City To Approve Impact Fee Payment Plan

George Wenschhof

Prior to meeting with City of Frederick administrator Josh Russin and Public Information Coordinator Susan Harding last Friday, Stephanie and Jen of 7th Street Starbucks, where I often write, pointed to an article in the Frederick News Post and said "you need to write about this!"

The article was about how the owner of the downtown restaurant Volt wanted to open up a restaurant in the long vacant property which once housed the grocery store Carmack Jay's on North Market Street. The stumbling block being an estimated $200,000 water and sewer impact fee.

Interestingly, after my last meeting with Josh and Susan, I wrote about the city considering instituting a payment plan for impact fees to hopefully spur business expansion. I added "The devil will be in the details as the city looks at how they can secure a guarantee for payment".

During our meeting last Friday, Mr. Russin informed me the proposal is still being "flushed out" with consideration of a 25 per cent down payment with payment plans up to four years with a monthly or quarterly payment option. Payment would be secured by a certificate of insurance and/or a guarantee by the owner of the property.

A city mayor and workshop meeting held last week further discussed the issue and it appeared approval of the proposal would be forthcoming.

According to Russin, review by staff and aldermen is near completion and it is likely the proposal will be placed on the November 3 mayor and board agenda for a vote.

A payment plan makes sense, especially during a difficult economic climate, as a way to help encourage business growth in the city.

Russin indicated that although a recent new restaurant paid their water and sewer impact fee in excess of $200,000, the city realizes a payment plan option is a more business friendly approach.

However, a $200,000 water and sewer impact fee for a new business is steep even if a four year payment plan is implemented.

During our conversation, I discovered the impact fee originated as a way to pay for the estimated 120 million in required water and sewer system improvements over the next twenty years.

Improvements include a 53 million nutrient enrichment reduction upgrade along with costs associated with the water agreement the city negotiated following a building moratorium instituted due to inadequate water supply.

In addition to the newly created impact fees, existing property owners saw their water and sewer bills increase by 10 per cent.

A thought I threw out for further research and discussion was requesting from the state General Assembly a special taxing authority for The City of Frederick.

Creating an specific enterprise fund paid by an increase in the transfer tax on the sale of property within the city to raise funds to pay for the required infrastructure improvements may be another way to raise the needed funds.

The transfer tax fee is shared equally between a buyer and seller so for example; a 1/2% increase would result in a $500 increase on the sale of a $100,000 property with the buyer and seller paying $250 each.

As all residents in the city are benefiting from the necessary upgrades, a transfer tax may be another way in which to raise the needed capital.

The taxing authority would have a sunset provision and end when the funds needed to pay for the improvements had been obtained.

Stay Tuned...

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