Believe it or not, the cost of a toilet flush in Simsbury today is a hot economic development topic. And that cost could go way up for many residents while the cost for developers could go way down.
In short, this is all about Simsbury town land use officials, economic development officials, the Simsbury Chamber of Commerce and independent developers working to impose a fee increase on the customers of the Simsbury sewer system. If you live or work in Simsbury and your home or business is served by a sewer, or if you are planning to connect, then please be aware, your pocket may get picked! What’s this all about you say? Read on and be prepared to learn more about sewers than you ever thought you needed or wanted to know.
First, let me explain a bit how the Simsbury Water Pollution Control Authority (SWPCA) and Simsbury’s town sewer system functions:
- The Simsbury Water Pollution Control Authority (SWPCA) is the operator of the Simsbury sanitary sewer system and the wastewater treatment facility on Drake Hill Road. The system is financially independent of the Town’s finances and is self-funded by bond issues and operating revenues from new user connection fees, usage fees from residential and business users and other fees from uses like discharge from septic pump trucks.
- When the sewage treatment facility needs capital improvements that it does not have surplus for it usually raises funds through the issuance of municipal bonds. These improvements might include expansion of the treatment plant to allow for more development in Town, modernization of the sanitation methods, repair of the facility and installation of new service pipes for existing or new streets. The principal and interest for these bonds are repaid by the SWPCA through operating revenue from its customers not from Simsbury taxpayers.
- When the SWPCA installs sewer pipes on streets the cost is incurred by the authority and if a user doesn’t connect for a period of time, often years, the SWPCA does not receive usage revenue until the hookup takes place. This hookup connection fee is called the FCC – Facility Connection Charge. The FCC is charged whether a connection is made to a newly installed sewer pipe on the street or an old one that has been dormant but available for years.
- To recover the costs for street sewer installation at the time of installation, property owners pay their portion of the street installation costs based on a pro rata formula as an assessment per home or business. This assessment can be paid as one payment or spread over a period of years with a modest interest rate; the choice is made by the customer.
- The standard FCC for each hookup - residential or business - is currently $4,095. This is in addition to the cost of installing pipes from the home or business to the sewer connection at the street and also in addition to the sewer installation property assessment.
- Residential property owners pay a flat rate usage fee per home per year regardless of their actual flow usage. Business property owners pay a usage fee based on their flow usage into the sewer system per year.
- The sewage treatment facility is fed by two main sewer pipes – the North and the South Interceptors. The entire town is served by only those two main pipes and all streets and businesses end up flowing to their respective Interceptor. The sizing and flow for these Interceptors has been designed to provide service to the Town based on estimates of new connections, economic development based on the usage zones for available land, and flow studies for existing users. If new or larger Interceptors need to be installed the cost is very extreme and would require significant townwide construction at great cost. So it is important for the Town to be sensitive to the capacity issues for the Interceptors. This is a huge issue with all the Town discussion about converting available land to PAD designations.
- The revenues from assessments, FCC’s and usage fees are used to repay the principal/interest on bonds as well as all day-to-day operating costs for the treatment facility and maintenance of the entire town-wide system.
- The SWPCA operates overall as a non-profit cost recovery operation. The Town commission that oversees the entire operation is an appointed commission of unpaid resident volunteers, many of whom have served on the commission for years and have significant experience in the management issues of the entire facility. The commissioners have diverse business, management and engineering backgrounds.
OK. That’s enough background for you to understand the basics of this situation.
Essentially what is going on is that our Town is hungry for economic development. It thinks that development will bring tax revenue. While it will bring gross revenue, what the town is ignoring is Net Economic Benefit to the town – which may actually prove elusive and Simsbury may find that the net benefit could be negative – that is, development can actually cost all taxpayers money. I will discuss this Net Economic Benefit issue in an upcoming future blog post but keep the concept in mind as you read on.
Another issue which I will write more about later but is relevant here is a new “overlay zone” that the Simsbury Zoning Commission has been spreading all over Town like peanut butter. That new zone is called the PAD – Planned Area Development. The PAD is also known as a Mixed Use zone. Many people seem to think a PAD is a good thing because they think of PADs that are well done like Blue Back Square. But a well done PAD requires a well defined metrics driven PAD regulation – which Simsbury does not have - and a plan and vision for what type of PAD best fits Simsbury and where, and a well informed, diligent and well managed Zoning Commission. Our Zoning Commission does not however appear to be paying much attention to how PADs will actually end up – whether they will truly be mixed use in a defined and prescribed amount of build time or how to hold developers accountable for their commitments to the Town every step of the way. Since the PAD designation has been approved by the Simsbury Zoning Commission a few years ago, several PADs are being built and are not being well managed by the Town in my opinion. And the developers are repeatedly coming back to the Town for concessions, outright changes to approvals, redesigns, begging for forgiveness, and complaints about Town fees which were clearly known at the time an approval was requested. One of those fees is the topic of this blog post - the FCC.
