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The stock market's down and gasoline is up and it's pay, pay, pay, more, more, more, from the grocery store to the hardware store. More suffering is predicted: higher utility bills in the fall.
On top of all this hardship is a new indignity: It's even going to cost more to flush the toilet.
How much more has been the subject of an under-the-radar discussion at Little Rock Wastewater for the past three months, in a back and forth between consultants hired to examine the utility's rate structure and a citizen Rate Advisory Committee. There, the sludge has hit the fan over the subject of sewer impact fees, dirty words among the mighty in Little Rock.
The 18-person advisory committee includes real estate developers, home builders, industry and chamber of commerce representatives … and Jim Lynch, the biosolid in the anti-impact-fee crowd's punchbowl.
What the citizen's committee — which is really a political thermometer — is hearing from Wastewater staff is that the nearly 40 percent rate hike the city agreed to in 2006 isn't going to produce enough revenues to pay for what it was supposed to pay for. That the wastewater utility's fiscal year 2009 revenues of $40 million could fall as much as $8 million short if project schedules aren't altered, according to rough estimates by Raftelis Financial Consultants. That the Little Maumelle Treatment plant, at one point estimated to cost $32 million to build, will really cost closer $50 million, a rise the utility blames on $12 million in modifications demanded by the city and rising material and fuel costs. (The whole project, including road, pump station modifications and line work, is now at $80 million — $9 million more than the revenue bonds floated to pay for it.)
Wastewater is also under federal court order — the result of a settlement of a suit against it by the Sierra Club — to speed up planned upgrades at the Adams Field and the Fourche Creek treatment plants, build a $30 million facility to handle sewer overflows and rehabilitate infrastructure. At the direction of the city, it's been extending service to unsewered areas, a $10 million project.
The Sanitary Sewer Committee, which calls the shots at Wastewater, has been wondering aloud if it's going to have to return to the city, hat in hand, to ask for yet another rate increase.
But Mayor Mark Stodola says he's not interested in asking residents, whose average bill will be $30 a month in 2010, when the stepped-in rate hike will be complete, to pay more. That was Stodola's message to Wasterwater Utility CEO Reggie Corbitt at a meeting Corbitt asked for a couple of weeks ago.
Corbitt told the city board of directors at a June agenda meeting that Wastewater will delay some projects so the Little Maumelle plant can be finished with available funds.
It was Stodola who, at the request of the Coalition of Little Rock Neighborhoods, asked the utility to hire a consultant to examine impact fees — an amount typically charged on new construction to offset the new demand it creates for city services, including sewers. The coalition has been pressing for the one-time fees to pay for city growth since the late 1980s, when the 4,000 acres of Chenal began to be annexed into the city.
The Little Maumelle plant, according to the utility's 2008 budget, is being built to handle current and future needs in the Little Maumelle drainage. Its capacity makes possible the addition of 15,000 residents to West Little Rock. In 2025, it will need to be enlarged — as it's designed to do — at a cost of many millions of dollars to serve future growth.
Under the current system, who is paying for new infrastructure that will allow 15,000 people to move west? Today's ratepayers, the ones that just got stuck with that big rate hike.
The city has considered, and rejected, growth policies that would include impact fees, for nearly 22 years. In those two decades, many square miles have been added. One day, it's predicted, there will be a Little Rock 2 in the west, thousands of people who'll need new roads, fire stations, water, police protection and, of course, sewers. All at the expense of a population that isn't increasing, but just draining from old Little Rock.
Now should we talk impact fees?
Just how animated people can get over the subject of sewers was illustrated at a recent gathering of the advisory committee at Wastewater's fairly luxe new headquarters on Shackleford Road. Lynch, a high-profile agitator for progressive policies and a representative of the neighborhood coalition, challenged fellow committee member and builder Keith Wingfield's suggestion that the cost of building a new sewage treatment plant on the western edge of Little Rock will not unfairly burden current ratepayers.
