At its last Committee of the Whole meeting, Hamilton City Council members discussed the potential agreement to contract with Ravalli County for wastewater treatment services in the county’s Targeted Economic Development District (TEDD) that includes the county’s airport property and other privately-owned properties to the west and north of the airport.
The county is looking to establish a tax increment financing district that would support value-added manufacturing enterprises but there is currently no sewer service to the district area. They are looking to the city to supply that service. They are also examining the potential of installing their own treatment system if they can’t strike a deal with the city.
When first approached by the County concerning the potential use of the city wastewater treatment system, the City said that it would be possible if the district was annexed into the city. The problem with that is that the district must remain under the county’s jurisdiction for the life of the TEDD, set at 13 years. This allows county property taxes in the district to be placed back into infrastructure development within the district. That infrastructure includes wastewater treatment, but it also includes water systems, road systems, lighting and power systems and more. The TEDD is designed to help pay for this development. All of that goes away, however, if the property is annexed into the City. From the County’s point of view, as expressed by Commissioner Jeff Burrows at the meeting, it is not possible for the county to move forward if the city annexes the property and the county is going to move forward “either with the city or not.” All the County wants, he said, is a simple contract with the City to provide wastewater treatment to the district. The county is providing for all the other infrastructure.
One of the City’s biggest concerns is committing to a project of sewer mainline expansion that ends up costing its existing customers. The County says that it will commit to paying for the extension of the mainline to get it to the property and fund all necessary connections to the line from district properties.
City Attorney Karen Mahar stated that the law did allow the city to contract with industrial users outside the city limits for sewage treatment at a “fair and equitable price.”
“So, what we don’t want is city taxpayers paying any more by allowing entities to contract for industrial services,” said Mahar. She also noted that although the airport property itself might not be annexed, other private properties in the district could be annexed after the TEDD expires.
Commissioner Burrows noted that the County was requiring development inside the district to meet city standards in the event they are eventually annexed into the city. Julie Foster from the Ravalli County Economic Development Authority noted that the zoning within the district also limited it to value-added manufacturing industries and would not allow any retail development or anything like a casino.
The other issue to be considered was the capacity of the treatment plant and the concern that by adding industrial customers the plant may exceed capacity, triggering enormous new costs.
The way to deal with that, according to Mahar, is to charge the district a different rate, a “differential rate” which, like an impact fee, serves as the new customer’s “buy-in” to the system, that is, the new customer’s share of all the previous customer’s investment into the system. She said in some states a 15% or less increase in the rate could be applied without an expensive study of the impacts. Mahar suggested that a “differential rate” of 115% could be placed on the district and adjusted over time, if necessary, for “extraordinary maintenance costs.”
It was agreed to pass the current draft of a wastewater treatment agreement with the county on to the county commissioners for their review.