Sewer Water Connection Memo_Gaffron

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Dunn & McCuskey S&W Charges Anal,ysis April 13,2009 Page 3 The Development Agreement also stated "As part of the installation of sanitary sewer and water improvements per the approved plans, Developer shall install two sewer and two water stubs far future service to the Dunn property and one sewer and one water stub for future service to the McCuskey property." � No connection fees were paid to Long Lake on behalf of Dunn or McCuskey. Those Long Lake fees would be due at the time of connection, at whatever rate Long Lake has in effect at the time of connection. ANALYSIS Is an Orono Connection Fee Warranted? The vast majority of City of Orono sewer and water systems are the result of the City retrofitting existing neighborhoods with sewer and water lines, assessing the costs of construction back to the benefiting property owners, sometimes partially subsidized by the general tax levy. It is a relatively recent phenomenon in Orono that sewer and water extensions have been installed for new development at the expense of a developer, and even more recent that such developer-installed systems have the potential to directly serve adjacent properties without an intervening City project. Examples include Glendale Cove and Creekside. Far City-constructed projects, Orono has normally established connection fees for new connections to an existing City project equivalent to the original per-unit cost of the given project,plus an annual inflation factor. For instance, a property connecting in 2008 to the . 1992 Stubbs Bay NE project that was originally assessed $12,630 per unit now would pay $19,750 as a connection charge if i�had never been assessed. For developer-constructed projects, the City has not formally established a policy regarding appropriate connection fees for additional direct connections of properties outside the subdivision. There is no precedent direction on this. However, the basis for the City charging a connection fee is largely an issue of fairness and equity. No property should be afforded the privilege of connecting to the sewer sy�stem without payinb its reasonable share of the costs to build and maintain that system. In the typical case where the cost of a "retrofit" sewer project is assessed equally to all benefitin� properties, a nearby property not originally assessed should pay its share of those oribinal costs at the time it does connect; it should not be allowed to connect at no cost to a system that others have paid for. In the case of a new development, where the developer builds a sewer system to serve new homes, the developer surely adds a portion of the cost of that sewer construction to the price of each lot. Should those lot buyers be subsidizing the sewer provided to properties not part of that subdivision? Probably not - outside properties connecting to that system should be charged a fair and equitable connection fee. However, the City as recipient of such connection fee has historically not redistributed it among the original subdivision lot owners.