Small Wisconsin Town Balances on Razor's Edge With Utility Rates

A small municipal sanitary district in Three Lakes, Wisconsin, struggles to keep up with infrastructure needs after losing two of its largest ratepayers

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Things were looking great for the Three Lakes (Wisconsin) Sanitary District (TLSD) after it was approved for a federal program that allowed it to do $4 million in upgrades for only $1.6 million in fully subsidized loans.

But that good feeling wouldn’t last, as only a few years into its 20-year loan repayment plan, two of the district’s largest commercial ratepayers burned to the ground.

Three years ago, the wastewater treatment plant in Three Lakes, Wisconsin, came under scrutiny for a long-standing issue with its digester and sludge containment.

“The DNR was well aware of it, and they said, ‘We’re OK with that,’” TLSD Board of Commissions President Doug Wallschlaeger says. “They kind of grandfathered along since at least in the ’70s.”

Several other recurring failures in the system spurred a full engineering report.

“We had been able to repair it, but by the skin of our teeth,” Wallschlaeger says. “We had two sludge pumps that were old and worn-out — since I’ve been on the district I don’t think both of them have ever been serviceable at the same time. By the time you get one repaired, the other one broke down.”

After analysis, they determined that the plant — built in the 1950s with little to no changes since — would need a full upgrade, including a transition from anaerobic to aerobic treatment. They also added a fine screen to the intake, additional sludge capacity and a redundancy train.

All of these new changes would bring a price tag of $4 million to the district.

A financial burden

Fortunately, the DNR was willing to work with them, and TLSD qualified for a hardship environmental loan through the Clean Water Fund.

“It would be debt forgiveness. So we basically did $4 million of work, and borrowed less than half that,” Wallschlaeger says.

Despite more than half the cost taken care of, the investment still required a significant rate increase for a district that hadn’t seen a rate increase for many years.

“Our district being fairly old and fairly rural, with not very many people, over the course of the years we’ve tried to keep those sewer and water rates fairly low,” Wallschlaeger says. “When we saw this coming, we decided we’d better start increasing it. We did go 5% in the last couple years, knowing that an increase was coming.

In hindsight, he says, there should have been higher rate hikes in years past. “But that’s hindsight. When you’re going along, and you have very few people, and everything is working, you’re trying to do the best you can for the people that actually own the district. Then all of the sudden, I guess kind of out of the blue you get blindsided.”

The burden was felt most by the larger businesses, which were using approximately 50% of the water volume. Adding to the stress was an additional DNR requirement to replenish their replacement fund for future expenditures.

A familiar problem

It’s a problem shared by many small municipalities across the country. A small ratepayer base, often subsidized in large part by local businesses, makes it difficult to upgrade aging infrastructure and outdated treatment plants.

A similar situation arose after the Carr Fire devastated the small town of Keswick, California. There were talks to merge the town’s water provider with the larger Shasta County Community Services District. It would presumably mean even higher water rates for the already struggling townspeople.

“We haven’t gotten any help from anybody. Nobody’s reached out and said, ‘Hey, is there anything we can help you with?’ We have nothing,” Trista Chaparro, a resident who lost her home in the fire, tells the Redding Record Searchlight. “It’s just like a slap in the face to everybody.”

Though the merger would have some benefits for the town, it goes to show how few options these towns have.

In Leicester, Massachusetts, a drought caused water bills to skyrocket for the 1,200 residents.

“It’s gotten out of control and the rates just keep increasing,” homeowner Tracy Gallati says in a story by Boston 25 News. “We’re struggling to pay $300, $500 a month — a month — it’s not even quarterly.”

As yet, city leadership has not found a solution, and residents have been forced to adopt extreme conservation measures.

Ratepayers of Nashville, Indiana, are paying the price as their water provider is pushing a 154% rate increase on its members.

“Increases are needed because revenue is insufficient to pay for operations, debt and other expenses required by state law,” wrote the utility’s attorney Peter Campbell King in his petition to the regulatory commission, according to an article by Brown County Democrat.

As with many similar cases, citizens are caught between a rock and a hard place as utilities are forced to take action and expenses are naturally pushed down the line.

Fueling the fire

After losing two businesses to fire — one of them the town’s largest ratepayer — citizens of Three Lakes were looking down the barrel of major rate hike, the likes of which would not only put existing businesses in a bind, but virtually destroy any hope of new business growth.

“We’ve got businesses that say they’re going to have to close because they can’t pay their water bill, and a bunch of other things, and so what can we do?” Wallschlaeger says. “If your rate is really high, it’s going to be pretty tough to bring somebody in to build anything significant, and attract new business.”

Fortunately for Three Lakes, an interdepartmental agreement with the town of Three Lakes itself put the district back on track. The town agreed to pay the loan amount out of its own coffers. It will likely still put a strain on the taxpayers, but will at least spread the cost more proportionately.

Still, despite the triumph of local cooperation, it is a reminder of the burden facing small utilities and municipalities as infrastructure investment needs grow nationwide.

“We’d have had to make up that revenue somewhere, because we’ve already pledged to pay for the loan,” Wallschlaeger says. “We would have had to go through another rate increase, which would have been really unpopular. Nobody likes to see their bill go up.”


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