Fayetteville City Council
Work Session
January 6, 2013
What Happened: The City Council discussed lowering the interst rate for sewer assessments to Public Works Commission customers who are required to pay for sewer installation due to annexation. The Council would like for PWC to bring 3 interest rate scenarios (listed below) back to the council for consideration.
Background: Homeowners are assessed $5,000 after sewer construction. The City of Fayetteville and PWC pays the remainder.
Interest rates to be considered:
1. current 8% interest rate
2. 6% interest rate
3. prime (5.25%) +2%
History of the sewer assessment:
PWC funds are currently not required to extend sewer
City Council capped the assessment to property owners @ $5,000
No property will be assessed more than $5,000
Interest information:
8% is the maximum allowed by law
A common interest rate was set to treat all property owners fairly
PWC waived (FIF) fees to customers – $720 for sewer and $540 for water
Fayetteville is the only city in NC that waives these fees
Sewer Assessments from other cities:
Charlotte – property owners pay upfront (no financing)
Raleigh – 6%
Greensboro – 6%
Durham – 7.5%
Winston Salem – 5.25% (prime + 2%)
Cary – 6%
What Was Said:
Councilman McDougald – “Any city made changes due to the economy”
Mark Brown (PWC) – “I am not aware of any.”
Mayor Robertson – “PWC will have options on the 13th (January) on lowering the interest rate.”
Councilman Wright – “You want us to make a decision on the rate when?”
Robertson – “At the next regular meeting. We can’t delay for a long time.”
Councilman Colvin – “It takes time to look at these numbers. Are there other options for funding this all at once?”
PWC – “You’d have to borrow the money and raise water and sewer rates to pay for the debt.”
Robertson – “If you float bonds…how soon? how long?”
Brown – “Under the current plan there are 8 years left with few complaints. The failing septic tanks are done and now we are surveying customers that don’t want sewer installed yet. We are repriortizing projects.”
Councilman Crisp – “With an accelerated schedule…we’re also trying to do stormwater improvements. I do think we need to look at a bond. I’m hearing hundreds of complaints about time. Five hundered homes is a manageable number but doen’t satisfy other people waiting for it.”
Councilman Arp – “You’re also asking people who’ve already paid for theirs to pay for others….could be a problem.”
Crisp – “We should examine the bond as a possibility.”
Wright – “We need to make it so the average citizen can understand it.”
Arp – “Would there be any reprocity to the people that paid for it?”
Brown – “Those who have financed…consider a credit.”
What’s Next: City Council will review the above interest rates at the January 13th regular council meeting. The public hearing has already been held and the Council could vote on the rate.
