WATER UTILITY CONNECTION FEES INFORMATION SHEET

What if I want to connect to water?

BACKGROUND

On May 24, 2004, the City of Racine, through the Racine Water Utility, and the Village of Mt. Pleasant entered into an Intergovernmental Retail Water Service Agreement (“Agreement”). This Agreement creates a methodology for sharing the capital costs of infrastructure needed to provide water service (i.e., water mains, storage tanks and pumping facilities) in which these costs are applied to new users of the system (i.e., “new growth”) rather than existing water customers that have paid for their share of the infrastructure. The Agreement also applies to the Village of Sturtevant, which became a Racine retail customer on January 1, 2007.

FRONT-FOOT CHARGES

If you have a water main in front of your home you may have to pay a front foot assessment or charge. Frontage is defined as the distance that a lot or parcel of land abuts either side of a Future Growth Main, or abuts the street, highway or other right-of-way in which, or adjacent to which, the Future Growth Main is constructed and installed, excluding land already served by the Racine Water Utility and land that is generally undevelopable. The assessment is the cost that a developer or municipality paid to have the water main installed in the public right-of-way. If the cost was $90 per foot and you have a 100-foot wide lot, the front foot charge is $90 times 100 feet or $9,000. In some cases the cost per foot can escalate with inflation from the date it was installed. If the water main was part of a new development, chances are the price of the water main was computed in the price of your lot.

SERVICE INSTALLATION COST

If the contractor installs a service lateral as part of the project that cost will also need to be paid. A water service lateral is a small diameter pipe (one inch or so) connected to the water main and terminated at your property line with a valve box. That lateral cost can be about $1,500. Commercial service laterals can be more expensive if the pipe diameter increases. The property owner will then need to hire a plumbing contractor to connect the service from the property line valve box to the building at additional charge. The Water Utility will need to inspect this installation and then install the building water meter. There is no charge for that service by the Utility.

IMPACT FEE

In order to receive water in the Village of Mt. Pleasant, Village of Sturtevant or the City of Racine, there is a fee that is due and payable called a Residential Equivalent Connection fee (REC fee) or Impact Fee. The money collected is used to provide new water-related infrastructure for growth, such as new development. Things like large water mains, booster stations, tanks, towers etc. are funded with this fee. The fee for 2019 is $500 per residential connection. Multiple fees are due for condos, apartment buildings and commercial buildings. A REC is a measure of water usage expressed in terms of the amount of water used by a typical residential household, which is set as 72,000 gallons of water on an annual basis.

Example 1:

If your use is estimated to be 216,000 gallons, then you would need to pay 3 REC fees based upon your peak usage: 216,000 / 72,000 = 3.0 RECs

RECs are always rounded up to the nearest whole number.

Example 2:

If your use is estimated to be 190,000 gallons, then you still need to pay 3 REC fees:

190,000 / 72,000 = 2.63 RECs = 3.0 RECs (rounded up)

Once an Impact Fee is paid, those RECs become a REC credit, which remains with the property. Likewise, if the Racine Water Utility provided water service to a property prior to the signing of the Agreement (i.e., before REC fees), the average annual water usage for the most recent use is assigned as a REC credit. Upon a property change of use, or addition of a new use, or for a new or expanded building, the property in the example above would have 3 REC credits to offset water usage by the change. Any new Impact Fee would be determined based on the difference between the projected water usage of the new use or occupancy, and the actual annual average water use of the facility for which the initial Impact Fee was paid. If the new use or occupancy will use less water than water served to the property previously, then no additional Impact Fee will apply. If the new use or occupancy will use more water than water served to the property previously, then an additional Impact Fee will apply.

The concept is that existing ratepayers in the area do not have to shoulder the burden of new growth development and that growth pays for growth. The REC fee ordinance is based upon the number of peak employee hours multiplied by a factor depending on the use intended. A white collar office complex would use a factor of 2.3 gallons per employee hour. A restaurant would use a factor of 20 gallons per employee hour. The Racine Water Utility can recalculate RECs anytime from 1 to 3 years after a project or

new owner was initiated. If actual water usage within that time frame exceeds the projected usage at startup, then an additional Impact Fee would apply.

Examples:

The Qdoba restaurant strip mall complex at Green Bay Road and Durand Avenue paid 17 REC charges or about $52,000 to build their complex. Each tenant build out was evaluated based upon their number of employees, the type of occupancy and the number of hours of operation. The Mobil gas station that occupied that corner previously was on a well, so since the Utility had never furnished that parcel with water, no credits could be given. A restaurant like Noodles and Company on Washington Avenue would pay about 9 REC charges.

Recently, a Taco Bell on Washington Avenue and a McDonalds on Lathrop Avenue was torn down and a new one was constructed in its place. Since they had already been previous customers of the Utility and a similar size structure with the same amount of employees working, a REC fee was not assigned since the water consumption was viewed to be the same before and after.

If you tear down 10 houses that were customers of the Utility and build a strip mall you would receive a credit of 10 REC charges towards your new development. If they were all on wells, no credit would be due.

Who pays and when?

Normally if you develop an empty (white box) strip mall with no known tenants, no REC fees are assigned at the time of construction. As tenants move in and build out occurs, each tenant is evaluated and a REC fee assigned at that time. Whether the owner of the complex or the tenant of the space pays the REC fee is entirely up to the owner and the lease arrangement they negotiate. The fee is due to the Village or City who in turn remits it to the Water Utility to retire debt incurred for development of regional infrastructure.

Questions about REC fees

No one likes surprises. Especially owners, developers, tenants or the Water Utility. We encourage you to call ahead before you do your borrowing to get a ball park estimate of how many REC charges may be due for a specific project. Please contact Mike Gitter, Chief of Operations (Interim General Manager), to have a discussion about REC fees and possible credits. Phone 262-636-9424 for further information.

Additional information for calculating Impact fees is available from the City of Racine website: www.cityofracine.org

Scroll down to “Civics” tab, then “Racine Muni Codes”, scroll down to “Chapter 98-Utilities”, “Article III-Water Utility”, and “Division 4-Impact Fee”.