Sewer and water, tax increase hot topics

Before the East Bethel City Council moved ahead with a sewer and water project in 2010, a common message residents heard was if you did not hook up to the system, you would not have to pay for it.

Robert Nye was one of a couple of people who spoke during an East Bethel town hall meeting open forum. The big topic of the evening was a potential 17 percent city tax levy increase to pay for the 2014 general obligation bond debt for the sewer and water project. Photo by Eric Hagen
Robert Nye was one of a couple of people who spoke during an East Bethel town hall meeting open forum. The big topic of the evening was a potential 17 percent city tax levy increase to pay for the 2014 general obligation bond debt for the sewer and water project. Photo by Eric Hagen

That may no longer be true with the council proposing a 17 percent tax levy hike for the 2014 budget. This was the hot issue at a Nov. 21 town hall meeting.

“I always assumed that when city sewer and water came in, you paid for it. When I built my house in Blaine, that was part of the cost,” said Robert Nye. “It was my assumption where the city sewer and water was that’s who would pay for it. Now you’re putting it on the people because you’re not meeting the projected revenue to pay for this, so we have to pay for something that’s no use to me.”

The message from during the open forum was this was not the current council’s decision and they were doing the best they can to alleviate this problem next year and in future years because the current bond debt repayments go through 2040.

None of the five current members were on the council when the bonds were sold and contracts approved in December 2010.

Edward Reynoso is the Metropolitan Council district representative that covers East Bethel and was invited to sit at the council dais to answer questions. Gov. Mark Dayton did not appoint him to this post until March 2011, so he was not part of the Metropolitan Council that decided to invest in this project.

From what Reynoso has heard, all the numbers his predecessors on the Metropolitan Council saw showed that this project would work.

“At the time it seemed like a great investment. Unfortunately, it didn’t pan out and it didn’t turn out to be a good investment and if you decided to do it right now I think we’d be all crazy to go forward, but we can’t go backwards and that’s unfortunate.”

Richard Lawrenece, Robert DeRoche, and Heidi Moegerle sent a letter to the former council after the three were elected in November 2010 after jointly running on the platform of opposing sewer and water, but the old council still moved forward.

Their main concern has been that the city would be on the hook for paying for the general obligation bonds debt if there was no development.

“I asked people, do you understand what general obligation means? It means if the city doesn’t have it or the business aren’t here, then the people in this city are going to have to pay for it,” DeRoche said.

Roger Rickey, owner of Roger’s Rod and Customs, will be able to hook up to city sewer and water, but he does not want it. He is facing an $11,500 assessment.

“I’m paying for something I don’t need or want,” he said. “It’s just a robbery. It’s putting me in a serious hardship.”

According to City Administrator Jack Davis, the assessments total $253,000 for the 22 parcels. Eight paid by Nov. 15 so they would not be charged any interest. The remaining property owners will see the assessments on their property taxes with 5.5 percent interest charged. They would have up to 20 years to pay off the whole balance.

Of the 22 parcels, 13 are developed. These properties must hook up to the sewer and water system by Aug. 31, 2014, Davis said. They would be charged sewer and water access fees based on what the Metropolitan Council calculates their impact to the systems would be through the Equivalent Residential Unit measurement system.

A smaller business such as Roger’s Rod and Customs accounts for two ERUs while the East Bethel Theater will be charged 17 ERUs. The city will be charging $5,600 per ERU for both sewer and water while the Metropolitan Council will charge $2,600 just for sewer because only the city paid to construct the water system.

Rickey noted that this just gets the stubs to his property line. He said he has not received an answer from the city on how much it would cost him to bring the lines all the way to his building, which would mean digging up his property.

As far as new development, Aggressive Hydraulics moved from Blaine to East Bethel. The city issued a $225,000 pay-as-you-go Tax Increment Financing District note to close the funding gap for development costs. Village Bank fronted the costs, however, so the bank would be paid back once the increased tax payments from this property come in.

A 60 single-family home development got a preliminary plat review at Tuesday evening’s Planning Commission meeting. Community Development Director Colleen Winter said this development’s density will be about three units an acre.

Davis said two other projects are being discussed between developers and city staff including one for commercial development and another for “strip mall/general grocery store activity.”

DeRoche said the former council has not been visible at the meetings.

“I’ve seen none of these people that put this project in gear since the time when we came in and took office to offer up any idea how it was going to be paid for, what their plans were for development,” DeRoche said.

ABC Newspapers contacted former Mayor Greg Hunter, whom Lawrence defeated in 2010, and former Councilmember Steve Voss, who did not run for re-election in 2012, to get their opinions about the sewer and water issue. Both said they have not kept close track to what the current council is doing.

Hunter was on the council from 1999 to 2002 and the mayor from 2003 through 2010. He said the sewer and water discussion first came up when the theater and gas station were having trouble with their own septic systems and wanted to have some type of sewer system. The city got involved and a 2006 Maxfield Research study showed there was demand for city sewer and water along Highway 65 in East Bethel to bring in more businesses and residential development.

Voss said during the last two years he was on the council, the city had been making strides in having a more active Economic Development Authority, but he still felt the council was wrapped up in what happened in the past and hopes it focuses its energy on moving the city forward.

All the council could do at the time was rely on the information it had, Voss said.

“To me, it’s not about assigning blame,” Voss said.

Councilmember Tom Ronning was one of the people at many of the meetings of the old city council opposing the sewer and water project. He was one of two people elected to the council in the fall of 2012 to replace Bill Boyer and Voss after they decided to not run for re-election.

Ronning said this will also impact him because he is on a fixed income.

“I got my tax statement, but I haven’t opened it yet. I’m waiting for a better day,” he said.

Eric Hagen is at [email protected]