Agenda - 11-21-2002-1 - Laserfiche WebLink

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customers. Aside from the fact that any municipality's general fund is the ultimate guarantor of the solvency of its utility operation, there is unlikely to be significant present-day evidence that would demonstrate that the cost of providing utility service to out-of--town customers is more than marginally greater than providing service to in-town customers for most municipal utilities. In general, capital costs incurred in the extension of utility service to new out-of--town development are paid in full by that development (and recovered in sale/rental prices of new homes and building space). Capital costs incurred in the extension of utility service to new out-of--town development are paid for by assessments on individual property owners in existing neighborhoods. Actual operating costs of a collection sub- system would depend on the type of collection system, the topography and geology of the service area(s) and its physical proximity to a utility's motor pooUmaintenance facility (out-of--town service areas could actually be closer than across-town but still in-town areas). While many municipalities do offer various types of financial incentives or assistance to encourage affordable or subsidized housing, the enterprise based financial operation of their utilities does not allow the application of an affordable housing justification to utility billing practices. Thus the use of a rate structure that conforms to affordable housing goals is precluded. Capital facilities fees which generally reflect the relative impact of a utility customer on the size (and expense) of treatment plants, pumping stations and other infrastructure generally do tend to reflect affordable housing goals. That is, capital facilities fees are always greater for large non-residential utility users and, occasionally, fees for large homes are greater than those for small homes. Utilities that do use some type of rate reduction schedule generally offer reduced rates to large utility users, the theory being that a single service, meter reading, bill, etc., is required to provide service to a large user while many services, meter readings, bills, etc., are required to provide service to some greater number of residential and small utility customers whose aggregate use would equal that of the large single user. The economy of scale evaluation showing that it is more economical to provide utility service to large volume users then provides the economic justification for lower rates on a unit cost basis. While Mr. Atherton makes a number of accurate assertions about the expense of utility service to out-of- town customers of the Hillsborough utility system, he cannot show that Hillsborough's practice of charging double rates is outside of the recognized norm for municipally owned water and sewer utilities. To be sure, Hillsborough's utility in- and out-of--town rates are very high, but this is a problem that has been openly and publicly acknowledged by Town elected officials and staff. In the final analysis, it is totally within the purview of the Town of Hillsborough to set its own utility rates and to apportion the percentage of operating cost to be borne by its in-town and out-of--town customers. At least for the time being, and with detailed knowledge of the dissatisfaction of many of the Town's in- and out-of--town utility customers with its high utility rates, the elected officials of the Town of Hillsborough have formally declined to act on recommendations (for a rate study) that might apportion utility operational costs more equitably between in- and out-of--town customers. If Mr. Atherton is sufficiently aggrieved by the Town's decision not to pursue an effort to equalize utility rates or if he feels that he and those in a similar position are victims of discrimination or some sort of "taxation without representation" circumstance, he -and they -can certainly challenge the Town's rate practices through the judicial system. If I may provide additional information, please advise.