Frequently Asked Questions -
System Equity Fee and
CAP Water Resource Fee
- 1. Who authorizes implementation of new water fees or increases to existing fees?
- The City of Tucson Mayor and Council must formally vote to establish or increase fees.
- 2. Is there a legal process that must be followed before Tucson Water can increase or establish rates?
- Yes. One of two Arizona State statutes is applicable, depending on the type of fees being implemented or increased. The State statute pertaining to development, or impact fees, was revised shortly after the Mayor and Council adopted the revised System Equity Fee and the new CAP Water Resource Fee. The gist of the new statute has been blended with the other State statute in the following required procedural steps:
- A report supporting new fees or rate increases must be made available to the public.
- Mayor and Council must adopt a "notice of intention" to adopt new fees or increase existing fees and set a date for a public hearing on the proposed fees.
- The date, time and place of the public hearing must be published in a local newspaper.
- The public hearing must be held.
- The Mayor and Council can adopt the proposed new fees or fee changes only after completion of the public hearing. Depending on the fee type, adoption can occur immediately after the close of the public hearing or 30 days after the hearing.
- Depending on the fee type, fees are effective no sooner than 30-75 days following the Mayor and Council's vote.
- 3. Was there a citizens' review of the increased System Equity Fee and the new CAP Water Resource Fee before they were presented to Mayor and Council for consideration?
- Yes.
- The Citizens' Water Advisory Committee (CWAC), which reviews all matters related to Water rates and fees and makes formal recommendations to the Mayor and Council, studied the data supporting both fees. (The CWAC has 15 members made up of customers residing both inside and outside Tucson's city limits. Each member of the Mayor and Council makes one appointment to the CWAC; the remaining 8 members are appointed by the City Manager.) The CWAC voted at their March 2007 meeting to recommend that Mayor and Council adopt the revised System Equity Fee and the CAP Water Resource Fee.
- In addition, Southern Arizona Home Builders Association (SAHBA) and the Tucson Metropolitan Chamber of Commerce indicated that the methodology of the System Equity Fee was acceptable to their organizations. They reviewed closely and at length the methodology of the new CAP Water Resource Fee, and their efforts resulted in the Mayor and Council adopting the Fee without a cost component which had originally been included.
- 4. When will the revised System Equity Fee and the new CAP Water Resource Fee become effective?
- July 9, 2007.
- 5. How much is the revised System Equity Fee and the new CAP Water Resource Fee?
- For a 5/8-inch meter being connected to the water system for the first time, the System Equity Fee is $1,528 and the CAP Water Resource Fee is $202. Larger meter sizes will be charged more based on the greater volume of water the larger meter can accommodate versus a 5/8-inch meter. For example, a 1-inch meter can accommodate a water flow 2.5 times that of a 5/8-inch meter, so the fee for a 1-inch meter will be 2.5 times that of the 5/8-inch fee. The following chart shows the fees for the various standard meter sizes.
Meter Size System Equity Fee CAP Water Resource Fee 5/8 inch $1,528.00 $202.00 1 inch $3,820.00 $505.00 1-1/2 inch $7,640.00 $1,010.00 2 inch $12,224.00 $1,616.00 3 inch $24,448.00 $3,232.00 4 inch $42,020.00 $5,555.00 6 inch $86,026.00 $11,363.00 8 inch $129,880.00 $17,170.00 10 inch $198,640.00 $26,260.00 12 inch $328,520.00 $43,430.00 - 6. Will City or State tax be added to these Fee amounts?
- No.
- 7. Can I make a payment plan with Tucson Water, rather than paying all the Fees at one time?
- No.
- 8. Is the fee for installing the meter going to be charged in addition to the System Equity Fee and the CAP Water Resource Fee?
- Yes, because the fees are recovering different costs. The meter installation fee recovers the cost of labor, materials, and equipment to install the connection. The System Equity Fee recovers a proportionate share of the cost of water system capacity to serve the new connection. Water system capacity consists of the wells or the Clearwater facility (which produces the blend of groundwater and CAP water) which supply water, the mains and pumping facilities which move the water from the point of supply to the meter, and reservoirs which temporarily store the water as it is transported throughout the system. The CAP Water Resource Fee recovers a proportionate share of the cost of the right to CAP water (not the cost to have the water delivered to Tucson but simply the right to have it delivered - for which right Tucson Water must pay the State agency which administers the CAP Water project for the Federal government).
- 9. Will every new connection to the potable water system be assessed the two Fees?
