Officials in the city of Tehachapi approved new water and sewer fees — in case new housing developments start moving in — to support the construction of infrastructure that can’t quite support projected growth in the next 10 years.
“Growth pays for growth. We want to make sure that the fees are fair and reasonable,” said Alison Lechowicz, principal of Lechowicz + Tseng Municipal Consultants, regarding a recent water and sewer study. “So we determined the reasonable cost of infrastructure, we determined the capacity provided, and then the amount of capacity used by new development to proportionately assign costs.”
Tehachapi City Council members unanimously approved a resolution adopting new water, sewer and trunk main connection fees outlined in a study at the Feb. 18 council meeting. Councilman Michael Davies was absent.
A Water and Sewer Connection Fee Study Final Report dated Jan. 23, by Lechowicz + Tseng Municipal Consultants, evaluates city systems and updates water and sewer rates, along with presenting the projected 10-year growth scenario.
Only new sewer and water customers will be affected by these new rates.
"The primary purposes of that effort were to model, to revisit a comprehensive analysis of how our system operates today, how we think the system will need to grow in the coming years to respond to development, and what it’s going to cost, and how to fund those improvements,” said Jay Schlosser, city development services director.
New housing developments will fund any upgrades to major infrastructure, with money still coming from what customers pay in monthly charges.
This means new water wells, tanks, transmission lines and upgrades to Tehachapi’s Waste Water Treatment Plant could be on the horizon if new development is approved by the city.
“New folks are going to buy into a small portion of those facilities. There’s also an expansion cost. So those would be facilities that are 100 percent triggered by new development. If you have no growth, you wouldn’t need to build some of these items,” said Lechowicz.
Tehachapi’s Waste Water Treatment Plant needs to be expanded.
These improvements mean that new reactor basins, a secondary clarifier, pumping systems, sludge drying and power system expansion, plus site improvements bring the estimated cost for construction starting in 2024 to about $18.2 million.
The current sewer system capacity is about 760,000 gallons per day, with an expected 10-year build-out to 1.24 million gallons per day, said the study.
More water will be in demand, too, along with additional pipelines that carry this resource.
Existing customers use an average of 1.52 million gallons of water per day with an estimated total 10-year build-out of 2.24 million gallons per day.
New water rights need to be secured by the city of Tehachapi or by new developers to accommodate the growth. The cost of these water rights is not included within the scope of the report.
The total water buy-in connection fees to the city’s water system for existing infrastructure is estimated at about $6.1 million. This includes costs for buildings, land, machinery and equipment, pipelines, tanks, new wells and other improvements.
Total water capital improvement costs for new wells and transmission mains are estimated at more than $9.5 million.
Connection fees or one time hook-up fees are “intended to recover the capital cost of facilities needed to serve new development. Connection fees do not collect revenues to cover the costs of maintenance, operations or repairs. Instead, these ongoing costs are recovered through rates and charges billed monthly to customers,” according to the study.
There were also two other water and sewer model reports that were included in the study and completed in October 2019, said the study.
Even though water connection fees evaluated in the study have decreased, some of those fees have been moved to a different water category fee.
Some of the fees that were in the Water and Sewer Connection Fee have been reallocated to this Water Entitlement Fee that will help obtain additional water for development and fund the Groundwater Sustainability Project, according to documents in the Feb. 18 agenda packet.
City Council members approved the new water entitlement fee that was $500 per acre foot to an adjusted rate of $3,148 per acre foot at the meeting.
The developer must pay this fee if the property on which the new housing is built doesn’t have sufficient water rights and the combined allocation purchased from the city is not sufficient to accommodate the new development, said Tehachapi Municipal code 13.08.020.
According to an MKN & Associates Powerpoint presentation at the meeting, the city of Tehachapi and any new developers have some options regarding obtaining new water rights.
Some options include purchasing adjudicated basin groundwater rights on the open market, purchasing State Water Project water from Tehachapi-Cummings County Water District if it’s available, or implementing the Groundwater Sustainability Project that has yet to be created.
Water connection fees based on last updates from 2006 for citywide development were $6,780 per equivalent dwelling unit, but were reduced to $2,047. Sewer treatment and disposal fees last updated in May of 2007 were $7,259 and are now reduced to $4,822. This doesn’t include water costs, nor pipeline adjustments.
Sewer trunk fees will range from $300 to $927 for the development areas of Downtown, Industrial, Mountain View, Tucker Road area, but may be higher or lower depending on the wastewater flow of each customer, said the study.
Some sewer trunk unit costs will also have the assistance of Redevelopment Agency Funding, which is borrowed property tax revenue from Tehachapi resident’s in the amount of $645,277.
“In the study we have a nexus for improvements that will be required for expansion that will be charged to any developer capable of building new homes,” said Councilman Phil Smith.
There is a reason these fees have decreased, as the city of Tehachapi was using scaling fees from 1992.
"When we last generated the fees, we anticipated a number of major improvements to our water and sewer systems that resulted in the previous fees. We then used that money in the last 10+ years to build major improvements to these systems," Schlosser wrote in an email. "We spent the last 18 months producing a fresh evaluation of expected growth, expected improvements needed to these systems, and now have an updated fee number. The improvements we made in the last 10+ years were significant and valuable. As a result, we predict needing fewer improvements in the coming 10 years. The resulting calculation naturally produces a lower fee."
The agreement was signed in May 2018, and council members approved entering into a contract with Michael K. Nunley & Associates, lnc. on June 4, 2018 and their sub-consultants, Lechowicz + Tseng. The cost of the study amounts to $149,975, according to minutes of the June 4, 2018 meeting.