The stock market’s down and gasoline is up and it’s pay, pay, pay, more, more, more, from the grocery store to the hardware store. More suffering is predicted: higher utility bills in fall.
On top of all this hardship is a new indignity: It’s even going to cost more to flush the toilet.
How much more has been the subject of an under-the-radar discussion at Little Rock Wastewater for the past three months, in a back and forth between consultants hired to examine the utility’s rate structure and a citizen Rate Advisory Committee. There, the sludge has hit the fan over the subject of sewer impact fees, dirty words among the mighty in Little Rock.
The 18-person advisory committee includes real estate developers, home builders, industry and chamber of commerce representatives … and Jim Lynch, the biosolid in the anti-impact-fee crowd’s punchbowl.
What RAC is hearing is that the nearly 40 percent rate hike the city agreed to in 2006 isn’t going to produce enough money to pay for what it was supposed to pay for. That the Little Maumelle Sewage Treatment plant, originally estimated to cost $23 million to build, will really cost closer to $50 million, and the overall project will come in at nearly $80 million. That the utility’s fiscal year 2009 revenues of $40 million could fall $8 million short, according to rough estimates by Raftelis Financial Consultants.
So the Sewer Committee, which calls the shots at the utility, has been wondering aloud if it’s going to have to return to the city, hat in hand, to complete the treatment plant built and overflow prevention projects mandated by its settlement of a Sierra Club suit against it in federal court.
But Mayor Mark Stodola says he’s not interested in asking residents, whose average bill will be $30 a month in 2010, when the stepped-in rate hike will be complete, to pay more. That was Stodola’s message to Wasterwater Utility CEO Reggie Corbitt at a meeting Corbitt asked for a couple of weeks ago.
It was Stodola who, at the request of the Coalition of Little Neighborhoods, asked the utility to hire a consultant to examine impact fees — an amount typically charged on new construction to offset the new demand it creates for city services, including sewers. The Coalition has been pressing for the one-time fees to pay for city growth since the late 1980s, when the 4,000 acres of Chenal began to be annexed into the city.
The Little Maumelle plant, according to the utility’s 2008 budget, is being built to handle current and future needs in the Little Maumelle drainage. Its capacity makes possible the addition of 15,000 residents to West Little Rock. In 2025, it will need to be enlarged — as its designed to do — at a cost of many millions of dollars to serve future growth.
Under the current system, who is paying for new infrastructure that will allow 15,000 people to move west? Today’s ratepayers, the ones that just got stuck with that big rate hike.
The city has considered, and rejected, growth policies that would include impact fees, for nearly 22 years. In those two decades, many square miles have been added. One day, it’s predicted, there will be a Little Rock 2 in the west, thousands of people who’ll need new roads, fire stations, water, police protection and, of course, sewers. All at the expense of a population that isn’t increasing, but just draining from old Little Rock.
Now should we talk impact fees?
Just how animated people can get over the subject of sewers was recently illustrated at a recent gathering of the advisory committee at Wastewater’s luxe new headquarters building on Shackleford Road. Lynch, a high-profile agitator for progressive policies and a representative of the Coalition, challenged fellow committee member and builder Keith Wingfield’s suggestion that the cost of building a new sewage treatment plant on the western edge of Little Rock will not unfairly burden current ratepayers. Lynch does not speak in dulcet tones. When Wingfield insisted developers are already paying impact fees by shouldering the cost for on-site improvements, Lynch, who believes otherwise, turned up the decibels.
When utility operations manager Stan Miller insisted the Little Maumelle Treatment plant is being built to handle sewage overflow and not to increase capacity to handle new construction in west Little Rock, Lynch grew louder still.
Miller got a little testy, telling Lynch: “Sir, you do not want to match me on this.” But Lynch plunged on, until committee member Marty Baker of Otter Creek, who was seated at a table facing him, exploded. “Why don’t you shut your damn mouth!” Baker shouted at Lynch. “I make a motion we remove you from this committee!”
John Jarratt, who you might say is utility CEO Reggie Corbitt’s No. 2 man in administration and communication, jumped up and insinuated himself between the two men to soothe things over. No, he told Baker, the utility invited Lynch to be on the panel and he would not be removed. He said soothingly that all should be heard and none should expect total agreement on any point. He said the beauty of the committee was the varying viewpoints it brought together.
But there hasn’t been a meeting of the minds on impact fees, which the housing industry snidely refers to as “welcome, stranger! taxes.” The mantra has been “growth pays for itself” — from both government and developers. Because new customers pay for maintenance and repair to the older system they’re not joined to, developers argue, they’ve shouldn’t be asked to pay an extra charge for the additional infrastructure their new homes require.
And if sewer impact fees are levied, their thinking goes — probably rightly — the floodgates will be open to fire, road, even park fees. Someone will have to pay those costs at closing. On-site improvements and fees are already passed on to buyers. Impact fees will either add to the price of a new house, which builders fear might slow sales, or make the cost of doing business higher.
When the advisory committee met last Thursday with Raftelis, Lynch countered the argument that growth pays for growth: “If that was so, we’d have the $45 million for the new treatment plant.”
At that meeting, Raftelis consultant Bill Stannard described impact fees as “intergenerational equity” — a recognition that it’s fair to ask a new generation to pay extra to add on to a system the previous generation built. He likened the system to a club, an analogy that Lynch has often used: Club members respond to pressures put on facilities by new members by charging a one-time joining fee. The new member charge creates a pot of money for capital improvements that will eventually be required to accommodate the larger membership.
As Lynch puts it, why should current members foot the bill for, say, a $70 million tennis court in West Little Rock when it doesn’t need the court space?
Builders weren’t buying it. Wingfield, who owns River Rock Builders, linked a 40 percent decline in single-family home building permits in Conway from 2004 to 2007 to the road impact fee it enacted in 2003. He batted the club analogy back at Lynch, saying if the joining fees got too high “they’ll run to another tennis club.”
Lynch responded that, with gas prices they way they are, moving to Vilonia won’t have much appeal to those who work in Little Rock. He questioned that the fees would be burdensome, doing the math: An extra $1,000 added on to a 30-year mortgage amounts to pennies a month. “I hardly think that’s a competitive disadvantage,” he said.
Jim Pender, a member of the Sewer Committee and who like his colleagues there is indisposed to impact fees, raised the fairness issue, citing the costs passed on to new customers for keeping the old system running. Stannard replied, “You’ve got to assume that some day, the guys in the new part of the city are going to be in the same boat as the old.”
CEO Corbitt has called the requirements Arkansas law imposes on their collection and use as “onerous” and builders were flush with that notion at the advisory committee meeting, saying devising a fee that would be legal would be far more complex than Raftelis’ model implied.
Baker, the member who was so put out at Lynch the previous meeting, raised a new point. The utility is growing by about 600 new customers a year. Impact fees on those new customers would be a drop in the bucket toward reconciling the utility’s budget with its needs.
Instead, developer Tim Daters piped up, the committee ought to be looking at a charging on what’s dumped in the sewer rather than water use and main sizes. You put more gook into the sewers — pollutants and grease and such — you pay more. That’s not happening now. No one on the committee disagreed with that.