LIHUE — Some affordable housing advocates say a proposed Department of Water fee increase could add hundreds of thousands of dollars in additional costs to proposed low-income developments or altogether halt some planned projects. They argue the new costs will
LIHUE — Some affordable housing advocates say a proposed Department of Water fee increase could add hundreds of thousands of dollars in additional costs to proposed low-income developments or altogether halt some planned projects.
They argue the new costs will discourage or inhibit the construction of new developments for low-income families.
These concerns stem from several proposed changes to the Department of Water’s fee structure for one-time facilities reserve charges, which are charged to new customers to get water system connections.
The changes identified in a 118-page needs assessment study conducted by Honolulu-based defense company SAIC proposes fee calculations should be based on the number of fixtures rather than meter sizes for single family residential, multi-family residential, resort or hotel and agricultural customers.
Updated fee schedules outlined in the study call for a $572 charge per fixture unit for resort or hotel and single-family and multi-family residential users.
The previous FRC was a flat $4,600 for each single-family residence. Fees for multi-family residential developments and resorts or hotels were assessed based on the larger amount of the water meter size or $4,600 per unit.
The fee, according to the January 2013 study, is “intended to recover a proportional share of the cost of facilities (source, storage and transmission) necessary to provide water system capacity to new developments in Kauai.”
David Craddick, the Kauai Department of Water manager and chief engineer, said several factors — including inflationary costs, a rise in construction-related costs and bond financing for the required system expansion — were large contributors to the increase.
At issue, he said, is the large number of capital projects that must be done to address the water department’s vast infrastructure needs.
Craddick said the changes are becoming increasingly important as the water department continues to borrow money for infrastructure expansion projects.
He estimates the water department has borrowed more than $20 million since 2002 to fund these projects as federal and state subsidies declined over the past decade.
“The department has enough money to pay this year’s debt service for the FRC debt (from the FRC fund), but next year, there will not be enough money to pay the debt service,” Craddick said. “At that point, the department will have to start borrowing money in order to keep going, so the fund is at the point of running out of money.”
Some affordable housing advocates say something else must be done to avoid placing an increased burden on low-income families.
“We recognize the significant amount of work done by the Department and the Board in considering the factors involved in the FRC update and understand the intent of having the costs covered by developers,” Kauai County Housing Agency Housing Director Kamuela Cobb-Adams said in a April 2 letter to Department of Water’s finance committee members. “But we also recognize the inability of affordable housing to bear additional costs without a reduction in the number of units built.”
In some cases, the report establishing the revised fee schedule noted that proposed rates would create a 151 percent to 373 percent increase.
“Impacts to customers must be weighed before rates are implemented,” the report read. “Significant increases to FRC rates can have a material impact on business expansion and community development plans.”
Habitat for Humanity Kauai Executive Director Stephen Spears said he is concerned the fee’s implementation will delay the nonprofit’s plan to build out the second phase of the Eleele Iluna subdivision for low-income families.
Current development plans call for the construction of 48 homes in sets of 12 beginning in 2014, but Spears said the groundbreaking as well as the future of the subdivision may be in limbo if the nonprofit is forced to incur new charges.
Spears estimates that the increased FRC fees will increase the cost of individual lots and homes by more than $12,000 each.
“It’s already very difficult for people of low income to be able to afford a place, so with the prices rising and rising it just makes it to where it is no longer affordable anymore,” Spears said. “This increase would just add to that.”
The situation on Kauai, Spears said, is becoming increasingly pressing as more families apply for affordable housing opportunities.
In all, he said at least 1,900 low-income families are currently on the nonprofit’s waiting list for homes.
“The problem is so large on Kauai, so there really should be a focus on that (affordable housing),” Spears said. “In a population that has 66,000 to 65,000 people, where do you end up with 1,900 families without reasonable housing? Those are really high numbers.”
The overall proposal, Craddick said, is now awaiting approval from the water department’s rules committee, which is scheduled to release a formal report this month.
• Darin Moriki, staff writer and photographer, can be reached at 245-0428 or dmoriki@thegardenisland.com.
