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TWSA looks at foreclosed home policy
By Justin Goble
Members of the Tuckaseigee Water and Sewer Authority are looking at ways to deal with rescinded sewer allocations stemming from home foreclosures.
Officials discussed the issue during their Oct. 14 regular work session after hearing complaints from county residents. Attorney Eric Ridenour of Sylva brought up the matter during a September TWSA meeting, and TWSA Director Joe Cline said he’d received calls about the issue over the past few weeks.
In September, Ridenour said he recently bought a house off Hampton Street that he is remodeling. When he went to pay his deposit and have the water turned on, he said he was told he would have to pay for a new water and sewer allocation, which would cost $4,000.
Since allocations run with the land, Ridenour said he researched the issue to see why TWSA had taken this one back.
When banks foreclose on a house, TWSA is not notified of that fact, he said. After the homeowners fail to pay a bill for six months, TWSA policy states that the authority can pull that allocation.
At the start of discussions, Cline proposed a change to the policy, increasing the time before TWSA rescinds the allocation to 60 months (five years). If a buyer decides to turn the allocation back on, they will be charged 1/60th of the impact fee for every month that the water and sewer is not in use.
However, TWSA member Stacy Knotts, a representative from Sylva’s town board, said she was concerned about rescinding allocations from existing homes. If TWSA is able to pull those, it will make it hard for the homes to sell since they would essentially be condemned.
“I have a fundamental problem with rescinding a water and sewer allocation on existing houses,” Knotts said. “You’re basically condemning that house and making it unlivable. I understand why we do it with developers – that keeps people from speculating. But these houses are already existing and the allocation runs with the house.”
TWSA member Brad Moses pointed out that when a house is foreclosed, there is a possibility that it will be vacant indefinitely. If officials were unable to rescind that allocation, it would keep TWSA from using that capacity in places water and sewer may be needed.
“If we weren’t able to rescind it, that would be holding up capacity we could be using elsewhere in our system,” Moses said. “I agree that if we pull it then that greatly diminishes the property value. But if it’s left sitting there fallow, it could be that way for 10 years or more.”
TWSA member and Commissioners’ Chairman Brian McMahan agreed, saying more often than not foreclosed houses would be sold well before that 60-month period is up.
“If a house is vacated and foreclosed on, it won’t sit empty for very long,” he said. “The thing that concerns me is the language. We have to make it clear who is eligible and how we’re going to go about rescinding the allocations if we decide to do that.”
Despite those opinions, Knotts argued that the state requires officials to provide existing services to those homes that are within the limits of any municipality. Since most of the municipalities have water and sewer from TWSA, allowing officials to rescind allocations to existing homes would go against those provisions, she said.
During a telephone interview, Cline said a modified version of his initial proposal would be up for consideration.
“We’re still putting the language together,” he said. “What we came up with was that we would let people who lose allocation like this pay a capacity assurance fee up to 60 months until it was lost. After that, the person would have to buy a new allocation. By then it would cost more to pay that capacity assurance than to just go ahead and request a new allocation. That was one of the things we were looking at – where the breaking point would be.”
Under this plan, Ridenour would have to pay $30 to turn the water and sewer on at the home he bought. A new allocation would cost $4,000, which he would have been forced to buy under the existing policy.
The revised proposal is the most fair way to deal with the issue, Cline said.
“A lot of people think that they shouldn’t pay a thing extra to turn it back on,” he said. “We want to be fair, and we realize that the impact fee was cost prohibitive. But they should pay something to make up for the length of time that capacity was held out of our system.”
Cline said TWSA officials will have the revised policies to vote on at their next meeting, which is set for Tuesday, Oct. 28, at 5:30 p.m.
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