More than 120 businesses, ranging from medical facilities to
restaurants, still owe the city nearly $20 million for
”
overusing
”
Gilroy’s water and sewer systems, but council members
acknowledged that collecting that money, given the sputtering
economy, could be tricky.
More than 120 businesses, ranging from medical facilities to restaurants, still owe the city nearly $20 million for “overusing” Gilroy’s water and sewer systems, but council members acknowledged that collecting that money, given the sputtering economy, could be tricky.
In September the city council will consider revamping Gilroy’s 22-year-old sewer and water ordinances. The ordinances determine how much a commercial or industrial user should pay to offset their expected impact on the city’s water and sewer systems. The business and city agree on the one-time “impact fee” and then the business pays its separate, much-lower water and sewer bills each month based on its actual usage.
But the faith-based agreements have lacked foresight.
In one of the most egregious cases, West Coat Linen, formerly Marriott Laundry, on Murray Avenue owes more than $2.2 million, according to City Hall.
Overuse of the aquatic systems has recently become an issue because city coffers dedicated to building new roads, sewer lines, water pipes and public buildings are already down 75 percent, or $13.8 million, due to snail-paced development, which largely fills the funds. The city also borrowed more than $6 million from two of the funds to help pay for Gilroy Gardens earlier this year.
So the question becomes: As the economy continues to sag, is it a good idea to collect $20 million from businesses flushing and drinking more than they promised? The city deserves its money, yes, but hastily collecting it now could hurt businesses that also pay sales and property taxes, council members said.
“If the money is owed, it has to be collected,” said Councilmember Bob Dillon. “We don’t desire to put anybody out of business when we do it, so my feeling is we’ll be willing to come up with a repayment plan that gets people current without bending their arm due to the current economic climate. But I have bills I have to pay every month, too, and so does the city for that matter.”
Councilman Dion Bracco agreed.
“We do need the money, and we definitely need to look at it, but we still haven’t found out what’s really owed,” Bracco said. “If a business started out and has grown and used more water because of that, that’s one thing, but if a business misled the city to pay a lower fee, then that’s different.”
City Engineer Rick Smelser notified the council of the thirsty businesses in January and said at the time he expected new ordinances for council approval by Feb. 25. But designing a new, streamlined monitoring system and figuring out exactly who owes what has taken longer than expected – “It’s time we look at it again,” Bracco said – and the council will consider the issue in September, according to Smelser and City Administrator Tom Haglund.
“The ordinances have been revised and are ready for council. However, as I mentioned, we are still working on the automated computer system,” Smelser wrote in an e-mail June 18. “The (amounts owed) need to be correct, and the system needs to work smoothly before we go back to council and out to the property owners.”
Haglund declined to comment on the matter extensively because it largely predates his tenure, which began in May, but he agreed that the council needs exact amounts before considering new preventative ordinances and a plan of recourse.
If left uncollected, the city will be hard pressed to maintain its 80-mile underground network of pipes, some of which date back to the early 1900s, according to Smelser and sewer officials. Thanks to state funding, the sewer fund begins the fiscal year in the black, but the water fund will begin with a nearly $3 million deficit, and both funds show multi-million jumps beginning in 2009, partly due to an expectedly recovered economy along with the piecemeal collection of the $20 million.
Gilroy has 242 allocation agreements with as many businesses, but 121 of those have not stayed within their aquatic means. Five businesses alone owe more than $1 million each for excessive sewer use, and there are dozens of six-figure violators, as well. None of the businesses contacted returned calls for comment.
Pre-1985 businesses that have not drawn any new permits since have never paid impact fees because their usages are grandfathered in, according to Smelser, who added that the city will continue trying to create or update allocation agreements for those older users, which total more than 600.
Water agreements at a glance
Impact fee agreements with the city have turned out to be very inaccurate with regard to projected water and sewer use. Out of 242 allocation agreements, here are some facts:
60 businesses exceed water allocation
$2.1 million in unpaid water fees ranging from $485 to $400,000 per business
119 businesses exceed sewer allocation
$17.4 million in unpaid fees ranging from $225 to $1.9 million per business
Commercial/industrial sewer impact fees are:
$3,966/100 gallons per day
Commercial/industrial water impact fees are:
$8,208/1,000 gallons per day
