Council asked to reconsider sewer impact fees for restaurants



Several business leaders, three of whom are appointed members of the City’s Economic Development Corp. Board of Directors, urged the City Council Monday to revisit the fees the City charges new restaurants to connect to the sewer system.

Like other municipalities, the City of Liberty Hill uses Living Unit Equivalents (LUEs) as a way to measure anticipated wastewater use for commercial properties to determine what impact those businesses will have on the wastewater system when they open for business. The number of LUEs per business is based on the size of the finished out property.

Because restaurants are the largest contributor of waste to the regional plant, officials say impact fees are needed up front to help pay their fair share of “real costs” to maintain the system.

Residential customers pay lower costs to connect to sewer service and pay a lower monthly fee for service.

John Clark, a member of the EDC Board and a local insurance agent, said reducing the impact fees for restaurants would deliver a big return for the City in the form of increased sales and property tax revenue. And, it would help revitalize downtown to have a small restaurant there.

Cheryl New, branch manager for a local mortgage lending company, said lower fees might encourage restaurants to choose Liberty Hill as opposed to Bertram, Burnet or other neighboring communities where she said fees are lower.

City Administrator Greg Boatright said Liberty Hill’s sewer impact fees are “middle of the road” and were set lower than the recommendations of a utility rate study.

“How are we supposed to offer the service if we can’t fund it,” said Boatright.

Todd Cummings, a local builder, said he has plans to build a 7,000-square-foot retail center in the city limits. However, he may reconsider it if the sewer impact fees for restaurants remain as they are. He said he was hoping a restaurant might be interested in leasing space there, as well as retail businesses or professionals seeking office space.

“Who’s going to want to rent it (for a restaurant) when it cost so much to put it in,” he said. “The City is missing out on potential revenue from these people.

“Liberty Hill impact fees are the highest by a long shot of any municipality,” Cummings said.

He said Georgetown sewer connection fees are based on water line size.

“The larger the water line, the more sewer you will use,” he said.

In August 2015, the Council adopted a rate structure setting the commercial sewer impact fee at $4,500 per LUE, and made one LUE equivalent to 300 square feet. Under those guidelines, a new restaurant with 1,200 square feet could pay as much as $18,000 in impact fees before they could open for business.

Boatright said if the Council were to lower the impact fees for restaurants, the residential customers would end up bearing the burden of what are actual costs to the system.

“The money has to come from somewhere (to operate wastewater system), so it either comes from people who impact it the most or the citizens of Liberty Hill,” Boatright said.

Assistant City Administrator Amber Lewis added that impact fees are determined partly by the amount of debt the system has.

“It isn’t fair for residents to pay the costs (for commercial property),” she added.

“No one is saying get rid of the fee, just don’t compound it just because it’s a restaurant,” said Eric Van Natter, an EDC board member and owner of two downtown properties — one of which is for lease.

“I feel like we have a balanced fee,” said Lewis. “Our rates are middle of the road, and I think where we’re at is good.”

Boatright reminded the Council that several years ago a rate study showed the connection fee for wastewater should be $6,700, but the council then lowered it to $6500.

“Then, in the interest of gaining business, you cut the price (in 2015) to $4,500,” he said. “So, if you vote to do away with the LUE system and go back to system where impact fees are minimal, then we’re going to be subsidizing heavily.”

Perry Steger, the city’s engineer, added that eliminating system of LUEs or reducing the commercial impact costs are “policy decisions”.

“If you have a restaurant to produce 4,000 gallons (of wastewater) a day, that’s $44,000 that the City has to spend just for the treatment. The cost is real, it’s expensive and you’re creating high quality effluent before putting it into the river,” Steger said.

When comparing Liberty Hill rates to other cities, Steger said “some cities might choose policy wise not to look at it, or elect to subsidize or allow residents to subsidize other businesses to make it more affordable for them. While it’s a policy decision, the impact on the system is real.”

Council member Elizabeth Branigan suggested the City consider creating a designated area where impact fees on restaurants would be reduced.

