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SEATTLE, WA-Since 1990, King County has imposed a “capacity charge” to cover the costs of construction new sewer facilities. However, until this last year, the state legislature only allowed a flat rate of $10.50 to be charged to new King County customers whose service requires the addition of capital infrastructure. Now, beginning in 2003, new development in King County will be tagged with significantly increased charges calculated to cover 95% of the costs of new or expanded sewer facilities. The rate increase will apply to all industrial and commercial endeavors as well as residential projects. So says a 30-year plan adopted earlier this week by the Metropolitan King County Council.

Louise Miller of council District 3, chair of the Regional Water Quality Committee, says the plan will promote fairness among ratepayers by ensuring that “growth pays for growth,” an idea she says is not always popular with local developers, some of which voiced their opposition “in this latest go-round.”

Larry Phillips, vice chair, tells GlobeSt the committee attempted to work with the development community to avoid serious impacts on King County’s real estate industry. The challenge, he says, was balancing the need for new infrastructure that will allow for continued growth and development–and the voices of long-time residents who were adverse to paying $1.2 billion for a third treatment plant for the benefit of newcomers.

The capacity charge, which Miller says around the country is often referred to as a “hook-up charge,” is limited by law to pass on costs associated only with new capital infrastructure benefiting new customers. Costs such as maintenance must be shared equally by the entire customer base. With the calculations to determine exactly what is capital infrastructure, being exceptionally complex, Miller says it is better to err on the conservative side than overcharge a new customer and open the county to lawsuits down the road. Thus the plan of passing on 95% of estimated costs.

Rather than saddling developers with paying for new infrastructure, the plan will allow the first owner of the property to take on the responsibility. Current legislation only allows capacity charges to be made monthly over a period of 15 years. The council plans to seek new legislation that will allow the county to collect the money up front as a one-time fee, which owners could roll into their commercial or residential mortgages if they so chose. Phillips says the 95% figure is the most aggressive in the county and says high-growth West Coast areas, such as Arizona and California, will be watching the outcome closely.

Under the plan, new customers are defined as those who hook up to service between January 1, 2003 and December 31, 2030. The capacity charge will be calculated based on annual estimates of the cost of capital expenditures. An in-depth study conducted every third years. In 2002, the capacity charge will jump to $17.20. The current estimate for 2003 is now figured at $17.60 but may change if anticipated costs rise prior to the July 2, 2002 deadline for setting the rate for the following year.

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