MENOMINEE - The first step toward a rate increase for water and sewer rates in Menominee was taken Thursday afternoon. Members of the Water and Wastewater Utility Board approved a bid by Coleman Engineering Company of Iron Mountain, Mich., to conduct a rate study.

Coleman came in with a low bid of $16,000. U.P. Engineers & Architects submitted a proposal for $48,900 while C2AE bid $32,500. The two highest bids included a financial review, which is something the city plans to bid out separately after the survey. The recommendation will go to the full council for its approval.

The survey is a very involved process that is expected to take up to three months to complete. At this point nobody knows how much the rates may go up, or when. The last time there was a price hike was more than five years ago. Menominee Mayor Jean Stegeman said she encouraged the study in order to address financial hemorrhaging.

"Two years ago our internal audit done by Unger & Walters, showed a loss of $50,000 in this proprietary account. You can't have that," she said. "Not only can you not run at a loss but we have projects going on and that's how we have to fund them. This year's loss was almost $300,000."

The first thing Coleman Engineering will do when conducting the study will be to put together information on the existing system including but not limited to customer billing history, current rate schedules, fees, revenues, expenses, debts and other data. The survey will also examine water and sewer projects the city is involved with, particularly as it relates to street improvements.

"If we're going to continue to do the right thing and that is when we do a road, replace the water lines, replace the sewer lines, you have to have some money in those funds to cover that," said City Manager Ted Andrzejewski. "Unfortunately the fund balances in both the waste water fund and the water fund are very low."

Current projects such as 14th Avenue, 13th Street and the Enstrom plant fire hydrant relocation are all covered by existing funds but by the time those projects wrap up, the fund will be dry. Stegeman said the best case scenario would have been if rates had gone up just a little bit each year. She said the council will have to weigh all the variables before setting new rates.

"We've got to do what we need to do financially without it being an undue hardship on the citizens of Menominee," she said.

Members of the public will be free to comment on the process throughout the study and then again between its publication and implementation.