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May 03, 2012

Builders prepare for higher water, sewer fees in Albemarle

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DailyProgressBy Sean Tubbs
Charlottesville Tomorrow
Thursday, May 3, 2012

Developers building homes and businesses in Albemarle can expect to pay higher fees over the next several years to connect to the county’s water and sewer system.
 
That fact has raised the concern of Neil Williamson, president of the Free Enterprise Forum.
 
Connection-fee-chart
This chart depicts a history of ACSA connection fees since 2000. Click to enlarge.
“This year’s double-digit increase is on top of a 15 percent increase last year and the [Albemarle County Service Authority] is projecting annual 10 percent increases for the foreseeable future,” Williamson said in an interview.
 
Williamson said the fees will result in higher home prices because developers will pass on the cost to buyers. He warned that if fees keep increasing, builders will not be able to afford to connect.
 
Gary O’Connell, executive director of the ACSA, said he understands developers are not happy about the high fees but added they are necessary to pay for additional capacity, as well as maintenance.
 
“The last thing [developers] want to hear is not being able to have the capacity to handle future growth and developments, so we have to go a step ahead and be ready for that,” O’Connell said in a briefing before the county Board of Supervisors on Wednesday.
 
For example, construction of the Stonefield development was delayed for several years because there was not sufficient sewer capacity.
 
The fees are determined through a formula that seeks to calculate the worth of each connection to the overall system.
 
“What we’re trying to do is give a value to each residential connection,” said Lisa Breeden, the ACSA’s finance director.
 
Developers do not pay the Rivanna Water & Sewer Authority directly. Instead, the ACSA charges a connection fee to developers to help cover its share of the RWSA capital improvement program.
 
The RWSA “capacity fee” for water will increase 21 percent, to $4,758 per connection. For sewer, the capacity fee will climb 17 percent, to $3,506 per connection.
 
Other fees will increase more modestly. The ACSA’s water system development fee will increase by 2 percent, to $1,802 per connection. The sewer system development fee will increase by 1 percent, to $2,436.
 
The ACSA has proposed a $5.5 million capital improvement budget for fiscal year 2013 with projects ranging from the North Fork regional pump station, stormwater management projects and water line replacements.
 
Breeden projects these two connection fees will bring in $4 million of revenue over the next fiscal year. The ACSA will draw $1.5 million from its reserves to cover the rest of the CIP.
 
“The RWSA has a tremendous amount of capital projects, and we have a number of capital projects as well,” O’Connell said. “There’s almost a double-digit wholesale rate increase that the RWSA is charging us.”
 
The increasing reliance on connection fees is a relatively new trend. In 2000, developers paid an average of $2,573 in connection fees. For fiscal year 2013, that will increase to $12,502.
 
Albemarle Supervisor Ann H. Mallek said she supports the shift.
 
“[There was] resentment for decades from existing long-time residents having to pay everything for all these new people moving in,” Mallek said. “The charges are being put where they should be.”
 
In 2010, the ACSA changed its policy to allow developers to pre-pay their connection fees even if they had no immediate plans to build units.
 
“We did it because we thought it was fair to developers because they need to be able to plan how much they’re going to be able to spend in a given year,” said ACSA board member Liz Palmer.
 
A developer can pre-pay a connection fee as long as there is an active building permit, which can be renewed. The new rates go into effect July 1.
 
“We expect an onslaught of pre-paid [connection fees] before June 30,” Breeden said.
 
Williamson recently met with ACSA officials to discuss connection fees.
 
“After meeting with Gary O’Connell and Lisa Breeden, I understand the logic in the formula used for determining the fees but I don’t like the ever-increasing result,” Williamson said.
 
The ACSA board will further discuss its budget at its meeting May 17, with a public hearing set for June 21.
 

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