Developer fees will pay for less of the San Antonio Water System’s Vista Ridge pipeline than they might have under State law, after City Council approved a fee structure that did not assess the maximum amount allowable.
Council members on Thursday approved 13 impact fees for water and sewer service, 12 of which were set at the maximum rate. For one “water supply” component meant to offset the cost of the $2.8 billion Vista Ridge pipeline, the fees will cover a projected $383 million over 10 years instead of the nearly $471 million that could have been possible.
The fees passed despite the opposition of Councilmen John Courage (D9), Clayton Perry (D10), and Greg Brockhouse (D6), who voted no.
At the meeting, Courage argued strongly that it makes no sense for SAWS to charge developers anything other than the maximum rate for Vista Ridge, a project clearly intended to supply water for San Antonio’s growth.
Previous City Council members voted unanimously in 2014 on the contract to supply up to 16.3 billion gallons per year from aquifers below Burleson and Milam counties east of Austin. They voted unanimously again in 2015 to approve water rate increases to support Vista Ridge.
“We needed it for growth, not what for what we had, but for what we were going to have,” Courage said. “So the City Council in its eternal wisdom said, ‘OK, we’ll go ahead and do that. We’ll rely on growth to pay for it.’ Well, growth did not pay for this project.”
SAWS Chief Financial Officer Doug Evanson said the utility would continue to collect some level of impact fees for Vista Ridge after 2020, when the pipeline begins operating.
SAWS customers could see their water bills rise by as much as a Council-approved 9.9 percent next year – part of a 50 percent increase to the average customer’s bill from 2016 to 2020 to pay for Vista Ridge and required sewer improvements, among other infrastructure.
Evanson said the municipally owned water and sewer utility’s executives are working on seeking a lower rate increase than 9.9 percent but would not say how much lower.
“That’s the maximum amount,” Evanson told the Council. “I don’t think we’re going to come in with a figure near that figure.”
The impact fee City Council approved is the result of what SAWS officials dubbed a “compromise” hammered out over about five months by members of SAWS’ Capital Improvements Advisory Committee (CIAC).
As in other states, Texas allows water utilities to assess impact fees on developers so that growth pays for growth and existing customers don’t unfairly subsidize the cost of future development. State law governs the formulas used to calculate impact fees. City Council last voted on impact fees in 2014.
The CIAC is a big part of the process, with seven of its 10 members made up of people from the real estate and development industries.
CIAC members and SAWS officials have said that the lower-than-maximum rate for the water supply impact fee is based on intricacies in State law and the way the contract is structured with the private businesses building Vista Ridge. These nuances would have allowed developers to come back within a year, after water starts flowing through Vista Ridge in April, and request that the impact fee be lowered, they said.
“I think this was a compromise position,” Evanson told Council members. “The CIAC could have asked to come back and look at it a year from now. If we had approved the [maximum impact fee], I think there’s a large likelihood we would have been back in front of you a year from now asking to lower it” to a level below the fee the Council approved on Thursday.
Before the vote, a coalition of SAWS’ staunchest critics spoke against the lower impact fees. They included groups on the left and right of regional politics, including the League of Independent Voters, the Alamo Group of the Sierra Club, and San Antonio Making Bureaucracies Accountable, among others.
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“You’re the seventh-largest city in the nation; you don’t need to subsidize growth,” James Murphy, a water attorney and former Guadalupe-Blanco River Authority executive manager, told council members. “[Developers] want to be here.”
After the vote, Mayor Ron Nirenberg, who voted for the new impact fees, said he agrees with “the sentiments being expressed” and said the focus should be on efforts restructure the SAWS rates that will occur over the next year and a half.
“We have to be very careful that as we expand our water supplies that we are doing so in a way that protects homeowners and that we show that it is not on the backs of current residents that we continue to experience and welcome the growth that’s occurring in our community,” Nirenberg said.