Thanks for your follow up comment on this. I’m curious what you mean about the need to honor will serve letters. Do you have some information that will serve letters are somehow not being honored? I, for one, would be interested in hearing more about that issue.

Your figures are fascinating as well. You indicated that you had calculations. I’d also be interested in seeing thosel. If I understand you correctly the same amount of water use for a residential project is almost 10 times less in terms of hook up fees than is the same commercial use. Do you know why that is? I don’t have any experience in developing any projects so I don’t understand why there is this apparent difference. I would like to know why a commercial project with the same or similar water use as a residential project is surcharged 10 times as much. Please share the calculations of which you spoke, and any reasoning of which you are aware for this discrepancy.

Perhaps some of our NCSD board members might also be able to shed some further light on this. I have to admit, this is news to me. Mike referenced the rate study. Is there something in the rate study that might justify a 10 fold increase in commercial over residential?

Thanks again for the comment.

Jesse Hill wrote:

reply-to NipomoCommunity@yahoogroups.com
to NipomoCommunity@yahoogroups.com
date Dec 29, 2006 11:15 AM
subject [NipomoCommunity] Re: Nipomo Town Square Moves Forward

Mike and Guy:

I thought your discussion was well thought out and I wanted to add some additional information to bring the problem of mixed use into focus. For Clara Bergman’s smart growth project on one acre, she is being asked to pay over $300,000.00 by the NCSD for water and sewer hookups. I have Bruce Buel’s calculations and can post them if this becomes an issue. My one acre mixed use project has a new price tag just under that amount.

Now putting aside the issue of the need to honor a Will Serve Letter, which I would be happy to discuss if anyone is interested, the statement of: “Developers are being asked to pay only for their calculated proportion of costs-nothing more.” I think there needs to be some Clara-fication of that statement. The amount of water Clara’s project is going to use is about 2 acre feet of water per year. My project is about the same in terms of water use. One home on one acre uses 1 acre foot of water each year according to the actual use figures of the NCSD. The cost to hookup two homes on one acre each is roughly $30,000.00 for water and sewer hookups to the NCSD. The problem is that Clara Bergman’s project is paying ten times as much or $300,000.00 for the same or a less amount of water use. It is hoped that Mr. Winn in his tenure as president of the NCSD can fix this anomaly. A three hundred thousand hookup fees on ten condo units is a rent increase of about $250.00/month per unit. This is why the project does not pencil.

The other important issue to keep in mind is that the NCSD cannot operate in a vacume with respect to price. The real world problem is that a mutual water company costs $150,000-200,000.00 to set up. In a ten unit development, the costs for supplemental water of $15,000 per unit are getting near what the NCSD charges for supplemental water. I fully understand the complexities of the situation in that the County would charge a supplemental fee anyway, but what I am trying to point out is that if the NCSD tries to double the costs of the supplemental water charge, it may well be that as a practical matter the costs to set up a mutual are less and developers may head in that direction. In other words, the sky is not the limit of a supplemental water charge. In terms of actual costs, the NCSD may be limited to a supplemental water project that costs at most $8-10,000,000.00. JH

Thanks for stopping by and commenting. Of course your take on the water fees is an extremely informed one. And, you know more of the specifics than I do as you sit on the NCSD board; however, I have heard from more than one developer or potential developer that the issue of skyrocketing fees is placing some projects in jeopardy. I’ve also read in the press, accounts of neglected infrastructure over some 20 years. I’m sure that is contributing to some issues as well.

I don’t know of any easy answers. I hope we don’t lose the good projects because they can’t afford to be built. Otherwise we will forever be trapped in our unhappy SLO County relationship.

I must, however, correct a misconception that has crept into the dialog: Developers are NOT being asked to bear the entire cost of supplemental water. If we did so, it would be illegal, because (as you know better than me) the courts have ruled that all those who benefit from a public project must help pay, and no-one can be required to pay for more than the impacts they have created.

This is true here. We (the NCSD) commissioned a rate study, which calculated the benefit to our current ratepayers (percentage to make up overdraft, plus additional for the real benefit of having more than one water source), and that is being paid now on every water bill the NCSD issues.

Developers are being asked to pay only for their calculated proportion of the cost–nothing more.

If the City of Santa Maria will allow us to construct a more affordable project, new growth here will be more affordable. Otherwise, project costs are going to stifle growth for sure…and not just George Newman’s outstanding effort.

Mike