TWSA contemplates fee changes for 2018-19

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TWSA contemplates fee changes for 2018-19

Dillsboro Mayor Mike Fitzgerald, TWSA’s former chairman, tells the TWSA board why he believes impact fees should stay. Holly Kays photo

During a recent public comment period, water and sewer customers in Jackson County told the Tuckaseigee Water and Sewer Authority that they don’t want to see their rates go up to allow new customers to pay lower up-front fees.

Designed to take input on the analysis that TWSA will use to set new up-front fee rates in compliance with a 2017 state law, the public comment period drew two oral comments and four written comments given by a total of five people, as one person responded in both formats. Of the five people who gave feedback, four were against any increase in monthly rates to compensate for a decrease in impact fees, which will be known as system development fees after June 30.

Public comment

“No one I spoke to is in favor of having their rates go up just a little bit, considering gas is going up, your cable bill is going up,” Dillsboro Mayor Mike Fitzgerald, former TWSA chairman, said during the April 17 public hearing. “It’s all those little things. One by itself is not going to be a deal breaker.”

Fitzgerald also submitted written comments, arguing that the buy-in system has served TWSA well and been “very, very successful.”

“When I started my 35-plus years company, I financed it myself. I did not expect residents or businesses in my community to finance any part of it!” TWSA customer Valerie Harrison said via email. “TWSA has been working successfully for a long time with the system they have now! In my experience and opinion, it is not RIGHT or FAIR to increase costs on your customers’ bills to pay fees for a new business.”

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TWSA customer John Jeleniewski, who also serves as Jackson County’s senior planner, concurred.

“The ‘adjustment’ to impact fees for new businesses or other large developments may be warranted,” he wrote. “However, any suggestion that existing residential customers subsidize an impact fee for a new restaurant, for example, is unacceptable.”

James Cochran, a Dillsboro resident who served on the TWSA board for 12 years, said that municipalities should take the lead on helping new businesses bear the burden of impact fees.

“If a municipality thinks businesses are important to them, perhaps they could assist the new business with the cost of impact fees,” he wrote. “I believe the Town of Dillsboro has an incentive program to help new business as suggested. As a current TWSA customer, who has in the past paid our impact fees, I would object to paying an additional fee to help a business in another municipality start up.”

The only public comment in favor of shifting to a fee structure featuring lower up-front payments came from Sylva resident Eric Ridenour, who spoke April 17. He had previously addressed the board in February to share his unfavorable view of impact fees, calling them “deal killers” that “hold hostage” the county’s economic development. If TWSA reduced that barrier to entry, he said, more customers would tap on and begin paying the monthly charge, ultimately increasing the organization’s financial standing. It’s not fair to make new customers pay for capital needs just because they’re the latest to arrive, he said — financing infrastructure should be everybody’s responsibility.

“I just recently replaced the shingles on my building,” he said. “I had to do that because stuff wears out and it gets old. I didn’t increase the fees on my tenant who’s the last one in because he’s the last one to come to the table. Likewise, I think the way to keep and improve TWSA funding is to capitalize on the infrastructure you already have.”

Consultant Steven Martin of Asheville-based WR-Martin, which is conducting the study on which the new up-front fees will be based, will take all the public comment and incorporate any relevant feedback to the final version of the study. The TWSA board will consider the study for adoption at its May meeting.

The study won’t mandate how much the up-front fees, to be renamed system development fees, should be. Rather it will state a maximum amount that TWSA can legally charge. The preliminary draft presented in February showed that ceiling to be significantly higher than the fees TWSA currently charges, so the board could choose to set its fees higher or lower.

Running a ‘what-if’ scenario

At the April 10 meeting, Board Member Ron Mau, who is also a Jackson County commissioner, presented the board with an analysis he’d done to show how much the average customer might see their bill increase if TWSA were to reduce or eliminate up-front fees. Mau holds a Ph.D. in finance and teaches business administration for Embry-Riddle Aeronautical University’s online campus.

“We always have this discussion about the tradeoff between system improvement charges (paid monthly by TWSA customers) and what are now system development fees (paid up-front by new users),” Mau told the board. “I for my own information wanted to model that so I have something to look at as we go through this whole process.”

Mau’s analysis showed that if TWSA cut system development fees — formerly known as impact fees — in half, the average TWSA customer would see their monthly water bill rise by $1.33 and their sewer bill rise by $1.66 — an increase of 4.3 percent. If system development fees were eliminated, the monthly water bill would increase by $2.66 and the sewer bill by $3.33 — an increase of 8.7 percent. The resulting rates would still be well below the median rates for other utilities within a 50-mile radius as well as the median rates for other Tier 1 counties, according to the analysis.

In a follow-up interview, Mau said the average rate increase could actually turn out to be less than what his initial analysis showed, as it didn’t account for the fact that some homes share a meter. That means that the number Mau used to represent the average residential water and sewer customer could be too high.

“I might need to go back and reanalyze it,” he said.

TWSA board members thanked Mau for completing the analysis, with some expressing surprise that the average customer would see a relatively small increase even if impact fees were eliminated altogether. Board Member David Nestler, a Sylva town commissioner, suggested that TWSA forgo its planned rate increase this year and instead use the opportunity to move away from up-front fees.

Not everybody agreed — other board members said that TWSA needs the rate increase to remain stable and that it’s unfair to charge customers who have already paid an impact fee more so that new customers don’t have to.

“There are some things about the analysis that we want to have some further analysis about, and we’ll bring that back to the table,” said TWSA Executive Director Dan Harbaugh.

For instance, Mau based his calculation of what TWSA needs to bring in from up-front fees on the average received over the last five years. But Harbaugh pointed out that the last five years have been a bit slower, economically speaking, so that figure might not accurately reflect TWSA’s revenue needs. Some board members took issue also with the fact that the analysis compared TWSA’s rates to utilities within a 50-mile radius rather than to other water and sewer authorities — nearby utilities are mostly run by municipalities. A water and sewer authority is a different setup with a different set of financial needs and responsibilities.

However, pointed out Mike Byers, a nonvoting board member who is Western Carolina University’s vice chancellor for administration and finance, practically speaking TWSA competes against other towns, not other water and sewer authorities located halfway across the state.

“If we’re going to compare ourselves to Franklin and Waynesville, then the 50-mile radius takes care of us,” Byers said.

TWSA’s next meeting will be a work session at 5:30 p.m. Tuesday, May 8, followed by a business meeting at 5:30 p.m. Tuesday, May 15, both at the TWSA headquarters on 1246 West Main Street in Sylva.

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