CFPUA Developer Agreements

At their meeting in April, the CFPUA Board approved ordinance language which will enable developer payback as future projects tie onto water and sewer infrastructure in New Hanover County. THANK YOU TO CFPUA BOARD MEMBERS FOR THEIR CONTINUED SUPPORT OF THIS INITIATIVE. It was a complicated and time-consuming process which BASE has been working on since last summer, but the language as-passed is below. At both of the past two CFPUA Board meetings, BASE Governmental Affairs Director Tyler Newman addressed the Board to encourage moving forward quickly with a streamlined and simplified ordinance.

Please note, that while the ordinance language has passed–and interested developers can move ahead with their development agreements–BASE has continued to work on policies which will guide the process with the objective of keeping the policies as simplified and streamlined as possible. THE DRAFT POLICY DOCUMENT CAN BE FOUND BELOW. THIS ITEM WILL BE ON THE MAY 12 CFPUA BOARD AGENDA FOR APPROVAL. Ideally, the first developers which utilize the payback option and craft a formal developer agreement will lay the groundwork for future projects to utilize this opportunity.

ADOPTED ORDINANCE LANGUAGE

2) Authority to contract with Developer for Reimbursement of Costs of Water and/or Sewer Facilities Built Solely by Developer.

The Authority may enter into agreements with Developers of projects that are consistent with the Authority’s CIP or are needed for expansion of the system to serve the public but which are not presently funded wherein the facilities have been designed at the Authority’s direction to take into account Authority determined needs regarding existing or future development and, in addition, when the scale, scope, or size of the developer-constructed facilities are atypical and substantially larger than what is needed for that specific development, or other unique circumstances apply. Reimbursement shall be limited to payments from future users that benefit from the developer-constructed facilities. Such future users may include developers of future projects and/or water or sewer customers within those projects. The Authority shall reimburse the party to an agreement made under this section after future users make payments to the Authority. This reimbursement must be made in a manner consistent with the Authority’s Bond Revenue Indenture. The Authority Board shall develop written policies consistent with this section that govern such agreements and may allow variances when a rational basis exists for same.

d) Nothing in this section shall prevent the Authority from extending water and/or sewer mains within the Authority service area on its own motion without receipt of an application from property owners and to assess the cost of such extensions in accordance with this section when, in the opinion of the Authority, the general public interest warrants such extension of service. [Subsection 1(c) revised October 8, 2008; (Month) (day), 2010]

Background: Last summer, during the discussions with the Cape Fear Public Utility Authority regarding capacity management, the development community proposed a strategy for developer cost sharing. Our suggestions were simple, straightforward and modeled after similar ordinances in North Carolina. The scenario we proposed would enable a developer to make an investment in new CFPUA infrastructure, add new CFPUA customers and be repaid as future developers tie on to the initial improvements. Basically , if developer A can get the money to install water and sewer improvements, he or she can be paid back over a time period period as developers B, C and D tie onto the system. With the current challenges being faced by CFPUA and the stress on the Capital Improvements Program, this seems to be the only real way to enable system expansion. If the developer can take the risk, this public/private partnership will enable repayment over time while the CFPUA gets new infrastructure, customers and rate payers.

Policies for Developer-built Infrastructure Reimbursement
Developer Reimbursement Policy