SENATE BILL REPORT

SB 6013

BYSenators Bluechel, Talmadge, Fleming, Conner and McDonald

Regulating capacity charges imposed by a metropolitan municipal corporation.

Senate Committee on Governmental Operations

Senate Hearing Date(s):February 23, 1989; March 1, 1989

Majority Report:  That Substitute Senate Bill No. 6013 be substituted therefor, and the substitute bill do pass.

      Signed by Senators McCaslin, Chairman; Thorsness, Vice Chairman; Conner, Sutherland.

Senate Staff:Sam Thompson (786-7754); Eugene Green (786-7405)

                  March 2, 1989

AS REPORTED BY COMMITTEE ON GOVERNMENTAL OPERATIONS, MARCH 1, 1989

BACKGROUND:

Metropolitan municipal corporations have the authority to operate sewage collection and treatment facilities.  They do not have the authority to impose connection charges upon new customers of these facilities in addition to the uniform rates that all customers pay.

Cities, counties and sewer districts have the authority to impose sewer connection charges.  Connection charges are intended to ensure that new customers pay a proportionate share of the capital costs of sewage facilities to match the sum already paid by existing customers through regularly imposed rates.  Such charges usually retire debt incurred as a result of capital construction.

Sewer districts have the authority to impose liens against real property to enforce collection of delinquent connection and sewage disposal charges.  If the charges are delinquent for more than 60 days, the lien may be foreclosed.

The only functioning metropolitan municipal corporation in the state -- the Municipality of Metropolitan Seattle (METRO) -- seeks the authority to impose connection charges.  METRO operates facilities that treat sewage collected from various municipal systems in King County.  Excess capacity has been built into the METRO sewage facilities to accommodate anticipated population growth.

SUMMARY:

A metropolitan municipal corporation engaged in the transmission, treatment, and disposal of sewage may impose a capacity charge when a user connects, reconnects or establishes a new service.  The charge must be based upon the cost of excess capacity built in to sewage systems to accommodate increased use of the system.  The charge may not exceed $1,231 per residential customer until 2030, or $12.08 per month for up to 15 years from the date of connection.  The charges may not be altered until 2030.

The user may pay the charge monthly or when a certificate of occupancy is granted by the appropriate building department. The charge for a building other than a single-family residence shall be based on the projected number of residential customer equivalents to be represented by the building, considering its intended use. 

The charge will be collected in the same manner provided for sewer districts.

EFFECT OF PROPOSED SUBSTITUTE:

The capacity charge will be based upon excess capacity built into capital projects identified in the metropolitan municipal corporation's comprehensive water pollution abatement plan from January 1, 1982 to the effective date of the bill.  The capacity charge cannot exceed $7.00 per month collected over 15 years for connections and reconnections occurring prior to January 1, 1996.  For connections and reconnections occurring after January 1, 1996 and prior to January 1, 2001, the monthly capacity charge cannot exceed $10.50 per month collected over 15 years.  For connections and reconnections occurring after January 1, 2001, the capacity charge collected over 15 years cannot exceed 50 percent of the basic sewer rate established by the metropolitan municipal corporation at the time of the connection or reconnection.

The capacity charge can be paid off at any time prior to the final monthly payment at a discount determined by the metropolitan municipal corporation.  This option on the part of users of the system cannot give rise to a lien.

The metropolitan municipal corporation must notify a mortgage or deed of trust holder prior to foreclosing a lien for delinquent charge payments.

Provisions concerning connection charges imposed by water and sewer districts are added.  Factors relating to differences in cost of construction of water or sewer system facilities and differences in cost of service delivery must be considered by a district board of commissioners when they establish connection charges for various customers.  The connection charge can include interest related to the cost of construction of a water or sewer system, which cannot exceed 10 percent per year.  The connection charge can only be applied after a certificate of occupancy is granted by the appropriate building department.  Revenue from the charges can be expended for capital debt retirement but not for maintenance and operation.

In some circumstances, water and sewer districts must prepare a long-term capital improvement plan.

Water and sewer districts must provide reimbursement contracts for property owners when the owners finance construction of projects required for property development.  The contracts will provide for reimbursement of an owner's pro rata share of the costs of the project by other property owners who later connect to the system.  Districts may finance a project and be reimbursed in the same manner.

Appropriation:    none

Revenue:    none

Fiscal Note:      none requested

Senate Committee - Testified: Chuck Henderson, Seattle Master Builders; Ron Posthuma, METRO (pro); Tim Douglas, Mayor of Bellingham (pro)