Builders to see swell in fees

By Jeremy Borden

Published: May 30, 2008

Builders and developers — and ultimately homebuyers — will be shouldering a significantly heavier burden to pay for Charlottesville and Albemarle County’s water and sewer projects in the coming fiscal year.

It’s the connection fees paid on new housing that fund many of the area’s larger projects. Regional connection fees, paid to the Rivanna Water and Sewer Authority, will increase 62 percent, to $2,095, for water and 82 percent, to $2,425, for sewer in Albemarle. Other fees specific to Albemarle increased moderately or not at all when the Albemarle County Service Authority approved the new fees last week.

In Albemarle, a developer or anyone building a new house needing sewer and water connections will pay $14,079, including other fees specific to Albemarle, starting Sept. 1. This year they paid $11,790. The city of Charlottesville’s fees are generally about $1,000 less for residential units, though the proposed fees, which would increase, have not yet been adopted by the City Council.

The council is expected to discuss the increases on Monday.

Jay Willer, executive vice president of the Blue Ridge Home Builders Association, said he hopes that officials keep fees as low as possible because builders ultimately pass along the costs to homebuyers in a region that already has a shortage of affordable housing.

“Ultimately, it’s the user that’s the one that pays the fee, and that makes sense to us,” Willer said. But he said the steep escalation in fees could have been paced over time.

“Some of these fees should have been raised some time ago because these are costs you knew were going to happen,” Willer said. “That means it has a more skewing effect on the markets, because suddenly it does cost me this much more to build a house.”

Jamie Spence, the CEO of Church Hill Homes, said hikes in water and sewer connection fees are becoming commonplace across Central Virginia.

“It’s a tough time to go raising fees on builders and ultimately on new homebuyers,” Spence said of the economy. “It’s just another tax on new homebuyers.”

The Albemarle County Service Authority’s executive director, Gary Fern, says increasing connection fees on new development is a good way to get growth to pay for itself.

For example, the region’s long-term community water supply plan will largely be paid for through connection fees, including next year’s, which incorporate a part of the cost of building a new dam at Ragged Mountain Reservoir, Fern said, which would increase the reservoir’s water capacity.

The $32 million dam is a key part of a plan to expand the community’s water supply, and a pipeline to fill the larger reservoir is also in the works, though not for several years.

But the bulk of the authority’s work is still in the day-to-day maintenance of water and sewer infrastructure.

Rates are expected to generate $21 million in revenue while the connection fees are expected to generate $2.3 million, about $350,000 of that for long-term projects.

The service authority recently approved a $26.9 million budget for fiscal 2009, a 14 percent increase over the current fiscal year. Under the county’s tiered billing system, which charges based on usage, the average customer will see their monthly water and sewer bill go up about 19 percent, or about $9.

Under Charlottesville’s proposed rates, the average customer’s monthly water and sewer bill would rise by more than $4, an increase of slightly less than 7 percent.