Two measures were passed Tuesday night by Salida City Council aimed at reducing water and sewer system development fees or “tap fees” that create a barrier to the construction of affordable housing, particularly affordable rental units, in Salida. A tap fee is a one-time fee paid by a property owner or developer when a unit is first connected to a public water line or sewer.
The first measure passed was an ordinance amending the code to create additional classes of residential water customers that would allow tap fees or water rates to be set differently for each class. Three new categories were created: Accessory Dwelling Units (ADUs), which are separate dwelling structures of less than 700 sq.ft. on residential lots, Multi-Family Residential Units, which include apartment buildings and condos of three or more units, and Legally Restricted Affordable Housing.
The second measure passed was a resolution setting the tap fees within each class. It sets the tap fees for units in a Multi-Family Residential complex at 75 percent of the fees for single family residences, and those for ADUs or Legally Restricted Affordable Housing Units at 40 percent of the fees for single family residences and the units of duplexes.
The resolution does not change the monthly water and sewer rates paid by single family residences. It does, however, add a legal structure that would allow rates to be set differently for the various classes in the future. Currently, each apartment unit or condominium unit in a complex, or an ADU, is charged the same fee as a single family residence (SFR).
Concern was expressed among the majority of council over Multi-Family Residences, specifically that the reduction is not enough to encourage the building of urgently needed rental apartments. Under the resolution, fees are the same for all units in the multi-family class: 75 percent of SFR rates, or $10,289 for water and sewer. That fee structure, while not a barrier to building a million dollar condominium unit, could be a barrier to building a $150,000 apartment unit.
Whether charging different fees on a sliding scale based on the values of units could be considered was a question raised by Council member Dan Shore. He asked whether charging different fees on a sliding scale based on the values of units could be done, maybe by using the incentive approach used for affordable housing.
Council member Harald Kasper raised the issue of whether commercial tap fees for an entire complex rather than residential fees per each unit could be applied, which had been done is some situations in the past.
During public comments, housing developer Paige Judd also maintained that the 75 percent SFR rate would still deter builders from building low cost (affordable) apartments. She proposed that 40 percent of SFR usage was closer to actual usage by apartments from her experience as a builder and owner of apartments.
John Diesslin, who builds condos and apartments, stated that a fee of 75 percent of SFR rates would not make much difference to one who builds condos for sale, and still would create a barrier to one who builds apartments for rent. He suggested classifying apartments-for-rent and condominiums-for-sale differently.
Monika Griesenbeck objected to the idea of reducing tap fees as an incentive to builders to build low income housing. She declared that it would jeopardize the Salida Water & Wastewater Fund and could require single family unit customers to make up losses. Mayor PT Wood countered, pointing out that the fee numbers came from the study that is being made and that the W&WW Fund is whole and healthy.
The 75 percent SFR usage for Multi-Family Residences came from research of actual usage done by Bill Enquist. The budget further provides for a complete water fee study by an expert firm to clarify options that would keep the Salida Water & Wastewater Enterprise Fund sound and still achieve the City’s affordable housing goals.
Council members Harald Kasper and Justin Critelli further noted that the City’s current rules regarding ADUs discourage homeowners from renting them.
All council members agreed that this is a first step and required further study. They concurred that the city should proceed cautiously and make changes as experience is gained.
Council member Mike Bowers expressed the most concern over water fees and was the only one to vote “no” on the measures. He and Shore voted for an amendment to add a sunset clause to the measures, which was defeated. The mayor noted that these measures were step one of an ongoing process and that Council could act to change them at any time, [as we] “go into the great unknown and see how that works.”