Memorandum

City of Lawrence

City Manager’s Office

To:	Dave Corliss City Manager
From:	Debbie Van Saun Assistant City Manager
cc:	Ed Mullins, Finance Director Dave Wagner, Utilities Director
Date:	July 10, 2007
Re:	Fee waiver policy

As you know, two groups in Lawrence, Tenants to Homeowners (TTH) and Lawrence Habitat for Humanity (LHfH) are requesting consideration by the City Commission of a waiver of fees associated with providing water and sanitary sewer service.  It’s my understanding that the following fees are included in this request for waiver policy:

· Water system development charges (SDC) (currently $1,350 for a residential 5/8” meter

· Wastewater system development charges (currently $1,310 for a residential meter)

· Water meter tap fees ($435 for a residential 5/8” meter)

These fees total $3,095 and are scheduled to increase to $3,405 in 2008 unless SDC’s are increased above what is currently in the City code.  TTH projects that they will be requesting fee waivers for up to ten houses per year ($34,050).  LHfH estimates annual fee waiver requests for seven houses ($23,835).  Using these estimates for 2008, both entities would be seeking a total of $57,885 in fee waivers.

The City code provides for the City Commission to exempt certain service connections from the requirement of SDC’s “provided that the City Commission finds that such exemption serves the public interest pursuant to an adopted policy concerning exemptions.  The City Commission may direct the transfer of other lawfully budgeted funds to the Utility Fund in lieu of the system development charge” (19-906.B).The meter tap fees are set out in the City’s Development Policy and there are no provisions within that policy to waive fees, nor is there any restrictive language contained therein that would prohibit the Commission from waiving meter tap fees.

Staff has the following comments about the development of a fee waiver policy:

1) Developers of affordable housing units other than LHfH and TTH may request fee waivers.  At this time, the city does not have a definition for affordable housing units.  It has been suggested that waivers might be granted only to those entities providing affordable housing by a 501(c)(3) qualified non-profit or some other sort of qualifier. 

2) A waiver of fees for affordable housing units moves the costs for providing services (meter and tap fees) and water/sewer system capital improvements (SDC) to other rate payers.

3) A preferred method of handling the costs for SDC for affordable housing units would be for the City Commission to budget in the General Fund an amount that can be transferred to the Utility Fund to cover the SDC, per the code language referenced above.  Limitations on qualifying entities and numbers of housing units could be determined when this amount is budgeted.   

A review of fee waiver policies for area utilities recovered the following information:

Utility	Fee waiver policy
Topeka	Chief administrative officer authorized to grant a waiver up to 25% of fees for economic development projects offering extraordinary benefits to the city.  City Council approval required for any waiver in excess of 25%.
Wichita	Council as authority to establish waivers when there is an inherit public benefit to the City (e.g. approved a waiver for new infill housing construction as an incentive to attract new development into areas targeted fro revitalization)
WaterOne (Johnson County)	Does not offer waivers
Johnson County Wastewater	Does not offer waivers
St. Joseph	Does not offer waivers

Staff Recommendation

Due to the amount charged for the meter tap fee (currently $435 per meter) to cover labor and materials for this service, staff recommends that these costs not be waived.  This cost does not represent a significant portion of the cost to provide housing.  For system development charges, staff recommends that the City Commission proceed with the practice outlined in 3) above.