Local News

Thursday, Jul 19 2012 06:00 PM

Homebuilders decry huge, quietly imposed fee hike

BY JAMES BURGER Californian staff writer jburger@bakersfield.com

Earlier this year, the district that handles sewage from Oildale and northwest Bakersfield quietly approved a massive increase in sewer connection fees with nothing but a small legal notice in the newspaper, stunning homebuilders and its government partners who found out after the deed was done.

The North of the River Sanitary District, No. 1 didn't even inform the county of Kern or city of Shafter -- which are entitled to help formulate and implement rate changes -- before it hiked the fee charged for connecting newly constructed homes to sewers from $3,950 to $10,000.

Now the district, bombarded by criticism, is holding public hearings in preparation for reconsidering the fee increase.

"We're going to listen to the stakeholders," said LaRue Griffin, manager of North of the River. "We're committed to working together on this thing."

THE IMPACT

North of the River serves homes and businesses in Oildale and in the northern and western sections of Rosedale between Reina Road and Seventh Standard Road.

Home builders in the area said they were stunned by the price jump.

They found out about it just before the new took effect in April, said Donna Carpenter of the Kern County Home Builders Association.

Carpenter said the rate increase immediately shut down several builders' plans to start constructing homes in the short term and could crank up home costs on thousands of homes over the long term.

Chuck Lackey, director of the Kern County Engineering, Survey and Permit Services Department, said the rate hike could hit existing homeowners as well. The owners of residences with failing septic systems would have to pay the $10,000 fee to connect to the sewer system, he said.

And if North of the River issues bonds to pay for the expansion or improvement of its treatment plant, Lackey said, all homes serviced by the district would be on the hook for service fee increases if there isn't enough revenue from connection fees.

But the most immediate impact is on new home development.

Greg Balfanz of John Balfanz Homes said his business couldn't avoid the financial blow from the rate increase.

Balfanz said the company had locked in contracts for 20 homes in the Northwood Ranch development in northwest Bakersfield when it went to pull building permits. It got a $121,000 surprise when it discovered the difference between the old and new fees for a sewer connection.

"I can't go back out to a homeowner and say to the homeowner, 'I just got another $7,000 fee, I can build your home,'" Balfanz said. "I have to build it because I'm contracted with this homebuyer."

He said the increase in regulator costs to build a home has jumped significantly in the last 10 years and that has frustrated developers who have to decide whether to pass that cost on to buyers and risk being undercut by other developers or take the hit on the bottom line.

This fee increase was especially troublesome because it came out of the blue, Balfanz said.

TAKING INPUT NOW

Now, Griffin said, NOR is seeking input from the public, is reviewing concerns from homebuilders and the county about the study that justified the rate increase and could revise its action to incorporate that public input.

Greg Balfanz has asked the North of the River District to allow him to build the 20 homes at Northwood under the old fee. So far, he said, the district hasn't agreed to do that.

But, Balfanz said, he has hope the fee will ultimately be reversed.

The fee increase was based on a new master plan that laid out expected growth in the district and the cost of expanding the district's collection and treatment system to serve it.

The county and Home Builders Association have questioned a number of assumptions NOR used to justify the fee hike. That includes the 105-year scope of the plan, which the county and home builders call excessive.

Who knows, said Carpenter, what sewer systems are going to look like in 105 years?

County officials questioned why, by the time all development is complete in the NOR district and all sewer systems needed to serve that development have been constructed, the district will still have $1.3 billion in the bank.

"We believe growth rates in NORSD are aggressive," wrote county officials.

The district plan assumes the construction of 5,500 new single family residences by 2025, a county letter notes, but the fee increase has shut down development and pushed developers to look at moving to construct homes in Bakersfield's jurisdiction, where the connection fee is $4,000 a home.

Shafter and the county of Kern have similar-sized fees.

And Shafter City Manager John Guinn noted that the NOR district included land development in Shafter in its study, even though Shafter -- which shares a sewer plant with NOR -- owns and manages its own separate sewer system for city residents.

"We should not be included in their capacity fee study," Guinn said.

A stakeholder meeting is scheduled for next week, Griffin said, and the district will hear these and other concerns.

Then the board will take a second look at its fee increase and make a call.

Greg Balfanz, who has another 66 home lots sitting unbuilt in Northwood Ranch, said John Balfanz Homes will be watching closely.

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