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Wednesday, 22 August 2012 12:54

Good intentions bite Maggie with sewer fee quandary

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Greg Snyder was perturbed when he addressed the Maggie Valley Board of Aldermen in June.

In March, Snyder had plunked down $4,625 to connect five new RV sites at Twinbrook Resorts to the town’s sewer system. Less than two weeks later, the town board voted to change its sewer tap fee rates.

 

Had Snyder waited just 10 days, he could have paid $0 — a considerable difference given the state of the economy and some businesses’ hesitancy to expand.

The town board suspended its pricey sewer tap fees for existing businesses that want to expand and rolled back the rates for new homes and businesses not previously connected to town sewer. But what was intended as a goodwill gesture to promote growth during trying economic times has put the town in a bit of a quagmire.

The Maggie Valley Board of Aldermen now plan to review the wisdom of its previous decision to reduce and, in some cases, eliminate the sewer tap fees after unclear language has left the door open for a steady stream of people to question how much they must pay.

The Board of Aldermen voted 4-1 in March to reduce its sewer impact fees for one year. Since then, a steady trickle of people have approached the town with their special circumstances, or reasons why the town should trim even more off the impact fees. And, the town must decide whether or not to give them an additional break — opening the door for possibly more “what ifs.”

“You are always going to have somebody who feels they have their own special problem,” said Mayor Ron DeSimone. “You have to set a line somewhere.”

The wording of the ordinance is what has caused some of the questions from business owners, and the board hopes to remedy the problem with clearer language, said Alderman Mike Matthews.

“That is partly our fault because we did not clean up the ordinance when we made it,” Matthews said.

 

Pros and cons

Sewer tap fees are intended as a way of paying for upgrades at the town’s sewer plant. Those using the town’s sewer capacity — namely those businesses that are adding volume to the system — should arguably pay for necessary expansion of the town’s sewer plant.

Maggie Valley upgraded its sewer system in 2010 to increase its capacity and will be paying on the debt until 2028. This year, it will pay $190,338 toward about $3 million owed.

The sewer tap waiver was controversial when it first came up in March. Some were concerned that the town would be forced to raise property taxes or increase sewer rates on town residents to make up the difference on what it was losing from businesses.

“How are you going to make this money up?  You are going to have to make up the difference by raising taxes or sewer user fees on everyone,” said former Alderman Colin Edwards during the public comment period of a March 13 town board meeting.

The town did not do either in this year’s budget, however.

The goal of the temporary waiver was to promote growth in the valley — among both new and existing businesses. In exchange, the town would benefit from the additional sales and property tax at businesses that otherwise may have seen the sewer tap fees as cost prohibitive.

“We are going to try to help them if we can,” Matthews said. “I wanted it to be as cheap and easy as possible.”

During the preliminary discussion, Aldermen Phillip Wight and Matthews wanted to offer the lowest fee rates possible. At one point, the word “free” was mentioned.

Wight argued that the cost of giving the taps away for free was worth the benefit that the town would receive from increased sewer usage in the future.

Despite both agreeing to the current sewer tap fees, Wight and Matthews still feel more could be done.

“Our sewer impact fees are still too high,” Wight said. “I think it sends a bad message when, in my opinion, the fees are exorbitant.”

The town eliminated the sewer tap fees for existing businesses that want to expand and rolled back the rates for new construction, residential and businesses not previously connected to town sewer.

However, Mayor Ron DeSimone is against giving anything away for free, though he did agree with lowering the fee.

“I still think that was a good compromise. I don’t agree with giving anything away for free,” DeSimone said.

Although he feels good about the compromise that the board struck in March, DeSimone said he is open to further discussion.

“I might be willing to explore other options, but truthfully, it is not a bad bargain where it is,” DeSimone said.

The only alderman who has been completely against the reduction of sewer tap fees from the beginning is Saralyn Price.

Price said the change would hurt the town, and she would prefer to offer tax incentives as a form of economic development instead.

“I would have liked to have done a tax incentive,” Price said. “It would have basically done the same thing, but it would have been done through taxes.”

Price pointed out the town is still paying off debt from upgrading its sewer treatment plant, which was hopefully going to be funded with tap fees, Price said.

“We just did a whole expansion on that, and we have to pay for it,” she said.

 

Devil in the details

As of Aug. 20, seven businesses and individuals had taken advantage of the lower fee — collectively saving $56,844. The biggest winner in the deal by far is Frankie’s Italian Trattoria, which added 86 seats. The restaurant paid no tap fees for the expansion. It would have previously cost about $26,500.

Matthews and Wight have both argued that some businesses in the valley want to expand but additional costs such as sewer tap fees, on top of the actual cost of renovations, are too big a burden to bear.

“There are businesses out there that are a bad month away from shutting their doors. I think we need to look at all of our fees,” Matthews said during a March 27 town board meeting.

The tap fees were $925 per bedroom for residential construction and a minimum of $1500 for commercial construction or expansions, with a wide range for the type of use.

But whether the waiver applied only to existing businesses expanding under the current use — or would also apply to existing businesses adding additional uses — has led to questions.

Bowed Up Archery is among those currently in limbo. In the past, the business had a small RV campground area behind its current building. Owner Bob Wiggins would like to once again have an RV site at the archery property on Soco Road, but it is not currently hooked up to town sewer. Wiggins believes the town should consider the reinstatement of the RV sites as an expansion of an existing use rather than a new use and thus waive or discount sewer impact fees. Further complicating matters, the property has a $1,050 credit because the town’s sewer line runs through the property.

The Board of Alderman voted to table the issue until it figured out how to move forward.

 

 

Who has benefitted

Maggie has offered up a temporary waiver or discount for sewer fees for new and expanding businesses to encourage economic development. Here’s who has taken advantage of it so far. Whether they would have expanded anyway, or only did so because of the waiver, is not known.

Frankie’s Italian Trattoria: 86 restaurant seats. Cost under old fees: $26,522.40 • Paid: $0

Kyle Edwards: Two 2-bedroom homes. Cost under old fees: $3,7000 • Paid: $2,400

Mandy Hartline: converted game room into restaurant/bar. Cost under old fees: $800 • Paid: $0

Snuggle Inn: added to two units. Cost under old fees: $3,700 • Paid: $0

David Snow: additional bedroom on house. Cost under old fees: $950 • Paid: $600

Ram Dass: Laundromat with eight machines. Cost under old fees: $18,504 • Paid: $500

Salty Dog’s Seafood and Grill: added 40 bar seats. Cost under old fees: $6,168 • Paid: $0

                       

Total amount owed under old fees: $60,344

Total amount paid: $3,500

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