Farmington Hills Water Tank May Net Ratepayers $3.5M in Annual Savings

Frustrated by , the took steps Monday toward building 3 million gallons of elevated water storage that could save rate-payers $3.5 million a year. 

"This is a very significant project," city manager Steve Brock said, calling the tower "an essential public facility". The 215-foot-tall structure will be located in the northwest corner of the  property on Halsted. 

City public services director Gary Mekjian said the city began talking with the Oakland County Water Resources Commissioner (OCWRC) about building the tank in April of 2011. Jody Caldwell, who is chief engineer with OCWRC, said Detroit Water and Sewerage (DWSD) bases its water rates on several factors, and the city only has control over peak hour use.

He said efforts to have residents voluntarily lower their peak water usage "really didn't have the big rate impact we all wanted to see." 

Vicki Putala, director of environmental and water resources for city engineering consultant OHM, said the tank's capacity was calculated to handle the city's maximum day usage, combined with room for future growth and fire protection. 

In addition to the potential rate savings, she said, the tank will provide water in case of emergency and improve system reliability. Windows could be added to the concrete pedestal, making it suitable for office or storage space. 

The $16.9 million cost includes construction of the tank and pedestal, site work, including replacement of small storage shed that would have to be demolished, as well as water main and other system improvements. The tank would directly serve the north/northwest half of the city, and provide emergency water to the entire city, Putala said. 

Bonds will go through Oakland County, which has a higher bond rating and can obtain a better interest rate, Mekjian said. 

Officials will in the future discuss how to use the annual savings. Caldwell presented two options, as a starting point for the discussion. If officials funnel all the savings to rate-payers, water bills would be reduced by an average of $185 per year over the 20-year life of the bonds issued to pay for the project. Officials could also save $43 million for capital improvement projects, reducing rate-payer savings to an average of $111 a year. 

Caldwell said savings would be less in the early years of the bond. Mekjian said DWSD would require one year of data with the tank online before acting on rates, so the savings may not start until 2015.

Following approvals Monday, officials expect to have a contractor working on the project by August, with the tank fully operational by June, 2014.