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Connection fees (also called tap fees, system development charges, plant investment fees or PIFs, impact fees, etc.) are one-time charges collected from all new connections to finance the impact of growth on a utility's infrastructure. Many utilities today ascribe to the philosophy that “growth pays for growth,” or that existing customers should not subsidize growth.

Developing defensible connection fees involves a multi-step process that can be completed with or without the input and feedback of relevant community stakeholders. These stakeholders include developers, industry representatives, customers, and political representatives, among others. The decision to include these groups in the connection fee development process may impact the success and acceptance of new fees.

Butler County Department of Environmental Services (the County) in Hamilton, Ohio completed two updates of its connection fees in the past four years. Updates to its water and wastewater capital improvement plans (CIPs) and estimates of the current connections, combined with strong annual growth, prompted the updates. The County also considered alternative water supply projects. Anticipating the need for large increases in its connection fees, the County engaged Integrated Utilities Group, Inc. (IUG) to conduct a systematic analysis and development process of water and wastewater connection fees. Connection fees were calculated to result in defensible, industry standard fees. The analysis was recently updated for more current data.

The first process of developing connection fees included educating and involving stakeholders to receive 360 degree feedback. Industry representatives, members of the public (customers), regulatory representatives, politicians, developers, and others were invited to participate in four seminars. At each decision point, the stakeholders were asked to provide comments and feedback. As a result, stakeholder buy-in to the final adopted connection fees was complete and recommended fees were implemented by the Board of County Commissioners without stakeholder complaints.

In contrast, time constraints prevented a 360 degree process for including stakeholders the second time around. The update in early 2003 was conducted without the benefit of stakeholder input. As a result, the stakeholders not only had more questions regarding the calculation of the fees, but they also asked more difficult and educated questions. Not all of the stakeholders, many of whom bought in to the first update, were on board with the second update. This caused complications with the implementation process.

This paper will describe the connection fee development process completed for both updates for the County's water and wastewater system. It will compare the reactions to the connection fees with and without stakeholder involvement. Finally, it will summarize the lessons learned by the County if stakeholders are left out of an important community topic.
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Document Type: Research Article

Publication date: 2004-01-01

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