Compact fee sparks anger, questions among business that face huge sewer hike

Numerous companies outside of Elkhart city limits are upset over being shifted to the city¿s existing compact fee policy that has left some facing significantly higher sewer fees.
Posted on Jan. 9, 2013 at 12:00 a.m.

ELKHART — Numerous companies outside of Elkhart city limits are upset over attempts to shift them to the city’s existing compact fee policy that would result in significantly higher fees for sewer use.

The issue has become a top issue for city officials and a committee is working to find a long-term solution to the policy.

“The mayor has several recommendations,” said Arvis Dawson, assistant to Mayor Dick Moore. “It’s a high priority for him.”

The committee is expected to meet with Moore on Monday, but Dawson was unsure if any decision or announcement would be ready when the city council meets later that night.

He added, “We always want to be business friendly. We don’t want anybody leaving our community.”

The crux of the issue involves the city’s effort to shift companies from a traditional sewer service agreement to compact fees for residential and business customers located outside of the city.

Under the sewer service agreement, companies paid a fee that is often triple what would paid if the customer were located inside the city limits. The compact fee is based on a formula involving the customer’s assessed property value.

Traditionally, customers who hooked up to sewer constructed before Dec. 14, 1998, were on sewer service agreements while customers who hooked up to sewer constructed after that date were placed on the compact fee that comes in addition to a sewer charge.

The new policy is an attempt to improve consistency, but would also generate more revenues for the city, said Laura Kolo, utility services manager for the city.

The policy was approved late last year after city council members discussed the issue at several meetings in which various concerns related to the policy were discussed.

At that time, one business representative expressed concern over the rate change, but that gained little attention as most conversation focused on transparency and how the RV/MH Hall of Fame would be treated as a nonprofit.

Companies affected by the change began receiving letters in December urging them to sign new agreements, but reaction from many was swift and led Moore to announce plans to reconsider the change and delay establishment of the policy.

Council members David Henke and Mary Olson — both Republicans — expressed dismay over how the city has handled the policy change.

Henke said he’s heard from nearly a dozen companies upset with the move.

Kolo points out that 63 other commercial customers have been on the same compact fee arrangement for years and seem to accept it.

Henke, though, said he thinks the city “overcorrected in the search for additional revenues.”

Among those upset, Henke said, are at least one recreational van company, numerous small businesses and landlords of commercial properties — including two strip malls — that would be charged the fees regardless of whether their properties have tenants.

On Monday night, the council heard from Kelly Moyer, owner of Future Sales, a company that serves the RV industry located on Glenview Drive, north of the municipal airport.

Moyer told the council the company is considering expansion, but is upset with the compact fee.

Under the old policy, Future Sales paid about $388 per month. But as of Jan. 1, the compact fee would be about $543, Moyer said.

“I’m concerned. I don’t understand how that compact fee was arranged,” Moyer said.

Newly elected council president Ron Troyer, a Democrat, assured Moyer that the issue will be taken up quickly by the city council.

Other companies face much larger hikes.

Goshen Coach would see its monthly rate rise from $202 to $3,057, according to Michael Pangburn, attorney for the company.

Pangburn said the company is willing to pay its fair share, but wonders how the city arrived at the fee.

He and others said they believe that basing the fees on assessed value does not make sense.

While paperwork with the old agreement refers to paying for sewer service, Pangburn said a recent letter from the city explains the change will help the city recover money for other services.

“My question to the city is what other services are you providing that you say we are not paying for?” Pangburn said.

Traditionally, the compact fee is intended to seek money in lieu of property taxes the customer would pay if located in the city.

Dawson said when the compact fee was established in 1998, the city viewed it as a way to attract customers to consider annexation into the city.

Dennis Mitchell, president of ProAir, which manufactures air conditioning and heating systems for specialty vehicles, said the company is looking at a hike from $144 per month to a $864 compact fee plus the standard sewer charge.

The company has been in existence for about 35 years and employs about 100 people.

Mitchell said the impact would be “tremendous,” in part, because they have other competitors nearby.

“To have an $800 increase per month in sewer fees is not something we’re going to be able to recoup from our customers. We’re not going to pass along the price increase to help offset this,” Mitchell said.

“I don’t know if $150 is fair or not fair, but I don’t think $1,000 is fair,” he said.

Mitchell, in a letter to city officials, warned that other cities would like to lure them away.

“Many area communities contact me frequently with attractive incentives for relocation, but I have refused to consider leaving. It’s my opinion that Elkhart County has always been favorable to hard-working companies,” Mitchell’s letter read.

Another company, Interlogic Outsourcing Inc., which employs about 80 office workers, would see its monthly rate rise from $200 to $1,000 per month.

Another businessman who asked not to be identified, said his business, which employs himself and one other person, will see fees rise from about $60 a month to nearly $300.

“There’s an uproar out there,” he said.

Monthly comparison

ProAir would see its fee rise from $144 per month to a $864 compact fee, plus a small sewer fee

Interlogic Outsourcing Inc. would see its fee rise from about $200 to about $1,000, plus a small sewer fee

Goshen Coach would see its fee rise from $202 to $3,057, plus a small sewer fee

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