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HomeMy WebLinkAboutAgenda - 09-29-1999 - 9dORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: September 29, 1999 Action Ager Item No. SUBJECT: Efland Sever Fund -Revisions to Fee Schedule DEPARTMENT: County Engineer PUBLIC HEARING: (Y/N) No ATTACHMENT(S): 9/23/99 County Engineer Memo Existing/Proposed .Fee Table INFORMATION CONTACT: Paul Thames, ext 2303 TELEPHONE NUMBERS: Hillsborough 732-8181 Chapel Hill 968-4501 Durham 688-7331 Mebane ~ 336-227-2031 PURPOSE:. To consider approval of revisions to the fee schedule for new connections to the Efland Sewer system. BACKGROUND: The fee structure in the "Rules and Regulations .for Operation of the System" dating to .1985 results in the County's subsidizing connections to Efland Sewer system, as outlined in the Engineer's attached memo. To preclude the County's inappropriately underwriting future connections to the system as development in the Efland area increases, staff recommends that the Board create and define: 1) a stub-out service line fee which recovers the administrative and construction cost of installing the service line on the basis of a "cost plus" fee structure; 2) an acreage fee of $1,000 per acre to be designated for retiring the debt plus interest for the General Fund loan that helped finance the cost of constructing the existing system; 3) a County availability fee of $600 per sewer tap to fund a capital replacement account for existing infrastructure. Staff also recommends that the rules be amended to specifically require that the Hillsborough availability fee - as determined on a case-by-case basis by the Town - be passed through directly to the consumer/customer. It should. be emphasized that the new fee structure would not apply to any of the original 212 potential sewer system customers who may not yet have tapped on, but are "grandfathered" under the original intent of the Efland Sewer Fund. FINANCIAL IMPACT: These changes will enhance the financial position of the Efland Sewer Fund and preclude any unintended subsidy by the General Fund of new system connections. 2 RECOMMENDATION(S): The Manager recommends that the Board: 1) approve the publishing of the proposed fee structure; 2) direct staff to schedule and notice a public hearing to be held at its meeting of October 19, 1999, for the purpose of receiving public comment, implementing the proposed fee structure and adopting the attendant changes to the RESOLUTION ESTABLISHING RULES AND REGULATIONS FO THE OPERATION OF A SEWER COLLECTION TREATMENT SYSTEM TO SERVE THE EFLAND AREA OF ORANGE COUNTY. 3 MEMORANDUM TO: County Commissioners John Link, County Manager COPIES: Geoff Gledhill, County Attorney Rod Visser, Assistant County Manager Craig Benedict, Planning Director Ken Chavious, Finance Director Diane Reid, Economic Development Director FROM: Paul Thames, PE, County Engine~;r-~ DATE: September 23, 1999 SUBJECT: Efland sewer system fees At its work session of April 13, 1999, in the Board discussion dealing with approval of BOCC goals, Commissioners instructed staff to create a goal that integrated a numberof issues relative to planning concerns, economic development and utility services. in the Efland -Mebane - Buckhorn Road EDD area. One element of that goal was to be a rate/fee study culminating in recommendations for revising both the fee and the rate structure for the existing and an expandedEfland sewer system. The overall goal is currently being developed by Planning, Economic Development and Manager's staff. However, staff strongly recommend that the effort to revise the fee (but not the rate) structure for Efland sewer system move forward independent of and preceding the process to develop and approve the remaining elements of the revenue structure or the overall goal. The existing fee structure for the Efland sewer system was created by the BOCC and incorporated in the Rules and Regulations for the Operation of the System as adopted by the Board in November 1.985 and amended in November 1988. Section III, Rate Schedule and Availability Fees, specifies that: a) availability fees are to be $600 for the County and $400 for the Town of Hillsborough; and b) availability fees may change pursuant to duly enacted resolutions of the County and the Town. While the official rules contain subsections for both Acreage Fees and Stub-out Service Line Fees, the subsections are noted as [Reserved] and contain no specified fee amounts or instructions, directions or provisions for applying those fees. The effect of (1) the lack of a fee structure for acreage and stub-out service line fees and (2) the very low County portion of the access fee has been to impose a financial burden on the Efland sewer enterprise fund. One measure of the :nature and extent of burden is revealed by the degree to which the enterprise fund -supplemented by annual allocations from the General Fund -must subsidize the capital costs of providing/constructing service lines to connect new customers to the sewer system.. The current costs for installing/constructing stub-out service line range from $800 to more than $3000, depending on a variety of factors related to construction conditions. Given the existing $600 cap on the County portion of the availability fees, the County must subsidize the cost of installing each sewer tap by an amount that varies between $200 and $2400. Furthermore, under the provisions of the Rules of 4 Operation, the Efland sewer system carries a debt (initial capital construction costs) to the County's General Fund of approximately $200,000. Under the current fee structure, there are no fee revenues available to provide for any reduction of this debt. Hillsborough's fee structure applicable to customers of the Efland system has not remained static Even prior to the sewer system becoming operational, the Hillsborough portion of the availability fee was raised from $400 to $600, reflecting the then-current accessibility fee charged by Hillsborough for its in- town customers. Since that time, the Town of Hillsborough's fee structure has reflected fee increases on at least two occasions. The current availability fee structure sets a fee of $800 fora 5/8 inch water meter service (standard residential size) or $1000 per acre, whichever is greater, for in-town customers. Hillsborough's Town Engineer has recently advised that Efland customers not covered under the original tap fee agreement will be subject to fees applicable to other out-of--town customers or double the rate for in-town customers ($1600 for the standard 5/8 inch residential water meter service or $2000 per acre). Staff recommends that the BOCC adopt a revised fee structure that addresses the shortcomings in the existing fee structure. Specifically, staff recommends that the Board create and define: ~ a stub-out service line fee which recovers the administrative and construction cost of installing the service line on the basis of a cost plus fee structure; an acreage fee of $1000 per acre to be designated for retiring the debt plus interest for the General Fund loan that helped finance the cost of constructing the existing system. Furthermore, staff recommends that the County: maintain the existing availability fee of $600 per residential equivalency sewer tap to fund a capital replacement account for existing infrastructure; amend the Rules and Regulations for the Operation of the System to specifically require that the Hillsborough availability fee - as determined on a case-by-case basis by the Town - be passed through directly to the consumer/customer. Staff is not recommending that the original customers who have sewer tap/sewer service contracts be charged any access, availability or service stub-outs fees other than those required under the terms of their contract(s). The recommended fee policy does not address sewer use rate issues or costs. These issues can be dealt with at the Board's leisure as potential losses over short periods of time are not significant and rates can be changed at any time necessary. The fee recommendations likewise do not deal with the issues related to sewer assessments for new sewer construction or expansion. Typically, these assessment issues are addressed at the beginning of an expansion/construction project and ultimately resolved through a project and assessment resolution/ordinance upon completion of construction and finalization of expansion costs. If I may provide additional information or input, please advise. Efland Sewer System Existing and Proposed Fee Structure Structure Fee/Rate Cost Elements Existing Fee/Rates for Ori 'nal Customers Currently Proposed Fee/Rates for Ori ' al Customers Existing FeeiRates for Non-ori final Customers Currently Proposed Fee/Rates for Non-ori ' al Customers Sewer Use Rates 1 gt 3000 allons $15.60 $15.60 $15.60 $15.60 r 1000 allons $4.50 $4.50 $4.54 $4.50 Availabili Fees Hillsborou None None $1600mi $2000/acre $1600min, $2000/acre Coup None None $604 $600 Acrea a Fee None None None $1000 Service Stub-out Fee None None None Cost est. $'700 - $3540 f