GRANGEVILLE What are equity buy-in fees? Last fall, the Grangeville voters considered this issue in evaluating prospective candidates for council elections, and it’s been on the city government’s radar for nearly a year. But exactly what these are, their purpose and how they fit into other charges for city services still remains confusing for many.
Addressing this, the City of Grangeville is holding a public information meeting next Tuesday evening, Feb. 27, at the Soltman Center. Public works personnel, along with engineers from J-U-B Engineering, will conduct a presentation on the buy-in fees, how they differ with water and sewer rates, how these are estimated, and their necessity to maintaining and upgrading utility infrastructure.
Doors open at 6 p.m. with the presentation beginning at 6:30 p.m. at the meeting facility across from Syringa Hospital (600 West Main Street).
“The bottom line, it’s to explain why we do what we do, and the reason for it,” said public works director Jeff McFrederick on the main purpose for next week’s public meeting.
Also, this comes at a point for the city where it is under way with the first of two utility studies. In January, the city contracted with J-U-B to update the municipal water master plan, a comprehensive look at the system on delivery and supply, needed repairs and future improvements, and maintenance and operating costs.
The long-term strategy, coupled with one planned following on sewer, will serve twofold purpose in helping guide utility infrastructure management and as a prerequisite for seeking project funding from state and federal agencies.
And it’s also time to have a current look at the state of the system.
“It’s been almost 15 years since we’ve done a master plan,” McFrederick said, noting that with subsequent improvements and expansions this has changed system dynamics, such as water pressure and fire flows, just to highlight one area.
While the presentation will provide more detail, in summary, water and sewer rates go into separate funds that provide for costs to maintain and improve their respective utilities and existing customers services; neither of these funds is supported by property taxes taken in by the city.
Rate formulation is a balancing act, according to McFrederick, to “cover the cost of operations and still keep our head above water with what we can charge people per month.” While the recommended increase is 6 percent annually for the city to keep up with rising costs and future improvements, McFrederick said the council has opted to keep that lower at 3 percent.
Equity buy-in fees were set up in 2005 and are charged to new developments that do not have existing services; these are $1,540 for water and $2,860 for sewer. Buy-in fees are dedicated toward utility system upgrades and expansions, and how these are charged is based on equivalent residence (ER) for the development in question. For example, a new single-family home (at one ER) could be charged with one buy-in fee, and a new 10-unit apartment complex (at 10 ERs) would be charged a fee for each unit.
A concern raised last year through the election was the buy-in fees discouraged growth and development. In a dialog started with the council last March, McFrederick suggested reviewing the fees, adjusting assessment based on actual usage – such as the difference between a family household versus a one-room apartment – and in deferment options to spread out payments or trigger them when, for example, prior to a certificate of occupancy or when a lot sells in a subdivision.
“That way it doesn’t have such a big impact up front,” he said, and although the city doesn’t get its fees up front, eventually it will, “and that is still revenue for us.”
“We want people to be able to develop,” McFrederick continued, but the city also has a service to maintain, “so we can’t give fees away.”
Buy-in fees were set up to address improvements and expansions to the system as the result of increased demand – such as new water and sewer mains, and wells — as well as ongoing federal requirements, as reflected in the city’s $4.4 million wastewater treatment plant project in 2012.
“The fees we charge prepare us for these things,” he said. “If we don’t have them, things can go to heck.”
“People will be surprised at the cost of equipment,” McFrederick continued, and “the wastewater treatment plant is a big driver of those costs,” he continued. Part of that is the limited number of equipment suppliers, so they can name their own price. As he explained to the council in December, plant equipment costs go up 10 percent every five years, notably chemical costs involved in phosphorous extraction required as part of the city’s NPDES (National Pollutant Discharge Elimination System) permit to discharge treated effluent into Three Mile Creek.
On the positive side, public works has set aside a reserve fund in both sewer and water to provide for both existing and emergency utility needs.
“I think we’ve been good stewards of the public’s money,” McFrederick said.