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February 19, 2010

County water authority will not change connection fee policy

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By Sean Tubbs
Charlottesville Tomorrow
Friday, February 18, 2010

The Albemarle County Service Authority’s Board of Directors has let stand a policy that requires developers to only pay connection fees once they have a building permit in hand. Some developers had argued they should be allowed to pre-pay the fees before a scheduled rate increase takes effect on March 1.

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When the budget for the current fiscal year was passed, connection fees were increased to help the ACSA finance ongoing maintenance and new construction.

“We’re constantly replacing facilities, spending $18 million this year,” said board member Jim Colbaugh. “Those new facilities become part of our infrastructure.”

However, some developers argued the increases were too much to absorb in one year and could stop development during the economic downturn. In response, the ACSA decided in August to split the increase into two increments with 15 percent effective last September and the rest taking effect on March 1.

Since then, two developers with projects in the planning stages have asked the ACSA if they would accept a prepayment of the fees at the current level, even though building permits might not be issued until later in 2010.

Developer David Hilliard is building an assisted living facility in Crozet. When he began the project in January 2008, the cost of connecting 126 units to public water and sewer was less than $200,000. However, delays in securing financing have pushed the project back. If he can obtain building permits before March 1, he’ll pay $581,000. If not, he’ll have to pay $724,000.

Andrew McGinty of Coleway Development is building a 212-unit apartment complex near Fashion Square mall called Arden Place. McGinty had argued the length of time it was taking for Albemarle County to approve the project meant he would be forced to pay the higher fee.

However, staff has repeatedly stated they do not recommend changing the policy because it would interfere with the “first-come, first-served” strategy shared by the ACSA, the Rivanna Water and Sewer Authority and the city of Charlottesville. That policy is in place to prevent large developers from buying up all potential connections long before homes are occupied.

Download Download staff report on connection fee pre-payments

The decision to break the fee increase into two phases has cost the authority nearly $178,000 in deferred connection fees, according to ACSA Executive Director Gary Fern.

Developers had also asked for a delay of the second increase, but the board was not receptive.

“Whatever date we choose it will be inconvenient,” said board member Richard Carter. “We did move it one time to help developers, but if we keep doing it, we’re never going to get this done.”

County officials worked with both developers to allow them to apply for building permits even though final site plans had not yet been approved.

Neither McGinty nor Hilliard was present at Thursday’s meeting. Breeden said McGinty has demonstrated he will receive building permits in time and will pay the authority $876,000 in connection fees for 212 units.

Efforts to reach Hilliard were not successful, but he has not yet demonstrated to the ACSA that he has obtained building permits, according to Breeden.

Neil Williamson of the Free Enterprise Forum had previously spoken out against the rate increases, but said Thursday that the authority had done the right thing by splitting the increase.

“I think that the ACSA board recognizes the importance of predictability of costs for developers,” Williamson said.

A further connection fee increase is likely to go into effect on July 1, according to Jim Colbaugh. The board will begin discussing a new budget in March.

In other news, the board voted to create a special rate district to pay for a new regional pump station to increase sewer capacity in northern Albemarle County. The ACSA will raise money through a bond to pay for the $12.25 million project upfront, and developers who build within the district will pay an additional fee to recoup the cost. Construction is expected to be completed by December 2011.

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