By Tanner Hall
Tuckaseigee Water and Sewer Authority board members continue to debate the merits of charging new customers upfront fees for water and sewer hookups.
They passed the 2019-20 fiscal-year budget June 18 with a unanimous vote. Customers’ base rates won’t change. The monthly system-improvement charge will increase 2 percent, with revenues going toward capital reserves.
Officials’ discussion primarily revolved around System Development Fees, formerly called impact fees.
Residents and prospective business owners must pay this charge, which is based on the amount of water and sewer they would use once construction is complete, before receiving building permits. These dollars, much like with the system-improvement charge, is put toward capital reserves – the pot of money TWSA uses for future growth and sustainment projects, such as building new treatment plants or repairing old waterlines.
TWSA board member David Nestler, one of three Sylva representatives and Sylva town board member, has long argued against impact fees and their potential to block economic development, a sentiment shared by many in the local business community. On June 18, he said the agency has enough money saved up to do away with System Development Fees and put the issue to bed.
Nestler targeted a new line item in this year’s budget, a rate-stabilization fund designed to build each year until it looks like TWSA would have to increase customers’ monthly rates.
Building this fund, TWSA Director Dan Harbaugh said, could turn a 5-percent rate increase in the future into a 2-percent increase. Officials opted to set aside $343,000 for this initial year.
The Sylva board member suggested using that money to instead get rid of System Development Fees.
“It doesn’t look like we’re really at a point to be causing such a headache over these System Development Fees, especially if we can afford an extra $343,000 for a capital reserve fund in the upcoming year,” Nestler said. “We had this philosophical debate on whether SDFs are justifiable, but when it comes down to the actual money of it, it’s not that much of our revenues.”
Harbaugh said although the agency has extra cash on hand now, long-range planning has those reserves being drawn down over the next 20 years.
Meanwhile, having that money in the bank helps TWSA secure loans with zero-percent interest, Dillsboro representative Buddy Parton said.
“If we hadn’t made the financial revenue from System Development Fees this last year, our numbers would look just as good,” Nestler responded.
Revenues from these fees vary year to year, depending on how many new customers hook into the system.
For the next fiscal year, officials budgeted $400,000 in expected revenues.
Mike Byers, WCU’s vice chancellor for administration and finance, who serves as a non-voting member on TWSA’s board, said establishing a fund for rate stabilization could put the group in a position to get rid of the fees in the future.
“At what point do you have enough in reserves to make that call?” Nestler said. “I would say at $13 million we’re at that point. I’ve just watched this fund grow and grow and grow since I’ve been here, and now, there’s an additional $343,000 going into reserves, on top of the surpluses we have every year.
“I think we’re fine, I don’t see the risk,” he said. “I look 20 years down the road, I’m not seeing us cutting it anywhere close.”
Jeff Goss, another Sylva representative, said he’s in favor of having the conversation about potentially phasing out System Development Fees; however, for now, board members should approve the budget as proposed.
The budget does some good things for customers, he said, such as maintaining the base rate and further lowering the cost of System Development Fees compared to the former cost of impact fees.
The state-mandated switch to System Development Fees dropped costs significantly for prospective businesses and homeowners. It cut impact fees close to 40 percent for residential developers and close to 55 percent for commercial developers.
The average full-service restaurant, rather than paying a $44,900 impact fee, now pays $17,044, and the initial charge for a single-family household is $2,200, not $3,600.