Certain residents of Soldotna may face new expansion fees for water and sewer services in the future. The fees would be assessed to new services established and offset the city’s costs for expanding the water and sewer systems.
At its most recent meeting on June 12, the city received a comprehensive analysis of potential utility expansion fees from HDR Engineering Associate Vice President Shawn Koorn. The city council contracted with HDR to complete the study after discussing enacting an ordinance regarding expansion fees during a meeting in Aug. 2023.
Koorn explained how expansion fees are single charges to customers who represent either a new or a different demand on the water or sewer systems.
According to Koorn, the study focused on the maximum allowable expansion fees based on a few key factors. “It’s a very simple formula, but to come back to the numbers in the formula is where it gets challenging. But ultimately, the buy-in component is the existing assets divided by both existing and future ERU,” said Koorn. “The future component would be divided through by the future ERUs or future connections that calculate the maximum allowable fee that you could support through a study.”
The original expansion fees were adopted by the Soldotna City Council in 1986, and according to current city manager Janette Bower those fees were intended for new service users. “They were adopted to speak to the existing users of the system, which had already paid in for expansion fees, and at that time, the council chose to have fees for anyone new coming on the system.”
The current expansion fees for the typical residential 3/4-inch water and sewer lines are $250 and $500, respectively. However, according to the HDR Engineering study, those expansion fees could go as high as $1,455 for water and $2,210 for sewer.
According to Koorn, the expansion fees provide a “reasonable relationship” between the impact of new customers or development on the system and the charge to be imposed. And while those potential new fee numbers are startlingly high, Koorn reiterated that they are simply the maximum allowable fees per the study. Still, additional study would be required to establish the exact fees.
“The preliminary calculation does show that the fees could be increased or it could be supported to be increased going forward,” said Koorn. “Again, you need to complete more of a formal study, update all the assumptions, and make sure you’ve dotted all the I’s and crossed all the T’s as you go through that. And I will say the majority of utilities do have some form of an expansion fee.”
New projects in Soldotna, like the Riverfront Redevelopment Project, represent substantial additions to the city’s utility systems, prompting the council to seek a continuation of the conversation on raising expansion fees.