Sanitary Board Defends Hookup Charges

Incumbents defend impact fees of $16,000 for a small restaurant, although district has $14.5 million in the bank

Northern Gila County Sanitary District facilities

Northern Gila County Sanitary District facilities Photo by Andy Towle. |

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Critics of the Northern Gila County Sanitary District argue the board hasn’t done enough to bring new businesses to town. In fact, the district’s high commercial impact fees have driven prospective restaurants, hotels and businesses away, say three residents challenging the incumbents in the upcoming Nov. 6 general election for the Northern Gila County Sanitary (NGSCD) Board.

Challengers Shirley Dye, Greg Freistad and Gary Bedsworth said even with the district’s cash coffers bulging at more than $14.5 million, the district continues to charge “some of the highest impact development fees (capacity fees in sewer talk) in the state of Arizona.”

They question why the district hasn’t lowered fees to help revive the struggling local economy. All promise to get answers and bring new direction to a board that has more appointed than elected members.

But appointed incumbents LaRon Garrett, Patrick Underwood and Guy Pfister say there isn’t any secret to the district’s fees and they are open to a rate discussion once the district finishes roughly doubling its capacity.

For now, the board follows a philosophy adopted in the 1980s that puts the cost of expansion and repairs on new users, not existing customers that have already purchased their capacity.

They say each new hook-up must pay its share.

And does the $14 million mean the district already had more money than it needs? The incumbents insist that the district needs that money, including $10 million needed to double the capacity of the plant. The additional $4 million provides money for unexpected, but costly, repairs.

“We have taken people’s money, we’re not going to put it in the bank and sit on it like these people think we are, we are going to do something with it,” said Joel Goode, the district’s general manager.

In the last 10 years, the district has spent $15 million on system improvements.

The challengers continue to argue, however, that the district has enough money to expand and therefore does not need to charge the same high fees.

In part three of the Roundup’s coverage of the sanitary race, we give the incumbents and the district’s manager an opportunity to explain.

We found while the current board members support the district’s direction and policies, they mostly directed the Roundup to speak with Goode for specifics.

Goode, who is not running, has worked for the district many years and both incumbents and challengers say he has run an efficient, safe and top-of-the-line operation.

Capacity fees

In a recent campaign ad Bedsworth, Dye and Friestad questioned why the district has not adopted a new capacity fee schedule that will encourage commercial growth.

The incumbents say their policies have promoted business and development in the community by providing adequate, reliable service. Moreover, several years ago, they approved a policy that lets businesses pay for additional capacity over a five-year, interest-free term.

They did this, in part, to help the Ayothaya Thai restaurant open, Garrett said. The district had charged the restaurant’s owners $24,000 for additional capacity in the system — too much for the owners to pay up front.

The district justified the fee because the space was formerly an automotive shop that didn’t generate much waste. Since a restaurant uses more water, the owners had to buy space in the sewage system.

“The Ayothaya Thai restaurant was a very thankful recipient of this deferred capacity agreement,” Goode said. “The same deferred plan is allowed for a single family, owner occupied, home for a two-year period. There are numerous business and homes currently receiving this assistance.”

But why was the restaurant charged $24,000?

According to the district’s fee schedule, each seat at a restaurant generates an average of 25 to 30 gallons per day and the rate per gallon per day is $18.80. The board set these rates based on an engineer’s recommendations.

Since the restaurant needed an extra 1,300 gpd in capacity, they had to shell out $24,000 — a hefty sum for a restaurant just getting off the ground, challengers say.

Fees compared

A Roundup survey of other sanitation districts found charges here remain among the most expensive when it comes to connection and capacity costs.

The Roundup asked Fountain Hills, Pinetop-Lakeside and Camp Verde districts how much it would cost a 33-seat restaurant to open in their area, an example based on an example used in the NGCSD’s rate structure.

