Impact fees going up via ‘82 policy

Decades-old error means residential fees will be higher in Port A


The headquarters Nueces County Water Control and Improvement District No. 4 is seen on Howard Boulevard on Monday, Sept. 5. Certain capital impact fees charged by the water district are set to go significantly higher soon. Staff photo by Dan Parker

The headquarters Nueces County Water Control and Improvement District No. 4 is seen on Howard Boulevard on Monday, Sept. 5. Certain capital impact fees charged by the water district are set to go significantly higher soon. Staff photo by Dan Parker

It’s looking like folks who want to connect water service to newly built residential structures in Port Aransas soon are going to have to pay a lot more for that than they used to.

It’s set to happen because Nueces County Water Control and Improvement District No. 4 has been charging the wrong amounts for residential capital impact fees at least since 1993, according to officials with the agency.

It’s reportedly due to a years-back clerical error made on a spread sheet, and the problem wasn’t noticed until about three weeks ago, as a result of a self-imposed annual audit.

After the audit discovered the discrepancy, water district officials contacted the South Jetty and provided a notice to announce that fee levels established by the board in 1982 for residential construction would be implemented.

Effective on Oct. 1, the water district is set to begin charging a higher impact fee for every meter size when someone who just built a new residence first connects to the water supply.

Right now, a fee of $1,371.50 is being charged, no matter what size a meter is.

Starting Oct. 1, the fee will be higher for the smallest meter size, ¾ inch, and the fees will be increasingly higher for larger meters.

The previous fee was based on a 5/8-inch meter – a size that no longer is used.

The fee for the ¾-inch meter will be $2,110, according to a notice issued by water district staff to the South Jetty on Friday, Sept. 2. That’s about 54 percent higher than the current fee.

Most single-family residences use ¾-inch meters.

The water district notice said the rest of the fee changes will go like this:

• $13,715 for a 1-inch meter, an increase of about 900 percent;

• $27,430 for a 1½-inch meter, an increase of about 1,900 percent;

• $48,002.50 for a 2-inch meter, an increase of about 3,400 percent.

Gallons of water flowing each day through the meters are as follows: 1,000 gallons for a ¾-inch meter, 6,500 gallons for a 1-inch meter, 13,000 gallons for a 1½-inch meter and 22,750 gallons for a 2-inch meter.

Water district officials emphasized that the current water board hasn’t approved new fee increases. Increases approved by water board directors decades ago are being implemented, they said.

“We want to be clear that we’re not raising rates,” said Josh Garcia, president of the water district’s board of directors. “We’re not changing any of that. We’re literally implementing what we had determined that was fair and what was just, what was right. And that goes back to 1982.”

No changes will be made to the impact fees paid by businesses because they are charged not by meter size but by general use type, and the clerical error had no effect on how much has been charged to businesses, water district officials said.

How is it that the water district has been charging the wrong amount all these years without someone catching the mistake, despite multiple audits over the years?

Auditors don’t look at every single line in financial statements, responded Scott Mack, the water district manager. They randomly check various components of the statements, and for all these years, the line in question wasn’t checked until during an audit just a few weeks ago, Mack said.

“There’s been a lot of board members, a lot of auditors that have come in to do audits, and nobody has ever caught it until now,” Garcia said. “… How do we make it that long without catching it? … It was just overlooked.”

Garcia said he doesn’t expect the water district to try to track down the people who paid the too-low fees and make them pay more.

He said it was a water district staff decision to now begin implementing the fees that originally were approved in 1982. He said he agrees with the decision.

No board vote is required to implement the higher impact fees because the board approved it 40 years ago, Garcia said. He said the water district has consulted with its attorneys and determined that it is legal to proceed like this.

But he added that he expects there to be a board discussion of the topic sometime fairly soon.

No meeting has been scheduled yet. The board doesn’t meet regularly. Meeting dates reportedly are scheduled on an as-needed basis, when water district officials feel the need for one.

Capital impact fees are one-time charges made only when a newly built structure taps into the water system.

The idea behind the fee, Garcia said, is to charge the owner of each new building for the additional burden that the building puts on the water system in terms of infrastructure, maintenance and more.

The impact fee changes won’t affect the monthly bills that water customers pay the water district for water and sewer service, Garcia said.

Did the clerical error that was made long ago result in such a loss of revenue over the years that the water district has gotten behind in updating its infrastructure?

Garcia responded: “I think if we’re behind on infrastructure, it’s because of (Hurricane) Harvey. But I can also follow that up with the fact that we were so far ahead of everyone else, as far as water, because of what the district does. And because the district stays progressive.”

He said the water district has done a good job over the years of planning and keeping up with demands on the district’s system.

“And that’s why we were so effective in Harvey (in 2017),” he said. “And that’s why (Port Aransas) went such a short period without potable water and without drinking water, without washing water and that sort of thing. So, I see that perspective, I fully do. I see the fact that people would say, ‘But what about all that money?’ The same thing that can be said is that there was a lot of people that … were able to get into their homes for a lot cheaper than they could have now. So, I mean, it goes both ways. But I don’t think the district lost anything because of it. I don’t think that it put us back any. … You know, we weren’t behind because we missed out on that money. The district’s always been able to take care of itself … So, we’ve always stayed a little bit ahead of the par.”

Longtime board member Ed Reed said that revenue from capital impact fees charged for new residential construction can be used only for new water system improvements. If they’re not used for that, the money must be returned to the public, he said. But the procedure for how that would happen hasn’t been determined because it’s never happened before, he said.

Builders and developers might say that the upcoming impact fee implementation will hurt their business plans. Will they have to pass the added expense along to their customers?

Garcia: “You don’t want to be that stern about it, but at the same time, it is the standard. Now, this is going to be what the standard is from here on out. … Without using any examples of builders, there’s a lot of builders that, you know, come Oct. 1, these builders that had built 10 homes up until now — they got in on a good deal. And now … if their plans call for something larger, it’s going to have to be what it is.”

Some might say that the water district has gotten along fine all these years without these higher fees. So, why go to these higher fees now?

“I think that when that board in the ‘80s decided on it, they were rational-thinking people, just like any of us,” Garcia said. “… It only makes logical sense that if you had a two-bedroom, single-family home, that a three-story multi-bathroom, multi-bedroom home should pay more, because the flow rate is considerably different. … I would think that if we asked any of the citizens in Port Aransas … they would say, ‘Well, of course it needs to be a different rate. That’s my thinking. And I think a lot of people would go right along with that. … I think that it’s fair.”

Dan Parker can be reached at dan@portasouthjetty.com.

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