This is a printer-friendly version of an article from Zip06.com.
06/26/2013 12:00 AMOLD SAYBROOK - With preliminary bills for homeowners' septic upgrades still in dispute, the Water Pollution Control Authority (WPCA) recently decided not to mail out bills to homeowners for their share of design and construction costs until May 2014. A second supplemental bill with an allocation of Phase One soft costs would be mailed later after the issue of soft cost allocation is resolved.
Homeowners in the Saybrook Acres neighborhood, the first to get septic upgrades under the Phase One program, have publicly disputed the initial soft cost allocations applied to their preliminary bills (i.e., benefit assessments). Each itemized bill included the septic system installation's hard costs-that is, the cost of design and construction-as well as an allocation of a share of the Phase One soft costs.
What are included in each homeowner's soft cost allocation? What the WPCA calculated was that homeowner's share of the technical services soft costs plus an allocation of the total program's soft costs. The technical services soft costs calculated for each contract of approximately 23 septic upgrades include the costs of engineering, project administration, legal, and health district services. For homeowners in Saybrook Acres, their soft cost allocation was between $3,000 and $4,000 and was in addition to each home's hard cost charges.
Many Saybrook Acres homeowners who have already received septic upgrades feel their benefit assessment's soft cost allocation is too high-and they don't think it's fair.
Some homeowners say that the WPCA should not add any soft cost allocations to their bills. They base their arguments on public presentations in 2011 by WPCA engineers and lawyers of the Decentralized Wastewater Management District Facilities Plan. The slide presentation for that plan notes that homeowners in the Wastewater Management District would pay only for septic upgrade design and installation; soft costs were not listed as a financial obligation. It was with this information that town voters approved the plan at referendum.
The WPCA Board and staff, however, aren't guided by the Facilities Plan, but instead by the language in the town's approved application to the state for Clean Water funds. Having accepted the $5.7 million Clean Water Fund loan for benefit assessments and another $2 million for town expenses, the WPCA and the town must now adhere to the loan's terms. That means that homeowner's benefit assessments-their bills-must include both the hard costs to design and install the systems and an allocation of the project's soft costs.
The issue facing the WPCA Board now is how to fairly allocate the total soft costs associated with each Phase One contract and of the program overall.
At a recent WPCA meeting, some board members suggested that to do this, the WPCA should delay a decision on soft cost allocation until after all Phase One work is completed.
Under the terms of the town's $5.1 million Clean Water Fund loan, the WPCA must bill homeowners within six months of Phase One's completion. Since the state approved Dec. 31, 2013 as the Phase One completion date, the WPCA must mail annual bills for homeowners' share of the costs by June 30, 2014-but this bill may only bill homeowners for their share of the site-specific septic system upgrade's costs of design and construction.
That's because one legal option, according to Finance Manager Gratia Lewis, would be for the WPCA to send out one bill for hard costs this fall or next May and then a second bill with the owner's soft cost obligation at a later date. At a recent WPCA meeting, this strategy was favored by a majority of the WPCA Board.
WPCA Bond Counsel and Attorney Bruce Chudwick told the WPCA Board recently that the state can grant extensions of Clean Water Fund project completion dates, but rarely does. He also told Board Chairman Elsa Payne, in response to her question, that the WPCA Board has great discretion in how to allocate soft costs.
When the WPCA decides to mail out the first bills matters since it has implications for the Town of Old Saybrook's financial position. The homeowners' first payments will help support the town's interest payments due on the town's Clean Water Phase One interim financing loan. If the completion date remains December 2013, the town must make its first interest payments on the loan in January 2014, therefore the WPCA will have to send out benefit assessments either this fall or next spring to start collecting the payments owed for septic upgrade work already performed.