Opposition to a looming 400 percent hike in sewer connection fees for new developments is prompting the Madison Metropolitan Sewerage District to consider phasing in the charges.
The sewerage district is raising fees for new connections to address a growing inequity in its rate structure caused by changing development patterns, which has left existing customers bearing the burden of paying for the infrastructure needed to serve growing areas, spokeswoman Jennifer Sereno said.
District commissioners have already decided to raise two fees that would increase one-time connection costs for a new, average-size, 11,500-square-foot residential lot by $1,102, or 129 percent, to $1,954.
A breakdown of the increase shows charges for the pipes and pumps to move wastewater rising by $138, or 23 percent, for the average lot, while treatment plant connection charges to cover increased capacity for new development are set to soar by $964, or 392 percent. The timetable for the increase has yet to be determined.
The development group Smart Growth Greater Madison, which represents 10 county developers and 60 associate members, opposes immediate changes, especially the high-percentage increase for new treatment plant connections, which it says will harm efforts to create much-needed low-cost housing.
“They’re hitting us with a double whammy,” Smart Growth executive director Matt Brink said.
For a big development with 100 or more lots, the new charges would reach around $300,000, Brink said.
“It’s not just the cash value, it’s what the bank wants you to put up for collateral,” he said. “Madison, as we know, is becoming a more and more expensive place to live. We need more support, not less.
“It makes MMSD less competitive,” he said. “It’s about how much more attractive perimeter municipalities will be the day after this passes. It’s about what happens two or three years down the line.”
Smart Growth, which doesn’t oppose the smaller increase for pipes and pumps, is asking the district to delay any increase in connection charges for at least 18 months to minimize the impact on currently planned projects. It is also asking for a moderate, annual fee increase that can be more readily absorbed and budgeted for in new projects.
The group also wants the district to distribute fee increases more broadly among current users and establish clear justification for any increase, Brink said.
The sewerage district commission is concerned with affordability for existing customers as well as new developments, Sereno said, and tries to limit general rate hikes.
Revenue from fees is deposited in the district’s capital projects fund. Its adopted budget for 2017 assumed new charges would be in place on July 1, providing an extra $600,000 this year. The increases are expected to deliver about $1.3 million in new revenue in a full year.
The commission, which has been exploring how to more equitably recover costs for serving new development since 2014, held a public hearing on April 27 and heard strong opposition from developers about proposed increases.
In a letter to the commission, Madison Mayor Paul Soglin said the changes needed more discussion. He said he supported the smaller rate hike but not the larger treatment plant connection increase without more input from developers.
A connection fee that’s too high might encourage development using septic systems or on lots farther away from Madison, Soglin said.
On May 11, the commission voted unanimously that it intends to accept the new connection fees and policies, but also asked staff to explore and offer options to phase them in, Sereno said.
The district is soliciting additional comment at a meeting Wednesday. A final vote is expected on July 27.
The connection fee increases come amid rising city park impact fees, higher property tax assessments and a potential new stormwater infiltration standard that would cost thousands of dollars per lot, Brink said.