Mon07282014

Last updateWed, 19 Nov 2014 8pm

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Ham proposes giving developers a break

Payne says proposal will burden citizens

Mike Ham, chairman of the economic development committee and a member of the public works committee, will present water and sewer tap fee incentives for multiple dwelling projects to the Colonial Beach Town Council at next month’s meeting. Ham wants the council to consider giving discounts on water and sewer hook-up fees (tap fees) to multi-dwelling projects like Monroe Point.
Although many steps are needed before this idea can become policy, it will have to be explored by the Public Works

Committee and no members of that committee, other than Ham, were present at the Economic Development Committee meeting. The Public Works Committee includes Chairman, Gary Seeber and Karen Payne.
Payne was unable to attend the meeting on Thursday but had already voiced her opposition in a letter addressed to Ham, dated Oct. 27. Payne’s’ email was not read aloud or referred to during the meeting. It is unclear when the letter was sent, or if it was received before the meeting, but the letter was carbon copied to the other council members, Joan Grant and Val Foulds.
If passed, Monroe Point developers will save up to 37% more on tap fees, on top of what they save now. Monroe Point already enjoys a one-third rebate on tap fees but the town has almost tripled tap fees since 2003.

Citizens will bear costs
If tap fees are reduced the citizens will bear the cost of water and sewer upgrades according to Payne’s letter.
In her letter, Payne refers to an executive summary entitled “Water System Evaluation” revised in February of 2006 from Dewberry, a consultant company recently hired by the town to evaluate the town’s infrastructure and help obtain financing for repairs to existing water and sewer lines.
Payne’s’ letter states, “The ‘summary’ estimates that in order to keep up with population growth, the town will need to install a new groundwater well, two above ground storage tanks and a booster station upgrade by the year[s] 2020 to 2025. The costs estimate in 2006 was nearly $1.6 million, which does not include capital improvements for the existing system, estimated at approximately $2.6 million.”
When Monroe Point was first planned in 2003 tap fees were $3,500. After the project was underway the town raised tap fees to $6,000 in 2005. Recognizing the burden placed on the Monroe Point and the revenue potential from units sold, the town agreed to give the developers a one-third rebate allowing them to pay $4,000 per unit. But the victory was short lived for Monroe Point, when the town doubled tap fees from $6000 in 2005 to $12,000 in 2011 leaving them to pay $8000 in tap fees per unit.
With lower tap fees, Monroe Point Developers argue they can save money on building and move forward with construction thereby adding to the town’s real estate tax base and raising revenue for the General Fund.
The tap fees were increased to fund water and sewer infrastructure repairs, according to town manager, Val Foulds, in an interview Monday, Oct. 31. Foulds said that money from the general fund can be used for these repairs. Public works should fund its own projects, however. If money is pulled from other resources it can negatively affect the town’s ability to secure low interest rate loans for future public works projects.
Ham is proposing that a cap be placed on fees allowing no more than 3-4 % increase per year, suggesting either going back to $4000 tap fees or go back to the 2005 rate and give a 3 percent increase a year until 2011. If passed and made retroactive Monroe Point may end up only paying $4,800 per unit in 2012 according to Hams estimates.
Monroe Point installed and maintains its own water and sewer infrastructure as well as a pumping station and its own roads, costing the town nothing in maintenance for these improvements. Out of 220 units planned, 73 have been built. Developers for Monroe Point feel they are losing on their investment by being charged the current tap fee rates ($8,000) and argue that by reducing the fees they can build and sell more units at a faster rate.
Monroe Point developer, John Netelson, argued “We were selling homes at a rate of about 30 per year in the good times. Now we are selling about 5 or 6. If we can get our price down we can sell more houses, the more houses we sell the more taxes the town’s going to get.”
Ham maintains that lowering tap fees for multi-dwelling developers would boost sales and generate more revenue for the town, saying, “In fiscal year 2010-11 the town budgeted $300,000 in revenue for connection fees. The town only received $114,000 so that tells you how much the economy is down. And just about half of that 114 was from Monroe Point.”
“The amount we are getting from tap fees is never going to fill the void that we have in the infrastructure that we have here,” states Ham adding, “We get a lot more money out of property tax if we increase development over there!”
Currently there are no breaks in place or being suggested by any members of council for smaller development projects or individual home builders who are currently charged $12,000, for hooking into the town’s water and sewer.

 

Linda Farneth

 

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