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“Huge jump” in fees is scaring off businesses

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By Bill O’Connor –

A five hundred per cent increase in the cost of hooking up to Hendersonville water and sewer services is scaring off potential businesses and keeping others from expanding, a local pro-development group says.

The organization reported in a recent newsletter that a national restaurant chain had been contemplating opening a store in Hendersonville, but was put off when told that it would cost $75,000 for a single store to tap into the city’s water and sewer lines.

In a phone interview, a spokesman for the group, who spoke on condition of anonymity, said the chain decided instead to build its new restaurant in Morganton, where it had been offered two years’ free water and sewer service.  The franchise had asked not to be identified and would say only that it was “a major steakhouse chain.”  The Tribune was not able by press time to contact City of Morganton officials in order to establish the company’s identity or confirm the deal.

“That’s about fifty jobs that were lost to Morganton,” the spokesperson said.

The newsletter also stated that owners of a local car wash, which had paid about $15,000 in water and sewer fees when it opened its current unit, were likewise told they would have to pay $75,000 for hookup at a proposed new location.

“Why would the City staff feel compelled to make … a 500% increase in impact and tax fees and then sweet talk City Council about the need to really lay it to the business community?” the newsletter asked.  “Here we are in economic bad times, fighting for new growth and new jobs and we have our water and sewer providers showing terrible judgment.”

But Lee Smith, Utilities Director for the City of Hendersonville, defended the hookup rate hike, saying that it was based on calculations designed to “level the playing field” and make usage fees fairer for the city’s customer base overall.

“Heretofore,” Smith said, “we had a flat rate structure in place.  That meant that a two-person office with a one and a half inch hookup line might be using fifty gallons of water a day, and a major business like a restaurant, with the same size line, would use thousands of gallons a day, but they would both be paying the same set of fees.  That didn’t seem fair, so we came up with a way of looking at the whole spectrum of our user base and we came up with a fee system in proportion to that,” Smith said.

Thus, last August, Smith’s department submitted to city council a new schedule of system development charges (SDC’s).  “We compare all commercial, industrial and institutional usage to residential usage, since residential customers comprise the majority, in numbers, of our customer base,” Smith’s covering memo for the August proposal stated.  The results of this comparison, together with design flow data for a particular type of business (if known) were used as a base line which the Water/Sewer department could compare to residential equivalence units (REU’s) set forth in the North Carolina Administrative Code.  “Based on an REU, we are able to compare all other customer classes with residential usage,” the report explained.  These comparisons yielded the fee structure Smith’s department submitted, which were then adopted at the city’s August budget approval meeting.

Smith acknowledged that the recalculated fees resulted in the fivefold increase in some cases, but added that a plan whereby the charges could be amortized over multiple years is under consideration.  Also, he said, a two-year average daily usage review is planned, whereby a business (or household) could receive a credit for the difference between fees collected and cost of actual gallons consumed.  “There would be an additional charge if there is an overage,” he said, “but this could very well result in more attention to water conservation.

“We know it’s caused a spike in the short term, but gas used to be fifty cents a gallon, too,” Smith said.  “We feel like over time this will prove to be a very fair structure for all concerned.”

The business community-oriented development group isn’t buying that line of reasoning.

“It still costs $75,000,” its newsletter says.  “This is truly bad news for the business folks and for folks out there recruiting to bring new business and industry to our community.”

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