start and take serving that water. Now, McClure’s money goes out of Henry County.”
Sheaffer added he foresees the district approaching Malinta in the future as well.
Napoleon Council President Joe Bialorucki said he has heard of Northwestern customers having their water rates doubled and he has also spoken with a council member from an entity which belongs to the Northwestern Water and Sewer District who Bialorucki stated is unhappy with what’s occurred with the utility.
On the issue of water rates being raised, Miller asked if Napoleon plans to raise its water rates.
“That’s what affects the water district’s water rates, what Napoleon does,” Miller said. “Water is one of the largest expenses to the district and that’s tied to Napoleon and how Napoleon structures their rates.”
Mazur said he didn’t believe any utility could guarantee it won’t raise its rates but added the city does not have automatic increases every year and has a rate study performed to determine what, if any, increases are necessary before enacting them.
Maassel asked if a proposal from the city would be considered.
“You give us the same numbers and same information that you’ve provided to Northwestern Water and Sewer District and the same chance to perform those functions and see if you want to do business with them or with us,” Maassel said.
Two members from the water district board, Amy Behrman and Tim Phillips, were present at the meeting. Both said that any decision on a proposal would have to be discussed by the full board, but Phillips said, while he is open to listening, he’s also influenced by past experiences working with the city.
“I’m not happy with all of the things that have come down the road dealing with Napoleon,” Phillips said.
Phillips referenced an attempt in 2013 where the county district, the City of Napoleon and the villages of Florida, Malinta and Liberty Center were working together toward a new regional water treatment plant owned by the county and run by a board of representatives from each entity to decide rates.
“That project would do everything you’re asking — keep (it in) the county, keep it going,” Phillips said. “We all know how that went.”
The city eventually decided to rehabilitate its current plant, retaining full ownership. Behrman has previously noted the county district is still paying off debt related to the original project to build a new plant even though it never came to fruition.
“I understand, we would like everything to stay in the county, too,” Phillips said. “We’ve tried several avenues to progress for our customers to try to find the best and the cheapest way to work things through. Like other projects, they’ve pretty much fizzled out and were cost-prohibitive.
“I’m still just a little concerned that, now that it might be happening and another sheriff comes walking into town, now everybody’s getting everything in a row,” he continued.
Miller said he felt the regional water plant project would have been the best thing for everyone involved.
“To see it die the death it did … is still aggravating, I’ll be honest with you,” Miller said.
Sheaffer said with the new administration, including city manager Joel Mazur, and some new council members, the climate of the city has changed.
“Some of those things that you may have experienced 10-15 years ago, even five years, are not the case anymore,” Sheaffer said.
The city and district have been discussing proposals regarding water rates for the past few years as the district has been evaluating other water sources. Sheaffer stated the last proposal received from the district was for less than it costs the city to make water.
“We can’t subsidize that, but we want to be able to provide you a fair number,” he said. “The discussions have been that we might be willing to assume that debt and we might be willing to take and provide the same rates as our inside customers have so you’re not seeing anything different than our own people would see and we’re responsible to them directly. We would like that chance to be able to show you that.”
Mazur said the city has been communicating with the district regarding water quality issues and asked why the district didn’t approach the city in the merger discussions.
Henry County Commissioner Tom VonDeylen said Northwestern has a history of taking on small water and sewer districts and villages that are in poor financial condition.
“Napoleon hasn’t been in that history,” he said.
VonDeylen added when the city manager prior to Mazur recommended the city no longer participate in the regional effort, city council unanimously agreed to pull out of the consortium, so they believed the city would not be interested in pursuing a regional effort.
Behrman said Northwestern is structured as a 6119 water and sewer district, which is what the Henry County district is, so the two could merge. The city is not a 6119, so the most likely option would be the city could join the district similar to how McClure did years ago.
“We could merge with them to be part of the district … and have an actual regional water authority,” Mazur explained following the meeting, adding one entity could handle billing, operations and maintenance. “Since Napoleon already has most of those capabilities in house, it would create the operational efficiencies that could save everybody money.”
In addition to the regional water plant project that failed, Behrman added the district, Malinta and the city had reached an agreement on aggregating the water meters for Malinta and the district.
“That was approved by (Napoleon) council, it wasn’t signed and then you guys rescinded it,” Behrman said. “We are having to honor our agreement with Malinta that we’d aggregate those meters so, again, the district customers are taking on that extra cost.
“There’s multiple reasons here why we wouldn’t automatically go to Napoleon (and say), ‘They’re going to help us now,’ because there’s things that have happened in the past where it’s been the opposite of that,” she continued.
Sheaffer said the issue with the aggregation could be re-addressed, starting with the city’s Water and Sewer Committee.
Mazur also said letters were sent to satellite customers Liberty Center, Malinta and Florida earlier this year that offered the possibility of setting up a regional board to make decisions. He said the letter was not sent to the water district as he was not comfortable sending the same offer due to the fact they receive a reduced capacity charge based on the size of the water lines.
Miller said he feels it would be ideal if everything is kept in the county and noted the previous regional idea was every entity involved would have one vote no matter their size.
“It’s the perception of Napoleon being the big boy, the bully,” Miller said. “I understand things have changed. When Joel came in, you and Jason visited some of the very upset industries that were still talking about leaving and got that taken care of, and that’s greatly appreciated.
“But it will be a (water) board decision,” he continued.
The issue will be discussed further at the next meeting of the regional water and sewer board of trustees, which is 4 p.m. Wednesday.