Creekside Sewer Water Serv Agreement

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Dunn & McCuskey S&W Charges Analysis April 13,2009 Page 3 The Development A�reement also stated `'As part of the installation of sanitarv sewer and water improvements per the approved plans, Developer shall install two sewer and two water stubs for 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 LonR 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 svstems are the result of the City retrofitting existin� neighborhoods with sewer and water lines, assessin� the costs of construction back to the benefitin� property owners, sometimes partially stibsidized by the general tax levy. It is a relatively recent phenomenon in Orono that sewer and w�ater 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 directiv serve adjacent properties without an intervening City project. Examples include Glendale Cove and Creekside. For City-constructed projects, Orono has normally established connection fees for ne��- connections to an existinb Cit}� project equivalent to the origina!per-irnit cost of the given project,p[us an annual inflation factor. For instance, a propertv connecting in 2008 to the 1992 Stubbs Bav NE project that was originally assessed $12,6�0 per unit now would pay $19,7�0 as a connection charae if it 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. How�ever, the basis for the City char�ina a connection fee is largely an issue of fairness and equity. No property should be afforded the privileQe of connecting to the sewer system without paying its reasonable share of the costs to build and maintain that s��stem. In the typical case where the cost of a "retrofit" sewer project is assessed equally to all benefitin, properties, a nearby property not ori�inallv assessed should pay its share of those ori�inal 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 subsidizin� the sewer provided to properties not pai-t of that subdivision? Probably not - outside properties corulectin� to that system should be char�ed a fair and equitable connection fee. However. the Cit�- as recipient of such connection fee has historically not redistributed it amona the original subdivision lot owners.