Public blasts TUD fee subsidy

By Chris Caskey, The Union Democrat May 15, 2013 11:30 am

The Tuolumne Utilities District will continue to examine whether it makes sense to lower connection and capacity fees for future developers in an attempt to spur growth.

Multiple people criticized the idea during a Tuesday meeting of the TUD Board of Directors, though board members said they are considering lowering the fees and want more information on how it could impact TUD’s water supply and bottom line.

The idea, according to directors and meeting documents, would be to significantly reduce up-front fees the district charges builders based on costs to connect to the TUD system and on a new development’s impact on the system. Though there is no formal proposal on the table, directors said they are interested in exploring possibilities like cutting the fees that can add up in excess of a million dollars by half or allowing installment payments over an extended period.

Members of the board backing the concept say a temporary reduction in fees would stimulate growth in the district by cutting costs for builders. In the long run, Board President Mike Sarno said, more growth means more customers and more revenue.

“To continue to maintain and fund our costs, we either have to cut costs dramatically, increase rates or increase revenue,” Sarno said.

The fees are calculated for individual projects based on their impacts on the TUD water infrastructure, including storage tanks, treatment plants and water mains. TUD General Manager Pete Kampa told the board that state regulations control the fees to some extent. Kampa suggested TUD further investigate what parts of the system have what levels of capacity, look into where the district has committed water and sewer, and nail down other details it will need to know before proposing a full plan to reduce those fees.

“This is going to take some staff time, still,” Kampa said to the directors.

Even without a proposal on the table, members of the public lined up to warn TUD about such a move. Speakers used terms like “sweetheart deal” to describe a discount, and suggested the district should not cut costs for developers at the expense of the TUD system and current customers. Jerry Cadagan called it a “reverse Robin Hood-ism” where the developers would receive benefits paid for by ratepayers.

“If a development project really has merit, the developer should be willing to pay legitimate costs and fees,” Cadagan said.

While the proposal would be general change to the fees, members of the public brought up a pending apartment complex proposed for Columbia. Under the proposal, developers Golden State Holdings and RC Equities are looking to build an 80-unit complex at Union Hill and Parrotts Ferry Road.

The developer has approached TUD multiple times seeking a discount in the connection and capacity fees, which would add up to between $700,000 and $800,000.

Multiple speakers said the fees are fair.

“There’s a cost to doing business, and that’s important,” said Tuolumne resident Laurie Sylwester.

The board asked Kampa and district staff to analyze the issue further and report back at a future meeting.