BOS Approves Water Ordinance; Pre-Payment Issue Left Unresolved

In a special meeting on Friday, August 13, the Board of Selectmen (BOS) approved the Water Ordinance amendments that will allow for benefit assessments to property owners along the municipal water lines. The amendments passed unanimously, but the board had a prolonged discussion about adding regulations that would address the concerns of condominium owners and potential problems with pre-payments.

The amendments were tabled at the BOS' monthly meeting to give the selectmen time to consider issues raised by condominium owners over the equity of the assessment formula. Patrick Blanchfield, president of the Ledgewood Condominium Association, noted then, and at a previous meeting, a perceived inequity in the distribution, as a unit with twice the real estate value will only pay 14 percent more for the water line assessment.

Property owners along the line will be assessed on a four-factor formula, based on the one used in Danbury. The total cost of a particular line will be divided among all potential users based on their total lot area, frontage (with a minimum of 50 feet for homeowners and 25 feet for condominium owners), the number of units and assessed value as of October 2009, with each factor weighted equally at 25 percent. Within a given condo complex, the only variable factor is assessed value.

First Selectman Bill Davidson also brought up the issue of specific costs, as the four condominium complexes incurred extra expenses to connect that shouldn't be borne by the other users on the same lines. In the approved ordinance, those costs were apportioned evenly to all condominium owners by square-foot. Davidson laid out the three options: keeping the existing method; dividing the cost among condominium owners by share, based on their assessed value; or by applying the four-factor formula, essentially weighing condo value 25 percent, since the other three factors will be the same.

Davidson put forth a motion to add a regulation that would split these costs along the four-factor formula. Selectman Howard Lasser objected to the motion, preferring to see the costs applied by property value. "We didn't address the questions that were put forth at our last meeting," he added, as the regulation only pertained to particular costs and not the inequity in the spread of the assessment.

Lasser wanted to change the regulation to say that specific costs to condos would be apportioned using the same method as that used for the total expense, leaving the door open to alter the formula for assessing condo owners. The motion passed as amended, however Lasser abstained, as he wasn't comfortable with the language of the regulation.

He offered a motion of his own, offering to use a "two-tiered approach," whereby the total cost to a given complex, as determined by the four-factor formula and specific costs, is then divided among the condo owners proportionally according to grand list value. The motion failed to receive a second.

Lasser also brought up the issue of pre-payments, where users pay down their share of the 20-year bond early, removing the lien on their property and avoiding the interest. "Going by a 20 percent pre-pay average," as seen by the WPCA in managing municipal sewer systems, "with 2.25 percent interest, the town would be on the hook for about $200,000," he estimated.

Each year, users along the lines will be assessed the annual bond principle and the interest that goes with it. Funds from pre-payments will be placed in an interest-bearing account, from which their annual assessment will be paid, however the accrued interest on the pre-payments may not keep up with the interest on the bond. "You won't physically be short until the 18th year," Lasser explained, "Then, do you go back and assess interest on those who pre-paid or do you shift that cost to the those who didn't?"

Selectman Steve O'Reilly pointed out that they would not be able to assess those who pre-paid, as the lien that allows the town to levy a tax would be lifted. The ordinance allows for the town to reassess properties along the line at a future date if the regular payments are not enough to pay off the debt service, however that would only be split between those users that still have liens on their properties.

"The only way to be sure [that there is not a deficit in the 18th year] would be to act as fund managers," Lasser said, adding that that is not in the selectmen's job description.

The BOS did not come up with a solution at the special meeting, but Selectman Lasser has sent a letter to legal counsel about potential options. Davidson is pushing to have all the kinks worked out within the next two weeks, so as to get the first bills out in October, before the holiday season.