The town is eyeing a new policy that will formalize who’s eligible for pro-bono utility work and start documenting how the free work is carried out.
Historically, town utility crews have run power, water and sewer connections at no cost for construction projects deemed a good cause — primarily for nonprofits that serve the greater good of the community, from Habitat for Humanity homes to the Haywood Arts Regional Theatre. But the absence of a formal policy was a tad unsettling to David Foster, the town’s new public works director.
“Since I have taken over the utility side, a lot of people have come out of the woodwork asking to waive fees for connections,” Foster said. “I fully understand the gist of why they are asking, but we need a policy.”
Foster recently shared his concerns with the town board, namely that he didn’t want to be the one making the call over who should get a free pass on utility hook-up fees.
So far this year, Foster has been approached by Haywood Arts Regional Theatre, which has built a second theater building, and Brookmont Lofts, a county-driven project to repurpose the old, shuttered hospital into low-income senior apartments.
Both wanted the town to waive the cost of new power, water and sewer connections for their construction projects — amounting to nearly $180,000 in town labor, materials and permit fees.
“I don’t want to be in the position of saying ‘I believe in this charity and I will give them a break, but this other charity, I won’t give them a break,’” Foster said. “My take has always been the town board should determine who and what fees get waived.”
If nothing else, a formal policy would remove the appearance of quid pro quo deals or accusations of favoritism. While both requests ultimately went to the town board and were approved, the HART project brought to light the problems that can arise in the absence of a formal policy.
HART’s new theatre construction began more then two years ago, predating Foster’s time at the town. Early in the design stage, HART asked the public works director at the time to waive the utility connection fees as the town had done with HART’s first theater construction.
“He said ‘Oh yeah, we’ll do that, like we did for the first one,’” recounted Pat Burgin, a Waynesville contractor overseeing the HART job. “But it was never documented. Nobody wrote anything down.”
By the time HART was ready to pull the trigger on the utility connections, a new public works director had come along.
“There was a big staff turn over at the town. Had it been documented in someone’s email or notes or minutes, we would have been OK. But nothing was documented so we had to start over,” Burgin said.
Burgin said the new town administration didn’t doubt what had been promised, but in the absence of formal documentation, HART had to make its case all over again.
The utility hook-ups for HART would have been $80,000. It was among what Foster called “one of the most expensive scenarios” because the work called for an all-new, high capacity six-inch water line to support a sprinkler system, on top of the regular water, sewer and electrical connections and impact fees.
“They said, ‘We can’t afford that. Can we get some relief?’” Foster recalled.
Foster sent HART up the chain of command to the town manager. However, the town manager didn’t have a playbook to go by either.
At one point, representatives of HART called on newly elected town board member Jon Feichter, a personal fan and supporter of HART, for advice. Unsure of what the protocol was, Feichter sent them back to Foster.
Feichter said he supports the concept of waiving utility fees for nonprofit endeavors.
“Nonprofits are doing things for the betterment of all of us. I am very much open to the possibility of helping that mission whenever and wherever the town is able to do so,” Feichter said. “But on the other hand I do believe there needs to be some kind of formal policy for nonprofits to go through to make those kinds of requests.”
When carrying out the work for the HART project, Foster encountered another reason why a formal policy — including a written agreement spelling out the pro-bono work by the town — is prudent.
The work ended up exceeding original estimates, but the town had already agreed to perform the work, whatever it cost. Foster said any waiver should stipulate the “not to exceed” cost up front.
“I want the board to know the ‘all in’ price of what they are passing,” Foster said. “We have been a very generous community and supported these for years and years and years. I am not begrudging anything we have done. I think they have all been a good investment on our part.”
That said, a formal policy would make the process smoother next time, he said.
“I agree completely,” Freeman replied. “When you deal with licensed contractors that are bidding out these jobs, this needs to be forefront when these contracts are written.”
When Foster eventually brought HART’s request to the town board over the winter asking for guidance, the board wasn’t quite sure what to do either.
