Tuesday, March 13, 2007

Subsidizing Sprawl

As my regular readers may know, I am starting a rehab project in my downtown building. I will be converting a formerly vacant 2nd floor apartment/retail space into two apartments. Everything looks fine on the permit front and the city is not imposing any excessively burdensome requirements on us. However, it seems we will have to pay up to $3,000 per unit to the water department. Now I already have water going into the building and up to the second floor, and of course I will be paying my water bills like everyone else. But this tax/fee is imposed, I'm told, to recoup the cost of the expansion of the water treatment plant.

Until now, it was my understanding that the recent water agreement between Racine and the outlying communities was such that Racine would be getting enough money from the other communities, and then some, such that Racine residents and businesses would not be paying the bill. And this makes sense because Racine's population is decreasing and presumably Racine's demand for water would likewise be decreasing. Thus the expansion was not for Racine's benefit but for the outlying areas that would be demanding more water. Therefore, they should pay for the water if they want it. Racine residents and businesses should not.

Why are Racine residents and business owners subsidizing the water bills of our wealthier suburban neighbors?


scammed in Caledonia said...


The outlying areas ARE paying and paying dearly! However, the sewer and water agreement was sold to us as money for the City of Racine to use to subsidize the library, zoo, museums, etc.

You may have noticed that recently there's been discussion of a sales tax to help fund those entities and the zoo has recently instituted a user fee.

Now you're stating that the money from suburbs was to offset Racine residents water bills and/or new development in Racine.

My question, and I continue to ask this question to no avail, IS WHERE ON EARTH IS THAT MONEY GOING?

It's obviously not funding the quality of life initiatives as was promised, and according to your story, it's not being used to offset new development water fees in the city.

Denis, time to do some investigative work and ask your friend the mayor where this money is going. Inquiring minds want to know!

Denis Navratil said...

I will ask the mayor. I don't mean to start a city/suburb issue here, but expansion of the water and sewer system is not because of development in Racine, as Racine is losing population. Perhaps city and suburbs are getting scammed.

Now, contrary to one of your points, I didn't think that suburban money was to offset the cost of water to Racine, but that the suburban money would pay for the additional capacity required for the suburbs, and that the city would have additional money, as you noted, for the zoo etc...

Something is amiss, you are correct. I will look into it and report my findings. However, I suspect that a professional independent audit would likely be needed to get an accurate accounting of the spending.

scammed in caledonia said...

My comments weren't intended to start an issue between city and suburbs either, and you're absolutely right about the expansion of the utilities being based on growth in the suburbs.

In fact, suburban sprawl should be benefittingthe city financially - that was the whole idea of this agreement. Our fee to the city is based directly on a percentage of new growth, and my understanding is that we're paying in excess of the user fee in order to benefit the city, zoo, museums, etc.

I supposed it's possible this money is being diverted to other developments in the city, but as you mention, there's not much development.

However, the agreement struck between the city and municipalities included subsidies for those quality of life initiatives and I'd sure like to know if they're seeing any of that money. The reasoning at that time was that these entities were not used exclusively by city residents and therefore, suburbanites should pay a portion as well. To my recollection, that was what "sold" the agreement to many residents I know. Had we thought this money would be diverted to other initiatives, there may have been opposition to the entire sewer/water agreement.

So, hopefully, you will understand why I'm choosing to use the word "scammed."

I've heard, strictly off the record, from various officials that they don't believe any of that money is going to the zoo, etc.

And maybe there will be no answer without an audit, but I'd appreciate any info you can obtain.

Anonymous said...

Interesting discussion. Was curious about city funding of the zoo and other services. Some quick googling and found the city of Racine budget. City expenditures for zoo and wustum are up slightly from 2005 to 2007 budget. I then checked county budget and dont have exact same year comparision, but funding trend is clearly down at county level.

So the decline in funding for quality of life looks to be more MacReynolds/county than Becker/city.

I didnt look up anything on sewer/water, but woudl be curious.

Greg said...

The idea behind REC fees is that growth in usage pays for growth in the system - regardless of where the increased demand occurs. If a building did not previously have residential units and it does not, it will have increased usage. As that happens throughout the area, the system infrastructure needs to be upgraded. REC fees allow these upgrades to occur without hiking rates on existing users to fund the upgrades.

Denis Navratil said...

Thanks Greg. So even though I already have water in the building, and I will pay more if I consume more water, I will have to pay $6,000 so other people's water bills don't go up? Was this voted on or was it an administrative decision?

Greg said...

REC (Residential Equivalent Connection) fees are paid based on change in usage. If you were taking a large mansion on Park Avenue and converting it from a single family to a four family, four instance, you would probably have to pay 3 REC fees because the house now impacts the system usage-wise as if it is four houses, not 1. The same goes for commercial buildings. I do not have all the skinny on when and how the fees are determined, but that is the thrust of it. I am pretty sure these fees were part of the "Agreement" and were voted on by all the signatories.

I am also pretty sure that if you make changes to a building that reduces the past usage, you do not have to pay the fees. I am not 100% on this point, but it would make sense to me. Depending on the past usage of your building, this may apply to you.

Perhaps Alderman Fair could research this issue for you and get you some information...