City to consider excusing sold lots from sewer fee hike
In response to complaints from the local development community, the Eudora City Council acknowledged a recent fee hike on new construction overlooked one detail.
After a lengthy public hearing June 28 at which Eudora residents insisted the cost of sewer-system expansion projects should be borne by new development, the Council agreed to increase the sewer connection fees. The new schedule raised the fee on a new single-family home from $1,500 to $3,250. The sewer tap fee that was $100 is now $300.
Faced with a deadline to apply for a low-interest state loan that will finance the improvements, the Council agreed to make the fee increase effective immediately.
Speaking to the Council on Monday, Philip Struble of Shadow Ridge developer Land Plan Engineering said he understood the reason for the fee increase and supported the projects it would help finance. In most cases, developers or builders would just pass the increased cost on to homebuyers, he said.
But there were a number of lots already under contract to homeowners, Struble said. In those cases, the builders would be stuck with the fee increase, he said.
"We have a number of properties that are committed," he said. "It's going to be difficult to recoup that cost.
"What I'm asking is you acknowledge these properties exist, and we can work with staff to deal with them."
Struble said he was partly to blame because he didn't attend the earlier meeting to voice any concerns. Council member Rex Burkhardt said the Council shared the blame for not anticipating the problem.
"In hindsight, I think we should have said the increase applies at some future date," he said.
Although Council members agreed developers and builders shouldn't be stuck with the added cost for lots and homes under contract, they rejected Struble's suggestion to excuse all platted lots from the fee increase.
City Attorney Jerry Cooley warned of another possible problem. The fee increase was approved to provide revenue to pay off a low-interest loan from the state for the sewer improvements.
"We need to find out how many dollars we would lose should we excuse those lots," he said. "I sense it would be a large part of the anticipated income."
Although that was a concern, the Council instructed City Administrator Mike Yanez to work with developers to identify lots under contract before Monday's meeting so the Council could consider "grandfathering" those homes.
Brett Fritzel expanded on Struble's remarks to question the consequence of the fee on developers.
The developer and builder of the Meadowlark subdivision said there was a misconception of the profit margin builders made on homes. Inflationary factors, primarily increases on building supplies, were eating up the profit margins he planned when he put together his business plan for the subdivision three years ago, Fritzel said.
"I don't make a 15-percent margin," he said. "It's not 5 percent on most jobs."
Passing the fee increase on to homebuyers would make it difficult to sell the $235,000 to $450,000 homes he built, particularly with interest rates rising, Fritzel said. All that threatened the health of his and other businesses in Eudora that were adding to the tax base, he said.
Looking into the future, the developer said he was also concerned the city wasn't doing enough advanced planning to ensure the basic infrastructure needs would be there to sustain his and other builders' businesses in four or five years.
Council members Don Durkin and Scott Hopson said the sewer fee increase was a needed step in responding to the city's future needs. More such development fees should be created to help with the costs of streets and water improvements, they said.
"I want you to come to our town and make money," Hopson told Fritzel. "My concern is those on fixed income. Those people have a single source of money and every year it brings in less."
The next of those promised fees on development was discussed Monday when the Council considered how the city could recoup some of the engineering and administrative costs associated with the review of development proposals.
Currently, the city does not charge developers for staff time or that of its consultants. City Administrator Mike Yanez said the city had spent $17,000 so far this year for engineering reviews.
Connor said the city's four options were to continue with the city bearing all the cost, requiring developers to pay all costs, establishing a lump sum fee, or requiring developers to pay for all costs after an initial review.
The last option appeared to be the most popular with the Council. Conner said he thought the point at which developers should be asked to start paying for staff and consultant reviews was when a proposal makes it to the Planning Commission.
It was agreed to forward the issue to the Planning Commission for its input.