The investigation showed each district structures its capacity fees quite differently. However, based on the charge for a 1-inch meter, inspection fees and the cost to run a pipe from the restaurant to the street (called a lateral), Pinetop-Lakeside was the most expensive at $16,005, a mere $45 more than Payson’s sanitary district.

Fountain Hills would charge several thousand dollars less. Camp Verde charged the least — a bargain basement $1,000.

Camp Verde has 1,200 connections and processes at most .325 million gpd. Payson’s plant can process 2.2 million gpd and has more than 10,000 connections.

Fountain Hills has 13,500 connections and Pinetop-Lakeside, 7,961.

Helping business

Besides stretching out payments, Goode said the district has helped businesses in other ways.

Recently, the Journigan House restaurant reopened and the district could have justified charging for a higher capacity because it had added more seats.

“Not wanting to be the bad guy,” the district decided to charge them based on history of the account, Goode said.

“We told them we would charge them based on previous operation; if things change drastically they will owe more money,” he said. “We try to treat them fairly.”

In addition, the district gives real estate/land developers alternative pay schedules.

A developer can pay half of the fees at signing and the remainder when a building permit is issued.

“This has been done to promote development in the community,” he said. “We have many developments with outstanding agreements and will remain a legal contract, until build out.”

While the board has let businesses stretch out payments, the board has not considered lowering fees.

Garrett said the district needs that money for expansion work.

While the board could float a bond or raise rates to fund this work, the board decided it would charge new users and not existing customers.

The incumbents and Goode say this just makes sense.

“Consider those who have previously paid their fair share into the treatment facility,” Goode said. “Should they be asked to pay again when the capacity is all gone and there have been no funds collected to pay for the needed expansion? How would this pay for the businessperson who has paid their fair share and now, a new competing business, comes into the community to be subsidized?”

Underwood said he stands by this policy, for now.

“The board decided a long time ago they would stay out of debt,” he said. “We look to the future and save for the future.”

With the current plant nearing capacity, the board said it plans to use some of the $14 million in reserves to more than double its size.

“So, we have a plan to spend that money,” Garrett said.

Pfister praised the district’s policy.

“When we replace a section of sewer that ages or breaks, we pay for it out of pocket,” he said.

The incumbents all agreed that they are not against growth.

“I am a pro-growth kind of guy,” Underwood said.

Asked why the board has never discussed lowering impact fees, Pfister said no one ever presented the district with a formal proposal. If they had, “I think it is something we would review in a heartbeat.”

“We kind of think that if no one is coming they must not be upset and if they are not upset we must be doing OK,” Underwood said.

Asked why the board had not taken the initiative, Pfister admitted they could discuss rates.

“Maybe we need to review that,” he said.

Underwood said if someone had a better rate structure, he is open to hearing it, “but we still have to expand and that requires rates and fees.”

Garrett agreed, saying the board thinks it is only fair to charge new customers for expansion work.

“We have the option of either doing this so we have the funds to pay for stuff or we can wait until we are in a real bind and jack the rates up on everybody to pay for those things,” he said.

Furthermore, Garrett disagrees with the challengers’ claims that the district’s rates have scared off business owners.

He says a combination of the economy, restrictive borrowing and fees for water and electricity are part of the problem too.

However, faced with increasing complaints about the district’s rates, Garrett, Pfister and Underwood said they are open to rate discussions after expansion work is done.

That could take several more years to complete.

In the meantime, if residents or business owners are unhappy, they should attend board meetings.

So far, only a handful of people have ever attended.

“If people ask, we are happy to discuss it with them,” Garrett said. “The board meets the second Thursday of each month at noon.”

Still, residents can rest assured that everyone on the board has the community’s best interests in mind, Pfister said.

“Take a look at the sanitary district and you are going to see one of the cleanest, most efficient businesses that you will ever see,” he said. “They do a phenomenal job, they have an amazing safety record and up until now we were never in the paper, which is an amazing thing considering we are in almost every house.”

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