Linda Kovak recently forwarded me the following AWWU Tarif changes which are scheduled to be on the January 22, 2008 Assembly Meeting Consent Agenda. I forwarded on Linda's comments to others involved in the Hillside District Plan and received a different view from John Weddleton. Below are the two interpretations on how the new tarrif will affect us.
Linda's Comments
The Chugiak Community Council passed a resolution asking for changes in the way that AWWU determines Levy Upon Connection assessments for new city water service or upgrades. The new AWWU Tarrif appears to be unfair to property owners located in rural, large lot areas or coincidentally located adjacent to AWWU installations but who would not directly benefit from the installations. There are 15 lots subject to the new tarrifs that would have a direct cost of between $9,000 - $54,000 per lot and the average being $29,000. This is 4X the cost of drilling a new well and therefore not economically feasible for the landowners of this particular subdivision.
Through the Hillside District Plan process we have been told that extending city water and sewer to our large lots on the Hillside could cost upwards of $120,000 per lot and would be financed with a lein against our property and the assessments collected through our property tax bill - like they aren't high enough already.
We hope that organizations and individuals will formally endorse the Chugach Community Council resolution or pass one of your own requesting similar changes to the AWWU Tariff. It will require the support of many groups to effect such changes to the AWWU Tariff for the Municipality.
John Weddleton's View
The proposed change seeks to encourage owners of large lots to connect to these unrequested pipes by lowering their cost to connect immediately and adding an unknown higher cost if they connect later. As homeowners hurry to take advantage of this new deal, the actual costs of their connections will feed into the 5-year average cost formula which should tend in the long run to bring the cost under this new system to approximately what it is under the current system.
The math works like this. When the new pipe goes in, the homeowners would pay the average of AWWU's actual costs for all connections they made in the last 5 years. That would likely be much less than the cost under the current system since most connections have been in areas with smaller lots in the last 5 years. If they choose not to connect immediately, but do so later, they will be required to pay the average cost calculated at that later time. So the costs to connect will increase over time.
There is really no downside for AWWU for this. They get their money for the project from ratepayers no matter what. This new method increases the likelihood of spreading the costs of the project over more customers. An upside for AWWU comes if homeowners wait to connect later and pay a higher amoung than the actual costs of installing the pipe (5 year past average). Also, if a property that did connect develops at a higher density later, AWWU gets to charge more. Also, after a 3 year grace period, this change applies retroactively to projects already installed. This will encourage homeowners city-wide to connect now at a certain cost rather than face an unknown future costs..
For the impacted homes, the benefits are unclera since they probably didn't want the service or they would have asked for it and instead of a certain cost for possible future connection, they face and uncertain cost. For homeowners who want to hook up, this is a nice deal. For the homeowners who do not want to connect, their main propble is that once a pipe is run along their property line, there may be some pressure to connect to get financing when the property sells.