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BetterYuma.org was represented at the Council meeting by Paul Muthart. Also in attendance was Howard Gwynn, Ken Rosevear, Kevin Dahl, and Harvey Campbell.
By a 5-2 vote the City Council implemented rate increase plan "I". This plan increases the hook up fee from the current $1,950 to $2,594 for permits pulled after 8/20/04. In one year the rate goes to $3,440 and in two years up to $4,300.
The BetterYuma.org Board worked many hours on minimizing the increase in the fee. While we were not very successful in holding down the fee, we were successful in getting the increase phased in over a 3 year period.
Councilman Paul Johnson voted against this option stating he preferred plan "B", which would have increased the fee to the maximum allowed ($4,300) immediately, with NO increase to the monthly user fee.
Councilman Scott Johnson voted against the "I" option, but did not state why.
After the meeting, when Councilman Bobby Brooks was asked why he did not amend the ordinance to allow a grace period for implementation (more than the 30 days by law) he said "it was in my notes, but I forgot". He recovered by saying he could "talk to the staff" about a grace period.
Position:
BetterYuma.org (which represents most of the development community) accepts a reasonable, but fair, increase in sewer hook up fees, which will have to be passed on to the consumers. BetterYuma.org originally testified to the Water and Sewer Commission that it would accept an increase to $2,150. We are now willing to support an increase to $2,450. We need a 6 month "grace" prior to the effective date to honor sales contracts already in effect.
BetterYuma.org strongly encourages the City Council to defer making a decision on the sewer hook up fee until the results of the Impact Fee Study is completed. Because the sewer hook up fee is a significant component of the total cost of fees paid by a developer, we would expect the Impact Fee Study committee to make recommendations affecting the sewer hook up fee.
Background & Arguments:
| 1.0 |
The sewer hook up fee is only one of a myriad of fees and taxes paid by a developer. All fees are under pressure to increase. A small increase in each fee adds up to a large increase to the consumer. |
| 2.0 |
Increased fees will make it harder to sell a home, or attract new business. |
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A $1.00 increase in fees translates to a larger cost to the consumer because of increased: |
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Sales tax |
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Sales commission |
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Interest cost to carry the investment |
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Builder profit (profit margins must be maintained) |
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Another $3,500 costs the homeowner interest expense of $280 per year (at 8%), or $23 per month ON TOP OF the increased monthly service fee. |
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Not selling the home has a trickle down impact: |
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The $1 becomes $1.40 as the construction dollars flow |
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City looses sales tax revenue (yes, different department, but is money still) |
| 3.0 |
The sewer hook up fees have been increasing over the last few years, but the monthly service fees have not increased. In November 2000 the hook up fee was $1,200. An increase to $3,449 proposed by the Commission means that in 4 short years there would be a 187% increase (or an average of 47% per year). |
| 4.0 |
The argument of "let growth pay for growth" compels us to do the math: |
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A $3,449 fee / average monthly discharge per home of 300 gal = $11.50 charge per gallon for the plant. We have heard testimony that the cost of building a treatment plant is closer to $7.00 per gallon. |
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In charging $11.50, it appears that the City is trying to recover the cost of the 1st phase of construction (an initial capacity of 3,000,000 gallons) which INCLUDES the cost of the infrastructure in place that will not be duplicated (land, offices, off-sites, etc.) when the plant builds out to 10,000,000 gallons per day. In other words, the City is "front end loading" the recovery of the cost of future capacity with today's fees. |
| 5.0 |
The City's Finance personnel have testified that the quality of the bonds issued by the City to pay for the construction will be diminished if too much of the repayment is scheduled to come from hook up fees, as opposed to monthly service income. If the current building "boom" ends, so does that revenue stream. It is much more fiscally responsible to rely on the certainty of the monthly service income. |
| 6.0 |
The amount of the necessary increase in monthly service fees is not that dramatic. Let's not forget that it costs more that $4.00 to rent one movie, or that gas is $1.90 per gallon. |
| 7.0 |
A large hook up fee will have a negative impact on the City's ability to annex neighborhoods. When a homeowner learns he must pay $3,449 to hook up, he may change his mind about joining the City. |
| 8.0 |
Not everyone believes that "growth should pay for growth". There is a contingent of citizens who welcome new restaurants, shopping, arts & culture, and medical care, and are willing to pay some of the "burden" of attracting them to Yuma. |
| 9.0 |
Yuma already is in the higher rate brackets for hook up fees in the State, as measured different ways (cost per house, cost per household income). |
| 10.0 |
Before we increase any fees, are we certain that all "special" users (including, but not limited to: Quechan Indian Tribe, Winterhaven, MCAS) are paying fair fees? |
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