Jul 28, 2014

New Water Contract Opens Gates for Development

Caledonia trustees will vote Monday on a new wholesale water agreement with Racine that makes business development possible along two major roadways that lead to I-94.

New Water Contract Opens Gates for Development

The ability to effectively compete with neighboring communities for incoming business development could rest on whether or not trustees approve a new, 40-year water agreement with the Racine Water Utility.

Without the contract, water service will continue to Caledonia, but the potential to expand—like running water along Highway K and 7 Mile Road out to I-94—gets shut off.

Bob Bradley, a commissioner with the Caledonia Water Utility, said the contract is really just an extension of the one that recently expired. Like the water agreement the village has with the City of Oak Creek to service the village north of 5 Mile Road, the contract with the city is a 40-year wholesale agreement for areas south of 5 Mile.

Wholesale customers buy water in bulk from the City of Racine and then sell it to residents. 

"The same rates apply and there won't be any interruption or change," he said. "When residents turn on the faucet, they'll get water."

While the agreement is for 40 years, it does include a review clause so officials on both sides can take a look at it every five years. The contract can also be terminated with a three-year notice.

There's some big money included in the agreement tied up in infrastructure; some $3,575,000 for which the village will have to borrow. The funds pay for regional water improvements the Racine Water Utility has put in like water mains and pump stations with cost-sharing amongst its customers. 

Village Administrator Mark Janiuk said Caledonia has not thus far contributed to those cost sharing dollars.

"Caledonia has not shared in that cost but now the village will need to contribute," he said.

Other pieces of the financing puzzle include:

  • Taking the Public Fire Protection (access to hydrants) off the tax levy and introducing a separate line item fee similar to garbage services (approval of which has to come from the Public Service Commission);
  • Combining village revenue bonds with Racine Water Utility financing;
  • Simplified rate increases or a larger rate increase of 10 percent followed by smaller rate increases.

Financing the regional water improvements will also cover the and about $500,000 each year for future projects.

But having the ability to develop is where the long-term value of the agreement comes into play.

Bradley points to Sturtevant an example of how Caledonia can't compete with its neighbors. That village recently announced , but Caledonia wasn't even in the running because of the lack of infrastructure going out to the expressway along Highway K and 7-Mile Road.

"We can't even play the game for development because we lack sewer and water along primary corridors that lead from I-94 into the village," he said. "I love the rural parts of this village, but we can develop along these two roadways and still keep those rural areas preserved."

The way he sees it, Bradley added, is that putting pipe in the ground is an investment in the future.

Trustees will discuss the agreement and vote at the board meeting on Monday. The meeting begins at 7 p.m. at the East Side Community Center.

Assuming Caledonia approves the contract, it then goes back to the city for the Common Council's approval and, finally, to the PSC for a final okay before the agreement goes into effect.

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