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Utility district considers revamp of connection fees

 

The LaGrange County Regional Utility District met Tuesday afternoon to discuss questions that have arisen concerning the district’s connection fees for users that connect after a system is operating.

Currently, the district charges new users to hook into a system that is already operating based on an established rate schedule. That schedule is based on several factors, including the number of years since the system began operating. Each year, the connection fee goes up.

It was noted that in Region B, the initial connection fee for the first year following the start of the system in 1998 was $975. In 2012, a new user hooking into Region B’s system would pay $5,525. That fee does not include grinder pump and installation costs, which are also paid by the user.

“This fee, in my mind, inhibits new construction,” said board member Ron Kantorak, who brought up the concern recently. It would also inhibit those who are close to a sewer district system, but on a septic system, to consider hooking into the sewer district’s system as a viable alternative to a new septic system.

“On the surface, this looks illogical,” said board president Mike Sutter. “I’m trying to justify this to a customer.”

Jeff Rowe of Umbaugh and Associates, the firm that handles the financial calculations for the district, told the board that the fees are connected to the value of the system. “The escalating fee attempts to calculate the value of that capacity for a new customer,” Rowe said. He noted that the same calculation is used throughout the state.

Rowe gave the example that it isn’t necessarily the piece of the “pie,” or capacity, that is rising in value, but the overall pie, or system, itself.

Expansion of capacity is expensive, Rowe added, and the fees are one way to pay toward future growth.

John Gastineau, the district’s legal counsel, noted that limiting expansion is not a bad thing, as each system only has a certain amount of excess capacity. He cautioned that the district would need to find a balance between providing an incentive to build within the district’s service areas and keeping the expansion from being more than the system can handle.

Rowe told the district that if it did see the fees as restricting growth, they could cap the fees.

The board asked for Rowe and Gastineau to look at capping fees, and at what level the fees should be capped. A primary question was whether or not the fees should be capped based on the number of years since a system went into operation, or cap the fees based on a set dollar amount.

In other business:

The board was told it needs to look at amending its rate ordinance to be consistent with the changes in state law concerning billing for youth camps in the district. The law, which goes into effect July 1, gives youth camps the option to be billed at a flat rate of ⅛ of the single family rate, per bed. Youth camps may also opt to be billed on a metered rate.

To modify the rate ordinance, the district will need to have a first reading of the ordinance changes, advertise for and hold a public hearing, and then act on the new rates.