HomeMy WebLinkAbout8.5.14 SDC Review Committee Memorandum
MEMORANDUM
TO: Members, SDC Committee
FROM: Raymond J. Bartlett
DATE: August 5, 2014 Meeting
RE: Food & Beverage Tax Impact on Sewer SDC
The Committee asked if the sewer SDC can be reduced because after 2023 the current sewer debts will
have been repaid but the Food & Beverage tax revenues continues. This action is inadvisable as explained below.
The cost basis for the Sewer SDC is primarily the improvement fee portion—$1.833/sq. ft. The reimbursement fee portion is relatively small at $0.195/sq. ft. The improvement fee is based on the Sewer
Master Plan that has 3 sets of priority projects:
Priority Time Line 2012 $’s SDC qualified % Included in Update Rate Payers Other
1 2012 – 2020 $10,791,000 $3,263,430 30% Yes $3,263,430 $7,527,570
2 2020 – 2030 $16,713,000 $5,753,920 34% Yes $5,753,920 $10,959,080
3 Beyond 2030 $5,799,000 $5,153,000 89% No $5,799,000
Totals $33,303,000 $14,170,350 43% $9,017,350 $24,285,650
% 100% 43% 27% 73%
Of the $33.3 million of planned improvements about $14.2 million (43%) is attributable to expanding capacity to accommodate growth. Because of the uncertainty of growth associated Priority 3 capital
improvements, these improvements were excluded from the proposed update of the SDC. This reduced
the cost basis for the improvement fee from $14.2 million to $9.0 million. The remaining $24.3 million will have to be paid by rate payers and from the Food & Beverage Tax.
In Table 14.1 (Comprehensive Sanitary Sewer Master Plan, 2012) the annual debt service exceeds the expected amount of revenue from the Food & Beverage Tax in each year of the forecast except the first
year, leaving nothing to off-set the amount of the proposed SDC. The current debt of approximately $11 million will be fully repaid in FY 2023. However, over the next five years, the City plans to issue an additional $8 million for Priority 1 capital improvements. That leaves approximately $19.5 million of
Priority 1 and 2 projects that will be paid from additional borrowing, or from the accumulation of net
sewer rate revenues, SDCs, and Food & Beverage Tax revenues. Table 14.1 ends in FY 2020 but capital improvements are schedules out beyond 2020. These projects will require more revenue than the Food &
Beverage Tax alone will produce. Also, Table 14.3 forecasts the sewer rate will increase 86% by 2020.
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Food & Beverage Tax Impact on Sewer SDC August 5, 2014
In summation, the SDC is already proposed at a level that excludes Priority 3 projects, most of which are growth related. Beyond 2023, the City will issue more debts to pay for Priority 1 and 2 projects that will
be repaid from sewer rate revenues and from the Food & Beverage Tax. Reducing the SDC would shift more of the cost of growth-related capital improvements onto rate payers who are already facing substantial rate increases.
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