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Developers speak out against proposed fee

Joel Bryant, a local developer, expressed concerns about a proposed development impact fee that would be used to help fund sewer upgrades on the east side. Photo by Jeff Harrison

Council to consider fee, rate hike to fund eastside sewer upgrades at March 26 meeting

By Jeff Harrison
Midwest City Beacon

Local developers have been frustrated by Midwest City’s moratorium on construction due to sewer capacity issues on the east side.

And they aren’t happy about the city’s plans to solve the problem either.

The city is contemplating imposing a development impact fee and raising sewer service rates for residents and businesses to fund necessary upgrades to the eastside sewer system.

The proposed development fee would be $6,325 and the proposed rate increase would be 10%.

A development impact fee is a one-time fee that would pay for infrastructure improvements to address capacity issues and cannot be used for maintenance. The fee would be imposed at the building permit stage. It would apply to new construction inside the geographic boundaries of the east side sewer study.

The rate increase would apply to all sewer customers city-wide.

Midwest City held the first of two public hearings on the proposed development fees and rate increase on March 11 during a planning commission meeting.

The city council will hold a second public hearing and discuss the proposal at the March 26 meeting.

Developers Jeff Moore and Joel Bryant both spoke against the city’s proposal arguing that it would harm development of the east side. Brandon Bundy, director of engineering and construction services, also gave a presentation on the east side sewer issue.

Moore, who is running for the Ward 3 City Council seat, said all options will increase costs for developers and home buyers. He said an aerobic or septic system would still increase costs.

“This fee is going to stop development of the east side in its tracks, that’s my opinion,” he said. “We have high material costs and competition from Choctaw and out east. Some of this (undeveloped) land could end up going into land conservation easements. These guys can’t sit on this land forever.”

Bryant said the city should have tackled the sewer issue about 15 years ago. That would have allowed the city to spread the costs out more evenly among developers and home builders.

“At that point in time, it could have been about $500 a house whereas today you’re looking at essentially sticking the last people at the party with the bill,” he said.

Bryant said he believes the city can fund the sewer upgrades using rate increases alone.

“If there is no development fee and it’s all on the back of utility bills, it wouldn’t be a $2.20 monthly increase, it’d probably be closer to $3,” Bryant said. “The difference is closer to 80 cents per month, if every utility bill goes up and there’s no development impact fee.”

Bryant said developers can usually get a higher premium for homes built on larger lots that use a septic or aerobic system. He said it would be difficult to absorb the additional cost of the development fee for homes built on smaller lots that connect to the city sewer.

Chris Ergenbright, a local homebuilder, did not speak at the planning commission meeting but has expressed concerns about the city’s plans for the moratorium.

His company Monarch Homes recently completed a development on Ryan Ridge near NE 10th St. and is planning to develop another 16-20 homes on Westminster Rd. south of Reno Ave.

Ergenbright says they cannot pass the additional costs along to homebuyers and sellers in Midwest City.

“We can’t go sell a house for $500,000 plus in Midwest City like you can in Choctaw or Norman,” he said. “The economic background doesn’t allow for that. It’s hard in Midwest City to pass along much extra cost that you’re already having to with the construction materials.”

Ergenbright said they purchased the property near Westminster Rd. about 18 months ago but didn’t know about the sewer study and potential moratorium until May when they were ready to submit the plat. He said he would like to start the process of getting the plat approved and get the site ready while they were waiting for the city to resolve the moratorium.

“Our hope was for the city to at least let us get the infrastructure in and get the sewer lines in because there wouldn’t be any use because new construction permits can’t be approved yet,” he said.

“But we couldn’t even get to that point. Now we’re sitting here 6-8 months later and we’re in the same spot and now being told there is a potential fee charged for each home.”

The delays have Ergenbright reconsidering future plans in Midwest City.

“We’ve been expanding into Choctaw and buying lots there for spec homes,” he said. “We’re buying more lots because Choctaw has been a lot easier to work with.”

Members of the planning commission agreed with some of the concerns and asked the city council to review the figures before voting on the ordinance.

“I make a motion that we recommend approval of the ordinance with the caveat that we’re not satisfied with the percentages and would like them to reevaluate it,” said Rick Rice, planning commissioner. “We don’t want to hurt people on a fixed income, and I don’t want to stop development out east.”

The planning commission unanimously approved the recommendation.

The city council will take up the item at the March 26 city council meeting. The meeting will include a public hearing on the ordinance.

In August, Midwest City issued a moratorium on development on the east side due to concerns about the capacity of the sewer system. The moratorium prohibits development that will connect to the public sewer system on the east side. Developments with septic or aerobic systems are still allowed.

The moratorium was approved following a study on the east side sewer system by Freese and Nichols, a consulting firm. The study outlined more than $28 million in upgrades to the system needed to accommodate future development.

During a special council meeting last month, city staff and representatives from Freese and Nichols provided an update on the moratorium and outlined a prioritized list of projects and possible funding sources.

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