Here's the latest (mis)information about the water rate election. The City's position is that (1) it can't close the distance between what it charges new development for water capacity and what it charges rate-payers for water capacity because state law won't allow it; (2) it did the next best thing by adopting a 'trigger' that will set the water connection fee at a level sufficient to cover capital costs once those costs are known. Unfortunately, both (1) and (2) are false.
With respect to issue (1), the state law at issue is Title 62, Section 895 - you can see it in full at http://www.oscn.net/applications/oscn/DeliverDocument.asp?CiteID=463751. It reads, in relevant part:
B. New development and expanded or modified existing development may only be charged the development fee for capital improvement costs for increases or expansion to the capacity of public infrastructure systems attributable to that development.
1. Development fees shall not exceed a clear, ascertainable, and reasonably determined proportionate share of the cost of capital improvement to the public infrastructure system attributable to the expansion or increase in functional service capacity generated, or to be generated by, the development being charged the fee. There shall be a clearly established functional nexus between the purpose and amount of the development fee being charged and the development against which the fee is charged. In determining the development fee, the municipality shall make a documented effort to quantify the projected impact from development and determine that the proposed development fee is reasonably and roughly proportional to the nature and extent of the impact of development.
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3. The development fees shall be based on actual system improvement costs or reliable, ascertainable and reasonable projected estimates of the costs. Any estimates of costs shall be based upon factual and historically realized costs for similar system capital improvements.
This clearly does not forbid fees based on future cost estimates; it only requires the City to do its due diligence in making those cost estimates. Given that the City plans to actually charge rate payers for the same wells based on cost estimates, I would certainly hope that those estimates are "reasonable" and "based on ... costs" from comparable projects. I'll give the staff the benefit of the doubt that they didn't pull the $12 million for 2 MGD a capacity out of thin air.
It is also worth noting that the law in question provides a lot of protection for a city that adopts a development fee:
K. Any ordinance, resolution, or regulation adopted in compliance with this section which is thereafter challenged in any future court action shall be reviewed through rational-basis scrutiny, such that it shall be upheld if it substantially complies with this section and if the municipality documented reasonably conceivable facts that provided a rational basis for the adoption.
Norman can already document "reasonably conceivable facts that provide[...] a rational basis for the adoption" of a connection fee up to $1530.* If well costs come in higher or lower, the fee can be adjusted then. To avoid charging what we think it will cost for fear of lawsuit guarantees that new development will never pay its own way.
Even if rate-increase advocates were correct in their interpretation of this statute, the correct response would not be to just abandon the idea that development should pay it's own way. Rather, the City could still fully recoup its costs if it had a moritorium on new development until it is satisfied that its cost estimates pass legal muster. The state law being cited does not undermine the #nountil strategy.
With respect to issue (2), the 'trigger' adopted by the City does not do what is claimed for it. The fee ordinance requires that "City Council shall review the connection fees relative to their sufficiency to fund new capacity no later than November 1, 2016 ...."** This is a long way from a commitment to actually set the connection fee so that it covers capital costs. Is considering "review" and "relative to" to be 'weasel words' unfair? No - just immediately prior to adopting the foregoing language the City Council adopted a Resolution guiding its thinking about connection fees. That resolution - R-1415-60 - explicitly says that "to determine the appropriate charge" it will take into account non-cost information - "total development fees charged by surrounding and comparable cities" (section 18, https://norman.legistar.com/View.ashx?M=F&ID=3383535&GUID=4F934AAC-E43B-4242-9383-215FBCEB4C4A).
The 'trigger' is not a commitment to make new development pay its own way. If anything, its adoption was a repudiation of that principle. A real trigger mechanism might be a way to go forward after we defeat this rate increase, but the adopted policy won't do.
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* The City concluded as much itself in section 10 of Resolution R-1415-60 that passed on Nov. 25, 2014 (https://norman.legistar.com/View.ashx?M=F&ID=3383535&GUID=4F934AAC-E43B-4242-9383-215FBCEB4C4A).
** Ordinance O-1415-18, adopted on Nov. 25, 2014 (https://norman.legistar.com/View.ashx?M=F&ID=3383005&GUID=0038CA6F-9FB7-4AA9-869F-65EA2A4908A0).
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