Sewer availability charge ensures generational equity

 
Date: February, 2017

The Council’s regional wastewater collection and treatment system is efficient, cost-effective, and protects both public health and the environment.

Council Chair Adam DuininckRetail customers in the seven-county metro pay, on average, about 40% less for their monthly sewer bill than our peer metro areas. Our system is paid for entirely by users – no tax dollars contribute to our operations.

One reason your monthly rate is low is because, under state law, we structure our revenue in a way that ensures current users don’t subsidize new development. Put another way, one generation doesn’t pay for the next. We do that through a mechanism called the Sewer Availability Charge, or SAC.

SAC is a one-time wholesale fee the Council charges to local governments when:

  • New development connects to the regional wastewater system for the first time.
  • A property changes use in a way that increases the potential wastewater flow, for example, a former bookstore property is remodeled into a restaurant.

SAC allows us to build pipes and plants big enough to meet future demand, but spread the cost over time and charge the future consumers of future capacity. So in 1982, a pipe was built to support growth through 2042. But through SAC, users in 1982 paid only for their portion of the pipe. Likewise, as growth occurred in 2012, the new users paid only for their portion.

SAC is based on the maximum potential wastewater flow from a property. It’s simple for a new home. One home or apartment is charged one SAC unit, currently priced at $2,485.

For other properties, the Council must determine the number of SAC units charged based on the maximum potential flow of those uses—on their busiest day. For example, think of halftime at a Gophers-Badgers game at TCF Bank Stadium. Our pipes must be big enough to handle that flow without the pipes filling up and backing up. Hence, the stadium paid 526 SAC units.

The Council is very sensitive to the fact that SAC can be a significant charge for a developing small business. Especially when local communities add anywhere from a one-time $75 processing fee to $7,500 in local fees per SAC unit. We offer a deferral program to spread the cost of SAC for small businesses for up to 10 years at our low AAA-rated debt rate, with no penalties or fees.

We also know that small business owners too often don’t learn about the SAC charge until they go to their city for a building permit. We are increasing our public education efforts and outreach to small business organizations. We also put a SAC estimation tool on our website to help businesses anticipate their SAC charge when seeking a loan from their local bank.
 
Over time, we have worked with communities and customers to optimize the policies and tradeoffs in the SAC system. We are currently convening a task force with diverse expertise from across the region. The group is looking at several issues, including how to simplify SAC determinations. We expect their report later this year.


See more information about the SAC program.

Adam Duininck