- No. New connections in isolated areas not connected to the main potable water system will not be charged the fees since (1) those connections do not use the infrastructure assets included in the System Equity Fee and (2) CAP water is not currently a water resource available in isolated areas. (Two isolated systems, Santa Rita Bel Air and Diamond Bell, have their own development fees which recover the cost of water system infrastructure within those systems; those development fees will continue to be assessed.) New connections within two areas northwest of Tucson known as 'Peppertree Ranch' and 'Dove Mountain,' respectively, will also not pay the fee, based on legal interpretations of pre-existing development agreements. Temporary connections for potable water used at construction sites will not be charged the fees. And the fees will not be assessed when a remote meter is replaced with the same-size permanent meter.
- 10. When are the System Equity Fee and the CAP Water Resource Fee going to be assessed?
- At the time of application, on or after July 9, 2007, for a new potable metered connection. The meter installation fee will also continue to be assessed then. All fees must be paid by the applicant at that time (by cash or check), unless the applicant is a non-profit housing developer as certified annually by the City's Department of Community Services. Such applicants, along with the City's Department of Community Services, will have the System Equity Fee and the CAP Water Resource Fee paid by Federal affordable housing funds at the time of meter application; the applicant remains responsible for paying the meter installation fee.
- 11. What if I have a 5/8-inch meter already and want to upgrade it to a 1-inch? Am I going to have to pay the full amount of these Fees for the 1-inch meter?
- You will initially pay the Fees for the 1-inch meter ($3,820 for the System Equity Fee and $505 for the CAP Water Resource Fee = $4,325). After the 1-inch metered connection has been installed and you notify us that the 5/8-inch connection can be severed, we will refund you the full amount paid for the 5/8-inch connection, $1,730.00 ($1,528 for the System Equity Fee and $202 for the CAP Water Resource Fee).
- 12. What if I have a 1-inch meter and want to downsize to a 5/8-inch meter. Will I receive a refund for the capacity I'm not going to be using?
- No. Money will not be refunded for downsizing a meter. The Utility encourages customers to consider carefully their water needs before downsizing on the grounds that the original connection size was considered appropriate for water use at the property.
- 13. What if I apply for a new connection before July 9? Will Tucson Water postpone installing the connection until I am ready to have it installed?
- No. New connections applied for both before and after July 9 will be installed as normally scheduled. A customer who requests, after applying for the connection and paying the appropriate fees, an installation date later than what has been scheduled will be refunded all fees paid, and the connection application will be canceled. A $25 charge will be assessed for canceling the application.
- 14. The main has already been tapped for the new connection I need, so it's just a question of dropping in a meter. (A) Do I still have to pay the System Equity Fee and CAP Water Resource Fee for just a simple meter installation? (B) Also, what happens if Tucson Water comes to drop in the meter and the service connection to the main is buried and so my site isn't ready for the meter to be installed?
- (A) Yes, you must pay these Fees (and the meter installation fee as well). No water will be delivered to you simply by the main tap. Only the meter installation allows you to use the water infrastructure capacity to actually have water delivered and assures your new connection's right to CAP water.
- (B) If you have not uncovered the service connection to the main yourself shortly after making application and paying all fees due, Tucson Water will uncover it at the time we come to install the meter and charge your account an additional $250 for that work. We will not postpone the installation until you have uncovered the connection. You may also choose to have us uncover the connection when you apply for the meter installation and pay us $250 at that time in addition to all other fees.
- 15. I do a lot of redevelopment projects. Usually, I'm putting apartments or multiple units on a large lot which already has at least one water connection, but I need to replace the connection already there with several additional connections. How will the System Equity Fee and the CAP Water Resource Fee work in a situation like that?
- The amount you will ultimately pay will be calculated on the difference between the total fees for the new metered connections and the fees related to the meter size of the existing connection. As an example, assume the property has a 1-inch metered connection but now requires instead 4 metered connections, each meter being a 5/8-inch. The fees related to a 1-inch meter total $4,325 ($3,820 for the System Equity Fee and $505 for the CAP Water Resource Fee). The total fees for the 5/8-inch meters are $6,920 (4 X $1,528 = $6,112 for the System Equity Fee and 4 X $202 = $808 for the CAP Water Resource Fee). So the dollar amount you are finally responsible for is $6,920 minus $4,325, or $2,595. However, you will have to pay $6,920 at the time of applying for the 4 smaller meters; after the smaller meters have been installed and you inform us that the 1-inch meter connection can be severed, you will be refunded the $2,595.
- If the total System Equity and CAP Water Resource Fees for the new connections turn out to be less than the total fees related to the existing connection(s), you must pay the Fees for the new connections at the time you apply for the meters. If the total Fees for the new connections turn out to be the same as the total Fees related to the existing connection(s), you must pay the Fees for the new connections at the time you apply for the meters, but your payment will be refunded once the new metered connections have been installed and you inform us that the original metered connections can be severed.
