OLR RESEARCH REPORT
November 25, 1998
SEWER LINE EXTENSION CHARGES
By: Kevin E. McCarthy, Principal Analyst
You asked how municipalities charge for sewer line extensions. Copies of relevant ordinances and policies are enclosed. We have also enclosed the results of a survey conducted by the Department of Environmental Protection on sewer extension charges.
State law gives municipalities broad discretion in how to charge for sewer line extensions.
This memo focuses on the policies of seven mid-size municipalities (Bristol, Danbury, Fairfield, Manchester, Middletown, Stratford, and Trumbull) whose policies regarding sewer line extensions range widely. Some do not construct new lines themselves, instead placing this responsibility on the owner or developer of unsewered property. Others have separate policies for lines they construct and those constructed by the developer.
Most of the municipalities that construct lines recover the entire project cost from assessments on the property owners who benefit from the extension. These municipalities use formulas based on such factors as frontage on the sewer line, the affected properties' assessed value, land use, and acreage. But Bristol uses taxes to cover part of the cost of extensions and the assessment in Fairfield is not based on project costs. Most of the surveyed municipalities allow property owners to pay the assessment over an extended period, often 10 to 20 years. Most of the surveyed municipalities also charge property owners when they tie into the sewer line.
CGS § 7-249 allows municipalities to impose assessments on properties that benefit from new sewer lines to pay for their construction and related costs. The assessment cannot exceed the benefit to the property. In determining the benefit and the assessment, the municipality may consider the property's size, frontage, assessed value, current or permitted use, and any other relevant factors. Under CGS § 7-249a, any municipality that builds a sewer system with federal assistance may alternatively assess industrial users of the system in proportion to the costs these users impose on it.
The Water Pollution Control Authority (WPCA) charges the property owners for the cost of building an eight-inch main. The added costs of building a larger sewer, if the WPCA determines this is appropriate, together with the costs of such facilities as pump stations are not borne by the property owners, but are instead covered by the connection charge paid by all ultimate users. If the connection charges do not cover the costs of additional facilities, the excess is recovered from the city's General Fund or through agreements with the developer.
One-third of the cost of building an eight-inch main is assessed against the property owners who benefit from the main. This part of the charge is divided by the number of “units” potentially served by the main. In residential areas, each housing unit in existence or allowed under the zoning ordinance counts as a “unit”. In other areas, a “unit” is 1,500 square feet of gross building floor space in existence or allowed under the zoning ordinance. The second third of the cost is covered by connection charges, which go into effect when a property is connected to the main. The final third of the cost is borne by taxpayers in the city.
The ordinance sets the payback period for the assessment and connection charge, which ranges from one year for amounts up to $500 to 20 years for amounts above $10,000. Payments must be made twice per year and no interest is charged for the first payment. The interest rate is capped by the rate the city pays on the bonds financing the project. The ordinance also provide for special charges for sewers built by private owners and for increased intensity of use of sewered property.
In most cases, property developers are responsible for constructing sewer line extensions. Individual property owners are charged a connection fee of $200 per parcel plus $300 per unit.
Property owners in a developed but unsewered area can petition the city for an extension. The city estimates the cost and surveys the affected property owners to determine whether they wish to go forward with the project. While the survey is only advisory, the city generally complies with the owners' wishes. If the project goes forward, the assessment is based on each parcel's acreage, assessed value, and frontage and the number of units that can be built on it. Property owners also pay a $200 per parcel connection fee.
The charge is based on a formula, established by policy, which is not tied to the construction cost of a project. The formula was first adopted about 30 years ago and is amended every time the town revaluates its grand list. The current charge is $30 per frontage foot, 6% of the property's assessed value, and $750 for each lateral. Property owners have 20 years to pay off the assessment. Charges do not include interest for the first year; the interest rate for the remaining years of the term starts at 3% and increases to 6%. The town picks the costs not covered by the assessment.
The town does not construct sewer line extensions. Instead, the individual property developer or owner who wants an extension must hire a contractor to build it. The contractor's work is subject to the town's supervision, and the developer must pay an inspection fee of $3.10 per linear foot. The town also charges a connection fee of $400 per dwelling unit ($600 in the Comprehensive Urban Development Zone bounded by I-84, Deming and Buckland streets, and the South Windsor town line). The charge is $1,000 per acre for institutional uses and $2,000 per acre for other uses ($1,500 and $3,000 per acre, respectively, in the zone). The town also charges a $40 inspection fee per connection.
The WPCA's method for charging for extensions depends on whether the property owner or the WPCA installs the sewer main and whether the property is residential or non-residential. If a property owner installs the sewer main himself, there is a one-time charge that is based on the type and size of the water meter. For residential properties, the charge currently ranges from $500 to $62,500. For nonresidential properties the current range is $750 to $93,750. In practice, the only cases where the applicant has installed a main have been residential developments subject to the minimum charge.
If the WPCA installs a main in a residential area, it imposes charges for each unit and buildable lot on the property and for the lateral connecting the main to the curb. Currently these charges are $1,500 per unit, $750 per lot, and $600 per lateral. Thus, for a single-family home on a single lot, the total charge is $2,850. For nonresidential properties, the charge has three components. The first is based on the type and size of the meter, ranging from $1,500 to $187,500. The second component is based on the lot size or gross building area, with the smaller charge applying. The lot size alternative divides the lot size (in square feet) by 21,780 and multiplies the result by $750. The gross building area alternative divides the gross area of the main and accessory buildings (in square feet) by 5,455 and multiplies the result by $750. The third component is a lateral charge of $600.
All of these charges apply when the property owner connects his property to the sewer. Under current practice, when a property owner connects to a WPCA-installed main, he can pay the charges in annual installments over ten years. No interest is charged on the first installment; for subsequent installments, 8% interest applies to the unpaid balance.
The WPCA has proposed making extensive changes in its policy, which will increase most charges by approximately 15% to 20%.
In residential areas, the WPCA bases the extension charge on the number of housing units allowed to be built on the parcel. For example, if a sewer was put in a street with nine homes, one of which was on a double lot, the owner of the latter property would pay 20% of the project cost because he owns two of the affected ten lots. The remaining eight property owners would each pay 10% of the costs. For extensions in non-residential areas, the charge is set by a formula contained in an ordinance. The WPCA sets the payback period for all charges on a case-by-case basis. If the property owner's charge is less than $10,000, the payback period can be up to ten years; if it is more than $10,000 it can be up to 20 years.
By regulation, the town divides the cost of an individual project by the front footage of the affected properties and charges property owners accordingly. In addition, the town charges $500 per lot, plus $250 for the second and subsequent dwelling unit on a lot. Industrial and commercial properties are charged $250 for the second and subsequent connection. Industrial and commercial properties larger than one acre are charged as if they were divided into one-half acre lots.