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Legislation considered to change utility districts

 

The Indiana General Assembly has three bills being considered that, if passed as they stand now, could mean fundamental changes for regional utility districts as well as increased costs for users.

That was the message given in a legislative update meeting held Friday by the LaGrange County Regional Utility District.

The district’s legal counsel, John Gastineau, presented information on the pending bills and what they could mean to the district, if they pass as written. Two of the bills which originated in the Indiana Senate would create relatively minor changes, but it’s House Bill 1497 that has utility districts worried the most.

HB 1497 was authored by Northeast Indiana Representative Dennis Zent of Angola and co-sponsored by representatives Ober, Smaltz and Lehman.

“House Bill 1497 is the most problematic,” Gastineau said. He noted that the bill will be heard in the Environmental Committee, chaired by Rep. Wolkins of Elkhart, on Wednesday, Feb. 6. He told the district board that if any legislature is passed out of the General Assembly, it would be with this bill. “I’m not sure we can live with some of the measures in this bill or how long we can live with it,” Gastineau added.

A couple of the provisions in the proposed law would amount to added time and costs in any new projects. One provision is additional steps in notifying property owners anytime a district applies for the permits required to build a system. “This is aimed at those who say ‘We didn’t know about it,’” Gastineau stated.

If passed in its current form, the bill would also require that utility boards be elected. One of the senate bills also calls for this action, but HB 1497 eliminates some of the issues that SB 205 does not. Under the House bill, voting on board positions would be limited to ratepayers of the district. “It wouldn’t eliminate the problem of getting good candidates,” Gastineau said. Gastineau pointed out that with elected boards, those motivated to run would likely be those who are vocal in their opposition to the district and to the board actions. “If you get one or two board members like that, who say no to everything, then the board can’t do anything,” Gastineau said. “Do they have an interest in running the district effectively and efficiently in mind, or are they just trying to hamstring the board?”

It is a third provision of HB 1497 that should have districts worried the most, according to Gastineau. That is the repeal of the septic system exemption that was enacted just last year.

“Under HB 1497, if you can find someone with ‘sufficient’ knowledge to confirm that your septic system is not failing, you don’t have to connect,” Gastineau told the board. The bill would also allow property owners who may have failing personal septic systems to replace or repair the system, rather than connect to a district’s system.

 

“That takes away your leverage,” Gastineau informed the board. If that provision passes as it stands, “You could never do another project,” he added.

The provision notes what a failing system is and who is qualified to make that determination, such as a county health officer, septic installer, or another person certified by the state who “can demonstrate sufficient knowledge.” One problem is that other septic systems, including privies, would also be included in the exemption.

Another provision that could cause headaches for districts considering new projects is the timeline that property owners would have to certify their septic systems, as well as additional time to replace or repair. Altogether, a property owner would have over a year from the time notice is given of a proposed system to have their septic system certified and possibly fixed or replaced. Gastineau asked how could a district plan a new system if owners have that much time to determine if they will connect or not.

Those who fund the systems, such as Rural Development, are already nervous in lending money for systems, Gastineau said, and have been adding restrictions to the funding to ensure the loan is paid back. One way is for a district to get signed contracts from enough users to ensure funding.

The bill would also take away the option that charges campgrounds and youth camps on a metered rate only as well as allowing for billing of actual use only. Gastineau pointed out that, as written, the bill does not allow for a minimum fee, including debt service, to be charged if no usage is billed.

The bottom line for a district is that a new system would likely see fewer users connecting as well as lower billing for some users, which would increase the cost for others on the system.

Another provision that could increase costs is one that would prohibit a district from doing partial billing during construction. Currently, the district partial bills during construction to pay for interest on the project loan as well as to cover administrative costs incurred during construction. “Under the bill, no more of that,” Gastineau said. “We can’t collect until they are connected and we are providing service,’ Gastineau said. When asked how the interest and costs incurred during construction would be paid, Gastineau said that the payment schedule for the loan would be changed, possibly adding a balloon payment at the end. “So that would increase costs again,” noted Board President Ron Kantorak.

If HB 1497 goes through as written, Gastineau said, the changes could put those districts that are weak financially “over the edge.” Then, the systems they operate as well as their debt and costs, would have to be taken over by the counties.

 

 

 

 

 

 

 

Gastineau encouraged the board members to contact the legislators to discuss the bills (see related article) and to point out the positives that a sewer system brings to the area. “The only ones they are hearing from are the ones that oppose us,” Gastineau pointed out.

If the bill is signed into law? “We will need to look at another form or organization if you want to do future projects,” Gastineau told the board.

“What is the policy of the state for treating sewage in a rural area? This bill says the state favors private septic systems in rural areas,” Gastineau concluded.