Sanitary District Fees Prompt Rare Challenge

Northern Gila County Sanitary District

Northern Gila County Sanitary District Photo by Andy Towle. |

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Before the Ayothaya Thai restaurant opened in 2011, the owners paid more than $24,000 to the local sanitary district to add seats to their restaurant.

Three residents running for the Northern Gila County Sanitary District board say that is too high and the district’s fees have driven businesses away to communities like Fountain Hills, Prescott and the Valley.

Shirley Dye, Gary Bedsworth and Greg Friestad say, if elected, they will find out if fees can be lowered, if only temporarily to stir up new growth.

“All we are asking is that they share a little bit of their revenue with the community and help us grow,” Friestad said, especially with some $14 million in the bank.

This is the first time in years anyone has challenged the sanitation board in an election and most certainly, the first time three people have taken out petitions.

That’s partly because the district was never included on the general ballot. Before, voters had to visit the district office to vote. Not surprisingly, few people made the trip.

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Gary Bedsworth

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Greg Friestad

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Guy Pfister

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LaRon Garrett

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Shirley Dye

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Pat Underwood

This year, everyone living the sanitation district boundaries can vote on Nov. 6, which includes almost every home in Payson.

The incumbents say they are surprised to have challengers, especially since the district has no debt and gets few complaints.

They say cutting fees now would hurt the district and users long term by putting the cost of future expansion and maintenance on the backs of the users tomorrow.

Incumbents Pat Underwood, Guy Pfister and LaRon Garrett say while they want economic growth like everyone else, the district must be smart about it.

Every new business and home means more waste for a 28-year-old system nearing capacity. The district must soon expand the plant and someone has to pay for it.

Instead of floating bonds or raising rates for existing users, new users contribute to the cost of this expansion, they say.

Thanks to that philosophy, the district has $14 million in reserves, including $10 million set aside for an upcoming project to more than double the plant’s capacity.

“The board before, probably before any of us were on, said we are going to have the people that are here pay for the plant that is here and the people that move in from here on are going to have to pay for the next part of it,” Underwood said.

Underwood, Pfister and Garrett say they understand how someone who has never attended a meeting or done the research might not understand why the district has millions in the bank or charges the fees it does, but they have never hidden anything.

“If people have concerns, ask questions. We are very open — we aren’t hiding anything,” Garrett said.

Bedsworth, Dye and Friestad say they are asking those questions and will get answers if elected. “They are flush with money, but I don’t think they are cooperating with the community,” Bedsworth said.

Dye said she heard that businesses run away when they learn how high the sanitation and town’s impact fees are. The Town of Payson charges new businesses and homebuilders an economic “impact” fee that helps covers improvements to the water system and roads. The town’s fees exceed $7,500 per house. The sanitary district’s fee cover plant maintenance and expansion. The sanitary district charges another $5,400 per house — and much more for commercial properties.

“The restaurants are having a horrible time because impact fees are so high,” she said.

Along with Bedsworth and Friestad, Dye says she will investigate the sanitary district’s fees and try to lower them. “We have got some real minds here, really good financial minds that can do this and I am supposed to be the one that shakes things up,” she said.

Bedsworth says according to his research, Payson has some of the highest impact and capacity fees in the state.

For businesses, the rate only goes up.

“The question in a lot of people’s minds is why?” he said.

Joel Goode, the district’s general manager says there is a very good reason.

A brief history of the sanitary district

The district formed in 1965 to deal with increasing growth in Payson.

Soon, the town outgrew its initial plant and in the 1980s, a growth moratorium limited new construction.

Unprepared for the rapid growth, the sanitary district didn’t have the money to expand the system. Coupled with federal and state grants, the district got the current plant built by 1984, but carried a debt of $3.5 million.

“At that time, the board said we are never going to let this happen again,” Goode said. “We look really bad, so what they said is we are going to charge as we go along.”

Over the years, the district increased the plant’s capacity from 1.8 million gallons per day (gpd) to 2.2 million gpd using money collected from new users.

The money did two things, Goode said. One, it retired the district’s debt and two, it paid for future expansion.

“So we are planning for the future.”

The plant today

This planning includes constant upgrades and improvements to meet Environmental Protection Agency and Arizona Department of Environmental Quality standards.

The district recently completed a $1.4 million upgrade of the headwork’s facility, a new testing lab, bio-solids building and presses.

Another firm is engineering construction plans for expansion work expected to start within a few years.

Goode said expansion work is crucial because the plant is nearing its committed capacity.

Currently, the daily flow through the plant is roughly 1.5 million gpd. The plant can handle 2.2 million gpd.

When the district went over 80 percent of its 1.87 million gpd-committed capacity, it had to start showing the regulatory agencies that it was working to expand, he said.

That is where the millions in reserve funds collected though capacity fees comes in.

“Our fees are called capacity fees and they are simply a buy-in to the treatment system,” he said.

Every dollar goes back into the system through maintenance or expansion.

“We are not hoarders,” Goode said.

Bedsworth admits Goode has done a good job managing the system. In fact, the district has an excess of funds, he says.

While most special districts pay for expansion by floating bonds, the board chose to charge developers “excessive” fees, he says.

“I don’t know how prudent that is. I suspect in a hurting economy there is an opportunity to partner with the town for growth,” Bedsworth said.

The challengers say it is disturbing to hear hotels, restaurants and retail businesses have chosen to go elsewhere because of the fees.

“I am not questioning anybody on the board,” Bedsworth said, “but I believe there needs to be a change.”

Dye agreed, saying she is running to help bring new growth to town.

“The main reason I am running is because I think the fees are too high,” Friestad said. “We should be able to reduce these fees without sacrificing the quality of service.”

Friestad, who worked 27 years in the utility business, said the sanitary district should model its rates after regulated utilities.

“We have a fine facility and we need to keep it that way, but fees need to be adjusted.”

Open elections?

The three challengers say it is crucial voters get out on Nov. 6, especially since it is the first time in many years the district has appeared on the general ballot.

If a challenger wins, it would be the first time anyone was elected to the board in years.

The board itself appointed four of the five incumbents after a board member resigned. Only one board member initially got on through an election, but that was decades ago. Mostly the appointed board members remained as long as they like since they almost never have faced a challenge at the polls — until now.

The board appointed Garrett eight years ago and filed for his seat four years later, but no one ran against him.

Garrett said confusion with the county motivated the district to hold the election at the district office.

Pfister, who joined the board six years ago, said this year is different.

“It was a different election system in the past and they changed to the public one to make sure everything is on the up and up.”

Editor’s Note: Read Friday’s paper for an examination of whether impact fees affect growth.

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