“How about if we designate an area downtown, a special improvement area,” she said, adding that if someone wants to open a restaurant in that specific area, the City would pay a portion of the impact costs.

Boatright said he had discussed a similar idea with EDC President Lance Dean, who also addressed the Council Monday. One idea would be to cap the number of LUEs at four for a downtown eatery, require the business to pay for two and have the City and the EDC pay for the other two.

“I certainly would love that idea of helping out with LUEs,” added Mayor Connie Fuller.

“We don’t want to be a deterrent. That’s the bottom line,” said Boatright. “But at the same time, Council, we as staff are charged with trying to establish the ability for our city sewer to pay for itself.”

Boatright noted that Bella Sera, a new Italian restaurant opening soon in Liberty Hill, and Jardin Corona, an existing restaurant that has expanded, are both paying at the current level.

Following a lengthy discussion on the matter, the item was tabled with the request that it be added to a future workshop agenda.

Council members Liz Rundzieher and Troy Whitehead were not present Monday.

Also Monday, the Council voted to enter a three-year agreement with First Southwest for financial advising services. With the vote, the panel ended a seven-year relationship with Chris Lane, who has worked with the City through multiple bond issues.

“Choosing a new financial advisor is something I had to be convinced of because Chris Lane has been with us so long and has done a great job,” said Fuller. “This isn’t a reflection on her work.”

Fuller said First Southwest “brings to the table such a broader view” of how the city can accomplish goals using various financing tools.

The company consults with the cities of Rowlett and Celina in north Texas — cities visited recently by the Mayor, Councilman Ron Rhea, Boatright, Lewis and Senior Planner Sally McFeron.

Lewis told The Independent this week that Liberty Parke developers paid lodging, meals and travel expenses totaling $1,200 for the visit.

City representatives were invited by First Southwest to see the experiences of those cities, Boatright said Monday.

Under the agreement approved Monday, First Southwest is paid when bonds are issued at a rate of 2 percent, said Lewis. However, the City may not always be responsible for the 2 percent, which is the case with the issuance of bonds for Liberty Parke PID, which is assuming those costs.

Lewis said Lane was paid in the same manner and at the same rate.

In other business, the Council voted to approve a variance to the burn ordinance allowing developer Jon Branigan to clear land for his subdivision Rosemont, a 15.5 acre tract located inside the city limits.

“A couple weeks ago, we brought a change to the outdoor burn ordinance that took out land clearing as an exception. We did that primarily for health and safety in reasons,” said McFeron. “There’s not an area in the city that smoke wouldn’t impact.”

She said a year ago, a similar controlled burn resulted in police and fire officials being called to the scene and one person at the apartment complex near the site Branigan’s development being treated for smoke inhalation.

Branigan told the Council that the burn site is well within the state-required 300 feet of his property line. He said he would burn on a day when it was raining to minimize smoke. A permit from Williamson County Emergency Services District #4 will be required.

Boatright discouraged the Council from approving the variance. He said he denied a similar request from the property owner on State Highway 29 near Sundance Estates who sought to burn cedar.

“The liability we expose ourselves to when we issue a permit with regard to traffic or smoke inhalation. I don’t think it’s worth the risk. That’s where I’m coming from,” Boatright said.

Fuller said she didn’t see a problem.

“I don’t see how this burn would cause a traffic problem. It seems like it’s too far away from the road to be an issue. Smoke is the main issue,” she said.

In the absence of two council members, and considering the abstention of Councilmember Branigan (Jon Branigan’s mother), Fuller voted yes with Councilman Wendell McLeod. Councilman Rhea voted no.

Also this week, the Council voted to:

– Extend an offer of employment to Maverick Campbell for the position of Liberty Hill Police Chief.

– Accept petitions for voluntary annexation into the ETJ from Mehdi and Sarah Corbett-Imeny, Jonathan and Lynn Pearson, Charles Mitchell May, and Harry A. Doggett.

– Approved a Task Order for Steger Bizzell to survey, design and manage improvements to Lift Station #19. Funds for the improvements are available from surcharges paid by MorningStar development, Lewis said.

– Adopted a budget planning calendar for fiscal 2016.