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Facing challenge, City Council puts water fee on agenda

Facing an election campaign that could focus attention on the city's commercial water charges, the Hendersonville City Council is scrambling to revise its one-time hookup charge for businesses.

The council on Thursday will take up a proposal that could lower its system development charges, a one-time fee the city charges to recover from new customers part of the cost of new sewage pipes and treatment capacity that large users require.
The council's potential action to change the initial hookup charges comes as Mayor Barbara Volk faces a possible challenge from Jeff Miller, the dry cleaning company owner who says the city's water policy suppresses business. Miller said this week he expects to decide by next week whether to run for mayor.
Miller has allies in the business community who support his assertion that the system development charges — $39,000 for a 250-seat restaurant, for instance — are so high that they are chasing off potential businesses and industry.
The day after news broke that Miller was considering a run for mayor and targeting water fees as part of his platform, the system development charge popped up on the City Council agenda for this week.
Volk says the City Council is looking at a variety of options for revising the payment schedule.
"We're trying to develop a good solution that will keep our fund balance in place and allow us to fund capital improvements but still not be so burdensome," she said.
In a memorandum dated June 28, city utilities director Lee Smith explained a proposed change to the charge, which the council adopted on March 7 of this year.
The system development charge, Smith says, is designed to make large users of the sewage system contribute toward future improvements.
"These one time charges to new customers are based strictly on the potential demand each will place on the city's utility systems," the city's policy for commercial, industrial and institutional customers says.
A new user pays a tap fee that covers the cost of hooking up to the city water and sewer system and the system development charge, which Smith said is based on "the potential and/or actual demand that a new customer" would place on the system.
The city uses household usage as a multiplier to calculate the demand on the system caused by a large user such as a restaurant or a nursing home. A business with eight employees is assumed to add 200 gallons per day to the system and would pay a $400 system development charge. A new restaurant with 250 seats, assuming a demand of 40 gallons per day per seat, would pay a system development charge of $38,889. The new customer can pay the system development charge in a lump sum or over three years.
The proposed change would give businesses a refund if their actual water usage is less than the amount projected. After two years, the city will figure the actual gallons the business received. If it's less than the amount used to calculate the system development charge, the city would give a refund. If it's more, the city would bill the user for the difference.