- 16. I do a lot of redevelopment work. Sometimes I already have a metered connection on one property that I don't need but I am redeveloping another property where I need a new connection. How will the System Equity Fee and the CAP Water Resource Fee work in a situation like this?
- If you need the same meter size on the second property as you already have on the first property, you will pay the System Equity Fee and the CAP Water Resource Fee (and meter installation fee) when you apply for the meter installation at the second property. After that meter has been installed and you inform us that the connection on the first property can be severed, we will refund both the System Equity Fee and the CAP Water Resource Fee.
- If the connection sizes (or number of connections needed) are different between the two properties, then the response to question 15 applies: you will pay all Fees for the second property. If the Fees for the second property exceed what the Fees would have been on the first property, you will be refunded the difference; if they don't, there will be no refund.
- 17. I develop sub-divisions. Tucson Water requires me to pay for and construct the water distribution system for the sub-division according to the Utility's specifications. After the Utility inspects and accepts the system, I deed it to Tucson Water. (A) If I have done all this, why do I have to pay the System Equity Fee and the CAP Water Resource Fee on top of these other expenses when I apply for meters for the homes in the sub-division? (B) If I do have to pay the Fees, can I apply for meters before July 9 for all the sub-divisions I have either underway or planned for the future?
- (A) In terms of the System Equity Fee, the dollar value of Tucson Water's existing assets was reduced by the dollar value of distribution systems and other facilities constructed by developers and donated to the Utility. Thus, the calculation of the System Equity Fee excluded, or gave a credit for, those contributed assets, and a developer is not being charged twice for water system capacity when paying the System Equity Fee for new houses in the sub-division; in the System Equity Fee, he is paying a share of the costs of all the other water system infrastructure or assets necessary to provide water to the sub-division.
- In terms of the CAP Water Resource Fee, the donated distribution systems and other facilities constructed by developers are related to water infrastructure, not the cost of the right to have CAP water delivered to the houses or business offices the developer has constructed.
- (B) No. Both before and after July 9, developers of sub-divisions can apply for meters only after the water distribution system for the sub-division has been constructed and accepted by Tucson Water. (This policy represents no change from the current policy, although exceptions are made for model homes constructed and open to the public in advance of homes being constructed for the entire sub-division.) Since these Fees are assessed at the point of meter application rather than the point of installation, meters applied for after the system has been accepted by Tucson Water and before July 9 but installed on or after July 9 will not be charged the Fees.
- The current practice of allowing some meter applications for model homes prior to Tucson Water's acceptance of the sub-division's water distribution system will continue. If such applications occur on or after July 9, the Fees will be applied. If they occur prior to July 9, the Fees will not be applied.
- 18. Will a receipt be provided when the Fees are paid?
- Yes.
- 19. What will revenues from these Fees be used for?
- Revenues from the System Equity Fee will be used to help pay annual debt service (principal and interest payments on water revenue bonds which have been issued to finance system infrastructure). Revenues from the CAP Water Resource Fee will be used initially to purchase an additional allocation (water right) of CAP Water necessary to support growth in the community; once that allocation has been paid for, the revenues will be used to pay the on-going annual charges of the State agency administering CAP water to retain the right to CAP water.
- 20. Will these Fees cause the cost of a new home to increase?
- The answer to this question is much debated. It is certainly true that these will become a part of the cost of new housing. But the question remains as to who will ultimately pay this cost. Will the price of a new home increase to cover the cost? If so, new home buyers pay. Or will home builders absorb the cost in their profit margins? The answer to that depends on many factors, including how 'hot' or 'cold' the current real estate market is and what flexibility exists in the home builder's profit margin. A reasonable answer may be that some portion, but perhaps not 100%, of the cost will find its way into the price of the house. Should the price increase to include 100% of the Fees, they would add around $10 per month to payments, assuming a 30-year mortgage and an annual interest rate of 6%.
- 21. What if a meter was present on my property at some earlier point in time but was removed. Do I have to pay these fees if I want the meter re-installed?
- Yes. No credits or upsizing adjustments will be provided for previously discontinued services.
- 22. I have my own well for potable water, but it goes dry periodically, so I need a connection with Tucson Water. Will I have to pay these Fees to get a connection?
- Yes, if the connection is not in an area exempted from the Fees (see question 9).
- 23. I receive service from another water company in the Tucson area. I've heard that the owner of the company may be selling it to Tucson Water. If that happens, am I going to have to pay these Fees?
- No. Existing metered connections will not be assessed the Fees, should your current water company be purchased by Tucson Water. After the purchase, however, a new, or additional, metered connection will be assessed these Fees, provided the water system which has been acquired by Tucson Water is not an isolated system or otherwise in an area exempted from the Fees (see question 9).
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