While Alderwoman Julia Freeman agreed with the merits of supporting HART, she questioned what the contractor’s role should be. Was the cost of utility connections built into the construction job already, and thus waiving the fees would simply be helping the contractor hold his own costs down? Freeman wanted to make sure HART would be the one benefiting if the fees were waived, and not the contractor.
Aldermen LeRoy Roberson and Feichter both supported the request, citing HART’s contributions to the community. However, Mayor Gavin Brown said Freeman posed a valid question and suggested the town table the request until they could query the contractor.
Burgin agreed utility connection costs would usually be built into a contractor’s price for a job, but they weren’t in HART’s case, he said.
“I didn’t include any administrative costs as far as the town of Waynesville goes because they all assured me it would be taken care of,” Burgin said.
The town board ultimately approved the request unanimously.
Then, a couple of months later, the town was approached again to provide pro-bono utility hook-ups for Brookmont Lofts, a project to convert the old hospital building into low-income housing.
The renovation of the outdated building is so costly and the financial return on low-income housing so marginal, that the project is barely viable as it is. The $100,000 in permit fees and utility connection work — a large amount due to the project’s scope — was a tipping point.
“You are talking real money that could make or break a project,” Foster said.
Before Foster came on board, the public works department was led by Fred Baker for more than 25 years. Given his long tenure, and the low turnover among public works employees, the town was content to rely on their institutional knowledge to get things done.
But Waynesville isn’t the small town it used to be.
“Nobody in town wants us to make those kinds of monetary decisions. Let us put the meters in and the pipes the ground. We’re good at that,” Foster said.
“They have gotten a little more professional in town administration and realized they probably ought to be documenting this stuff,” Burgin said.
For now, the adoption of a formal policy is in a holding pattern until a new town manager is hired. The former manager was fired in February. One of her criticisms was trying to make too many changes to town processes and how the town had historically done business.
What’s in a tap fee?
A new construction project coming on line in the town of Waynesville is typically on the hook for their own utility hook-up costs.
“The tap fee is supposed to recoup the cost of the work so current customers don’t foot the bill for someone who shows up and wants a new connection,” Waynesville Public Services Director David Foster explained.
The fees aren’t small potatoes. A new building connecting to the town’s water and sewer system and electrical power grid can easily run tens of thousands of dollars. On the water and sewer side, the price tag includes the labor of town utility crews to dig the trenches, lay the pipes, tap into the main line, bury it all again and fix the road back over the top — not to mention the cost of materials, from pipe fittings to asphalt patch. A typical residential job would run $2,000 for a new water and sewer connection.
New customers tying in to the town’s system also have to pay what’s known as an impact fee, which is as low as $1,000 for an average home, or as much as $40,000 for a large-scale apartment project, based on the number of bathrooms.
The impact fee is essentially the cost of “buying in” to the town’s water and sewer infrastructure and goes into a kitty for future repairs and maintenance to the water and sewer treatment plants.
“People who have been on the service all these years have paid for the water and sewer plants. Those who are new to the system, that’s suppose to be their contribution to maintaining the plants,” explained Waynesville Finance Director Eddie Caldwell.
For example, the town is currently spending $368,000 to repair the eroded spillway around the dam at its Allens Creek water reservoir.
“I am sure they didn’t plan on spending that kind of money 40 yeas ago, but we put those capacity fees aside to address those sort of things,” Caldwell said.
The impact fees also build up a fund for upgrading the plants’ capacity in the future, which would eventually become necessary as volume increases.
“That’s a very expensive proposition. The capacity fee helps them pay their fair cost toward that,” Caldwell said.
Last year, water and sewer tap fees and impact fees brought in $42,000.
New electrical connections aren’t quite as labor intensive or costly, but nonetheless run about $200 for every 100 feet of wire to get from the nearest power pole to the building. There is no impact fee for new electrical customers.
“We want all the electric customers we can get,” Caldwell said.