Agenda - 04-28-2005-1a2 - Laserfiche WebLink

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Reimbursement Policy March 23, 2005 Page 2 The previous policy reimbursed a portion of water and sewer infrastructure extension costs based on the conshuction cost difference between the minimum required extension (8-inch water and/or sewer mains) and the oversized infiastructure required to support future development approved by the Towns and County. Reimbursement payments were limited to a 10-year payUaclc period from the date of OWASA's acceptance of the new infrastruchire, rending for reimbursements was derived solely from footage and acreage fees paid by new customers connecting to the oversized water and/or sewer infastruchrre constructed by the developer within 10 years of construction of the improvements for which the reimbursement applied. The primary reasons for the elimination of developer reimbursements in 1999 were as follows: 1) Lregrrity of conrrectiou fires -Since the reimbursement collected was based on footage and acreage, a 1-acre lot with 100 feet of frontage would pay twice as much as a 1-acre lot with 50 feet of frontage even though both lots might have similar demand paitenrs 2) "Dorrble dipping" Gy applicants -Because the applicant had no assurance that they would recover the full reimbursable amount, and that it might take as long as 10 years before any or all of that reimhursement were received, we believe that applicants typically included the full cost of the utility line extensions in the original sales price, lease, or rental rates of the lot or property in question. Therefore, any reimbursements subsequently received would arguably represent a "double" receipt by the developer; which we believe represents a "suUsidy" for new development. 3) Limited rrse arrd payback -During the 20 year period between 1980 and 1999, approximately $1,000,000 in eligible reimbursements were approved by OWASA. Over that same period, less than $200,000 was reimbursed to eligible applicants. During the OWASA Board's ,June 10, 2004 and February 5, 2005 discussions, these was general consensus that a reimbursement policy should not he re-instated.. The Board concluded that there is no way for OWASA to provide reimbursements to public entities, such as the Towns, County, or University, without also providing reimbursements for private developers. The Board also expressed concern that providing an incentive to developers though the availability of reimhursements for water and sewer infrastructure extensions may contribute to accelerated growth within the community and a certain degree of "leapfrog" growth patterns by providing a disincentive for the more orderly expansion outward from the central service area. As an alternative, it was noted in the Board discussions that the North Carolina General Statutes provide the Towns and County the authority to recover line extension costs through the adoption of Special Assessments for water and sewer improvements. This alternative would provide a method for recovery of a portion of the water and sewer utility costs for public projects, from property owners actually benefited by such extensions, without reopening the policy questions surrounding the reimbursement of utility extension costs to any and all parties.