I will return to the subsidy theme later, of course, but first things first. One of the biggest worries about these sorts of proposals is the political obfuscation they spawn. To try to head that off, I sent the following letter to the City Council tonight:
"Dear Councilmembers,
I wanted to drop you a line about Item 50 on the May 12, City Council Agenda (K-1415-132). It is on the consent docket, so I am under no illusion as to whether it will pass. I do think it is important, however, to be very clear about the implications of conducting this study and even seriously considering its results.
1) The contract with Raftelis Financial Consultants is an explicit rejection of the Wastewater Systems Master Plan.
(a) The Wastewater Systems Master Plan (http://www.ci.norman.ok.us/sites/default/files/WebFM/Norman/Utilities/MasterPlan.pdf) includes a cost allocation (pp. 4-9 to 4-11). This allocation requires the part of the population to whom Norman had contractual obligations as of 2001 to pay for 13.9 Million Gallons per Day (MGD) of sewage capacity; post-2001 development is supposed to pay for 7.6 MGD additional capacity at ‘full build out’. The only mechanism Norman has to allocate costs to the post-2001 population was/is the Wastewater System New Development Excise Tax. The recent wastewater capacity increase from 12 MGD to 17 MGD made it clear, however, that the excise tax hasn’t collected enough moneyfor post-2001 development. The most anyone even claims is that the excise tax (current & future collections) is sufficient to pay for the 3.1 MGD that post-2001 development is responsible for in the most sewer system upgrade. The last 4.5 MGD required for ‘full build out’ (planned for the North wastewater treatment plant) are (1) the responsibility of post 2001 development and (2) completely unfunded.
(b) K-1415-132 explicitly repudiates the cost allocation in the Wastewater Systems Master Plan. It is concerned with the exact same projects - "the next phase of planned wastewater infrastructure including, but not limited to construction of the new North Water Reclamation Facility (WRF) ..." (Text file K-1415-132) - but it calls for the development of a new funding model - "Recommend how wastewater user charge revenues and wastewater excise tax revenues should be used to fund future capacity, maintenance obligations and infrastructure improvement costs" (Text file K-1415-132).
2) The contract with Raftelis Financial Consultants is an explicit rejection of the principle that new real estate growth should pay it’s own way. This is actually a corollary of the first point, but it can be established independently as well.
(a) Historically, Norman has approached the problem of paying for the costs on the City imposed by new real estate development by way of “[t]he incremental cost method” in that it has “focuse[d] on the cost of adding additional facilities to serve new customers that can be tied to an approved capital improvements plan (CIP), infrastructure improvements plan (IIP), or master plan” (http://www.raftelis.com/services/#rfc_services_1).
(b) K-1415-132 rejects this approach, however, because it is focused on non-cost information about wastewater treatment capacity - it will “[a]ssess the impact of the wastewater excise tax on City development based on a comparison to both surrounding and comparable communities” (Text file K-1415-132) - as well as non-cost information about new water capacity - “establishing water connection charges in relation to actual system capacity and the total development fees charged by surrounding communities" (Text file K-1415-132).
There are, no doubt, a host of things to be said about the advisability of sticking with the Wastewater Systems Master Plan or repudiating the new-development-should-pay-its-own-way principle. It would be disingenuous to claim, however, that either the Master Plan or the pay-you-own-way idea survives when we are asking for incompatible replacements.
Stephen Ellis
Ward 4"
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