September 7 - September 13, 1995

Tucson Water Gives Developers A Break At The Expense Of Its Customers.

B y  J i m  W r i g h t

ALL YOU FOLKS who get a monthly bill from Tucson Water, consider this a wake-up call:

While the Pima County Board of Supervisors contemplates transportation-related impact fees for developers, two northside public water companies are already charging developers stiff fees to cover infrastructure costs.

Meanwhile, Tucson Water isn't.

David R. Furrey, Superintendent of the Flowing Wells Irrigation District (FWID), says for a water company not to have a water development fee as a part of its rate structure, "assumes there aren't any costs associated with providing water service."

"It's as if a person went into business to sell candy bars," says Furrey, "and charged only the cost of the candy bar, plus tax...without ever taking into consideration the overhead cost of the business. Isn't this what's called a bad business practice?"

Assuming for the sake of argument that Furrey is right, no private business could stay in operation any longer than an orange-crate lemonade stand. Yet, Tucson Water continues to pursue this policy with impunity.

Furrey says his board of directors voted to impose development fees because they didn't want current ratepayers to bear the cost of new construction.

Mark Stratton, director of the Metropolitan Domestic Water Improvement District, agrees with Furrey. Stratton recently met with legendary land speculator Don Diamond associate Chris Monson to discuss the cost of water development fees for a 94-acre project north of the city off west River Road and La Cholla Boulevard. The Pima County Board of Supervisors recently approved zoning for the mixed-use development, with one reservation.

Half of Diamond's project was in Metro's customer service area and the other half was in Tucson Water's district. Before voting for the project, Supervisor Ed Moore asked Monson if he would agree to annex to the Metropolitan Water Improvement District. Monson agreed with Moore's stipulation "as long as that wouldn't delay our development plans" and "as long as Metropolitan Water was able to deliver water service to (the development)."

According to Stratton, water service to the Diamond-owned project on Metro's original half of the project will cost about $300,000 in water development fees. On the other half of the project, which was in the Tucson Water customer service district, Diamond and his partners would not have paid any development fees, since the city-owned utility doesn't charge developers for their overhead costs.

Is it worth Diamond going to court over $300,000? Probably not. The time lost would far exceed the cost of Moore's maneuver.

Metro Water's fees are stiff. Metro charges $280 dollars for a regular 5/8-inch meter fee. That fee covers the water meter hook-up service. Tucson Water has a similar charge. The hook-up fee is not a development fee.

In addition to the meter hook-up fee, Metro charges a $188 "northwest area fee" and a whopping "system development fee" of $600, for a total of $1,068. While some limited areas in the Tucson Water system have an "area fee," a development fee is unheard of.

Other Metro Water fees include: a one-inch meter fee at $1,755 dollars; and a six-inch meter (for commercial-industrial) at $25,390 dollars, with only $3,990 of that for the actual cost of the meter hook-up.

The development fees imposed by Metro's neighbor, the Flowing Wells Irrigation District, are not quite as high as those charged by Metro, but are by no means small potatoes. In both companies, the fees are used to pay for existing, not future, infrastructure costs.

Furrey views Tucson Water's policy of not charging for existing infrastructure as a direct subsidy to the developers over and against the interests of its customers.

When we asked Alan Lurie, executive vice president of the Southern Arizona Home Builders Association, if he would be in favor of Tucson Water charging a water development fee, Lurie said he "would not be opposed, as long as it was reasonable and held in a fund for specific improvements to the system."

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