To me, when a developer comes back and complains about a fee that they have to pay the Town which they always knew about during the application approval process, they are merely taking advantage of the Town. The developer clearly knew what they were on the hook for but they seem to figure it doesn’t hurt to ask – or in this case demand and threaten the Town for a huge reduction. And the Town Planner Hiram Peck, the Economic Development Commission, the Simsbury Chamber of Commerce (COC) and the COC’s executive director Charity Folk (who happens to also be the Republican candidate to be our state legislator running against Democrat John Hampton) are lobbying the Simsbury Water Pollution Control Authority very hard to reduce sewer connection fees for a few select developers.
As a side note, Charity Folk’s husband is Michael Girard who owns Simscroft-Echo Farms which is a major excavation and construction company that does a lot of sewer work in Simsbury and around the state.
Let me continue explaining…
In 2011 several commercial developers who are currently building PADs in the north end of Simsbury and on West Street in the center of town as well as other unnamed developers approached numerous members of the town government to lobby for a reduction in those Facility Connection Charges (FCC) for the sewer system. They claimed that the FCC is unfair because it is charged for each new dwelling and business structure and they claim that the payment of FCCs according to the current fee model would hurt their business plans and profit margins on their multiple dwelling PADs and unless they get a reduction in the fees they will either cease building or not build at all.
On September 8, 2011 EDC Commissioner Ellsworth was discussing the FCC fee issue and said “this issue is symptomatic of a broken system, meaning instead of removing road-blocks for developers to create growth, road blocks are being created”.
In the May 10, 2012 minutes of the Simsbury Economic Development Commission (EDC), the Simsbury Town Planner Hiram Peck stated “if the hook-up [FCC} fees are reduced, it could help potential development by increasing returns [profits] for developers […] Mr. Peck said he thinks a reduction by 50-60% would work well”. In that meeting and other EDC meetings there was more discussion about how developers claim to be reluctant to build in Simsbury because of the FCC fees.
In the April 27, 2012 SWPCA meeting, Charity Folk of the Simsbury COC asked for a reconsideration of the FCC fees. SWPCA Commissioner Gilmore stated “that he would like to hear from an independent unbiased expert, possibly a financial expert from UCONN”. And SWPCA Commissioner Park said they “have already had input from developers, although he would like to get input from a disinterested party as well”.
At some point in late 2011 or early 2012, the SWPCA did hire a consultant to evaluate the FCC issue. The final report from the consultant is expected soon. Of note however was a comment in the April 27, 2012 SWPCA meeting where Maureen Crowley of AECOM (the consultant) was asked by Commissioner Gilmore “if Simsbury’s [FCC] rate was out of proportion and more expensive than surrounding [towns]”. Ms. Crowley stated “that she does not feel Simsbury’s [FCC] is unrealistic when compared to other towns; it is a fair charge”.
Were these FCC fees a secret to the developers and the EDC commissioners? No they were not.
I find it hard to believe that a developer of a multi-million dollar development would make a Go/No-Go decision solely because of sewer connection fees. I also find it hard to believe that a developer’s business model is so weak that if not for reduced sewer connection fees their entire financial plan collapses?
So, for example, if Dorset Crossing on the north end of town builds approximately 200 residential units (which is the plan I believe), the developer could receive a total FCC reduction of 50-60% (per Mr. Peck’s request) or $409,500-$491,400. Plus the developer is also planning to build business and retail facilities which would generate additional FCC fees – also to be discounted.
And that’s just for one development in Simsbury – there are several other developments or planned/discussed developments in town currently with a total of approximately 550 units under consideration!
Since the SWPCA is a cost recovery business model, if a developer got a sewer connection fee reduction of almost $500,000 how will that lost revenue be recovered? It will of course be recovered from all sewer customers through higher usage fees!
Do you feel the tickle of your pocket being picked now?
So these developers and town officials and town commissioners and the Simsbury Chamber of Commerce and candidate Charity Folk expect you, a Simsbury homeowner or business person, to contribute your hard earned money directly to the profits of developers? All with a promise of more tax revenue? How does a situation like this factor into the comment I made earlier about Net Economic Benefit? But, that’s a topic for another article.
In the meantime I hope you found this helpful. And if you don’t think you should have to make an involuntary contribution to the profits of developers through an imposed sewer usage fee increase, then feel free to write to the following people.
Zoning Commission Chairman: RPomeroy@simsbury-ct.gov
Economic Development Commission Chairman: email@example.com
First Selectman Mary Glassman: firstname.lastname@example.org
Simsbury Water Pollution Control Authority: email@example.com
Simsbury Chamber of Commerce: firstname.lastname@example.org
Simsbury Town Planner: email@example.com
Or you can of course reply to this blog post with your comments, either pro or con. I welcome your feedback.