Lynch does not speak in dulcet tones. When Wingfield insisted developers are already paying impact fees by shouldering the cost for on-site improvements, Lynch, who believes otherwise, turned up the decibels.
When utility operations manager Stan Miller insisted the Little Maumelle plant is being built to handle sewage overflow and not to increase capacity to handle new construction in West Little Rock, Lynch grew louder still. “Sir, you do not want to match me on this,” Miller, who holds patents in treatment technology, told Lynch.
But Lynch plunged on, until committee member Marty Baker of Otter Creek, who was seated at a table facing him, exploded. “Why don't you shut your damn mouth!” Baker shouted at Lynch. “I make a motion we remove you from this committee!”
John Jarratt, who you might say is utility CEO Reggie Corbitt's No. 2 man in administration and communication, jumped up and insinuated himself between the two men to smooth things over. No, he told Baker, the utility invited Lynch to be on the panel and he would not be removed. He said soothingly that all should be heard and none should expect total agreement on any point. He said the beauty of the committee was the varying viewpoints it brought together. A meeting of the minds is another thing.
The advisory committee has discussed other ways to raise revenues. “Inflow and infiltration” — groundwater seepage into leaky pipes — puts huge pressure on the sewer system, and ideas to correct that problem have included requiring inspections and correction anytime a house changes hands.
Such topics inspire less heat than impact fees, which the housing industry snidely refers to as “welcome, stranger! taxes.”
“Growth pays for itself” has been the mantra of developers and the annexation-happy city board of directors.
Because new customers will pay for maintenance and repair to the older system, developers argue, they shouldn't be asked to pay an extra charge for new infrastructure their new homes require.
When the advisory committee met last Thursday with Raftelis, Lynch countered the argument that growth pays for growth: “If that was so, we'd have the $45 million for the new treatment plant.”
But if sewer impact fees are levied, the thinking in the housing industry goes — probably rightly — the floodgates will open to fire, road, even park fees. House prices will go up, and sales might slow.
At that meeting, Raftelis consultant Bill Stannard described impact fees as “intergenerational equity” — a recognition that it's fair to ask a new generation to pay extra to add on to a system the previous generation built. He likened the system to a club, an analogy that Lynch has often used: Club members respond to pressures put on facilities by new members by charging a one-time joining fee. The new member charge creates a pot of money for capital improvements that will eventually be required to accommodate the larger membership.
As Lynch puts it, why should current members foot the bill for, say, a $70 million tennis court in West Little Rock when it doesn't need the court space?
Builders weren't buying it. Wingfield, who owns River Rock Builders, linked a 40 percent decline in single-family home building permits in Conway from 2005 to 2007 to the road impact fee it enacted in 2004. He lobbed the club analogy back at Lynch, saying if the joining fees got too high “they'll run to another tennis club.”
Lynch responded that, with gas prices the way they are, moving to Vilonia won't have much appeal to those who work in Little Rock. He questioned that the fees would be burdensome, doing the math: An extra $1,000 added on to a 30-year mortgage amounts to pennies a month. “I hardly think that's a competitive disadvantage,” he said.
Jim Pender, a member of the Sanitary Sewer Committee who, like his colleagues there, is indisposed to impact fees, raised the fairness issue, citing the costs passed on to new customers for keeping the old system running. Stannard replied, “You've got to assume that some day, the guys in the new part of the city are going to be in the same boat as the old.”
CEO Corbitt has called the requirements Arkansas law imposes on the collection and use of impact fees as “onerous” and builders were flush with that notion at the advisory committee meeting. They told Raftelis that devising a fee that would be legal would be far more complex than the consultants' model implied.
Baker, the member who was so put out at Lynch the previous meeting, raised a new point. The utility is growing by about 600 new customers a year. Impact fees on those new customers would be a drop in the bucket toward reconciling the utility's budget with its needs.
Instead, developer Tim Daters piped up, the committee ought to be looking at basing a charge on what's dumped in the sewer rather than water use and main sizes. You put more gook into the sewers — pollutants and grease and such — you pay more. That's not happening now. No one on the committee disagreed with that.