Connection fees draw ire of developers

Published on Wed, Jul 18, 2012 by Jeremy Schwartz

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Blaine City Council’s decision to reinstate water and sewer connection fees has got some high-profile developers asking how serious city officials are about revitalizing the town.

Council eliminated connection fees in late 2009 following lobbying by developers wanting to pursue projects in the city. Fairhaven-based developer Ken Imus was a strong advocate of the proposal, and he and other developers were assured by council members the fee holiday would last a minimum of five years.

The city had also written letters to Imus promising that the moratorium would last the full term. The general belief of the council was that development would be spurred by dropping the fees.

Three years later, city officials feel new development has not covered the loss of revenue water and sewer connection fees would have generated. Staff has estimated the city forwent approximately $200,000 in the time fees went uncollected.

In April, city council decided the city would once again charge $8,119 per equivalent residential unit (ERU) for water and sewer connections inside city limits and $12,178 per ERU outside of the city, starting January 1, 2013.

With water and connection fees all but back in place, Imus and at least one other large-scale developer aren’t happy about the city reneging on their agreement. Imus has not yet decided how he will react but said he’s disappointed with the action.

“It’s kind of hard to have respect for [the city],” Imus said. “That’s not the way you do business.”

A big believer in the city’s potential, Imus has bought up 16 downtown properties in the last few years, spending approximately $6 million on the properties themselves and in permitting costs.

He said his renovation of the Black Forest Steakhouse building was just his first step in a plan to revitalize downtown Blaine.
Imus sees the city’s renewed focus on development fees as a significant deterrent to revitalization efforts.

Imus said nearly 10 individuals interested in his properties were scared off by the city’s decision, which has meant a loss of momentum in bringing life to downtown Blaine.

“I’m grossly disappointed,” Imus said. “My heart was it in, but now I’ve lost some of my enthusiasm.”

Blaine-based developer Doug Connelly echoed Imus’ sentiment. Connelly is involved in the proposed East Maple Ridge development in east Blaine, west of Harvey Road. The 350-unit subdivision has been in the works for years, and Connelly said he only needs to nail down financing sources for construction to begin.

Connelly said free water and sewer connections were a major selling point for development. Now that the city intends to bring the fees back, he doesn’t think there’s much to make Blaine stand out from other small cities in Whatcom County.

“There’s really not a whole hell of a lot to attract people in Blaine,” Connelly said.

When East Maple Ridge eventually gets going, Connelly said the price of the homes there will have to be increased to reflect the water and sewer connection costs. Connelly would also have to pay the connection fees to build a model home in the development.

Imus and Connelly both say council should not have reinstated the fees, and they’re not the only ones: city council member Bonnie Onyon shares the developers’ opinion. Onyon was the only council member in April to vote against reinstituting the fees.

Onyon, mayor at the time the fees were dropped, said the city should have kept its word for the full five years.

“It just sends the wrong message,” she said “To cut it short, I just don’t think it was right.”

Onyon said the city should have allowed more time for the fee moratorium to have an effect. While admitting the action had not yet spurred large-scale development, she said Imus’ renovation of the Black Forest Steakhouse building was a step in the right direction. Although the measure did not affect the steakhouse project as the building was already built, Onyon said she is confident Imus would not have invested as much time and money had there been connection fees.

Another council member, however, never got onboard the fee moratorium train in the first place. Paul Greenough was the only city council member to vote against the measure back in 2009.

At the time, Greenough advocated that council put more time and thought into the action before moving forward with it. Recently, Greenough reiterated that point and said the lack of connection fees would result in higher water and sewer rates for Blaine property owners. Blaine already has some of the highest rates in Whatcom County.

Greenough maintains the moratorium has no direct benefit to Blaine property owners. For these reasons and because of the resulting lack of development in the past three years he voted to reinstate the fees in April.

“The hope then was that reducing the fees would lead to development in downtown Blaine, and that just didn’t happen,” Greenough said.

When asked what could help Blaine to grow, Greenough said the city needs to focus on attracting more individuals rather than developer dollars. He said city officials ought to focus more on what makes Blaine unique, such as the annual birding and jazz festivals.

Relying on a single thing to attract more people or development dollars to Blaine, which is how Greenough saw the elimination of connection fees, is not the way to go.

“There were a lot of ‘one things’ that were supposed to turn Blaine around, but they didn’t happen,“ Greenough said.