AGENDA ITEM EXECUTIVE SUMMARY
ITEM TITLE*
title
Proposed OWASA Reimbursement Policy
presenter
RESPONSIBLE STAFF, TITLE, DEPARTMENT*
Tas Lagoo, Long-Range Planning Manager, Planning Department
STAFF RECOMMENDATION*
Authorize the Mayor to submit a letter to the Chapel Hill-appointed members of the OWASA Board of Directors demonstrating support for the proposed reimbursement policy and encouraging continued staff collaboration in finalizing the policy.
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LEGISLATIVE CONTEXT*
OWASA is an independent entity responsible for providing water and sewer services to the Towns of Chapel Hill and Carrboro. OWASA is governed by a nine-member Board of Directors. Five of the members are appointed by the Chapel Hill Town Council.
BACKGROUND AND CONTEXT*
Under OWASA’s current policies, once a developer expands water or sewer infrastructure, “future benefitting parties” that tap into the new lines are not responsible for any of the original infrastructure construction costs. The cost of expanding the infrastructure is borne entirely by the first developer.
Based on stakeholder requests, OWASA is considering adopting a new reimbursement policy that would allow developers to recoup some of the costs associated with expanding water and sewer infrastructure. The new policy would allow a developer that expands water and sewer infrastructure to be partially reimbursed by future benefiting parties.
TRADEOFFS, ALTERNATIVES, IMPACTS
The proposed policy is intended to address the “first-mover disadvantage”: disproportionately high up-front costs for the first developer to do work in an area. Allowing the initial developer to recoup some of its infrastructure costs should lessen financial barriers to new development in previously underdeveloped areas.
The proposed policy spreads out infrastructure costs among multiple developments. Relative to the current policy, developers that install new infrastructure may see lower overall costs while future benefitting parties may see higher costs. These higher costs may be difficult to bear for some smaller-scale projects or existing homeowners.
The overall impact to future benefitting parties is difficult to judge. Without the proposed policy, future benefitting parties would have been able to tap into new infrastructure without owing a reimbursement to another developer. However, under those circumstances, there may not have been another developer willing to install the new infrastructure in the first place.
FINANCIAL IMPACT
In most cases, the proposed policy will not have a direct financial impact on the Town.
If the Town extends water and sewer infrastructure to support a Town-led project, the proposed policy would allow the Town to recoup some of the costs associated with the new infrastructure.
ATTACHMENTS
Resolution
OWASA_Draft Reimbursement Policy (Prepared by OWASA staff)
OWASA_Example Reimbursement Scenario (Prepared by OWASA staff)
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