Greenwood is looking at a one-time fee businesses pay when they connect to the sewer system with the goal of making sure expanding and opening a restaurant or retail shop in the city is affordable.
Since 1997, the city has charged a sewer availability fee that businesses are required to pay when they connect to the city’s sewer system, and the city uses the money to pay for expansion of sewer coverage. The fee can range from $500 to as much as $100,000 and is based on a formula that calculates how many gallons of wastewater will be used per day.
But city officials have been concerned that fee may be too high and is preventing businesses from opening a store or restaurant in Greenwood.
For example, a restaurant has an estimate that 35 gallons of wastewater will be used per seat. With 50 seats, the restaurant is estimated to use 1,750 gallons of water per day, so the owner pays a fee based on the cost for that amount of water to flow into the sewer system. In a hotel, it’s estimated 100 gallons of water per room will be used per day, according to city code.
But city officials have learned through the years that many businesses don’t use the calculated amount of water from the formula, and often aren’t anywhere near it, city council member Linda Gibson said. That means those businesses are paying more than they should.
The fee is charged when a business expands, a property is sold or when a location is used for another purpose, city controller Adam Stone said. For example, when Revery added onto its downtown location, the restaurant has been charged as much as $10,000 in sewer availability fees, Stone said.
Whether businesses are paying too much has been a concern for the city for some time, Gibson said. One issue that cropped up was when a restaurant or business, such as Vino Villa on Madison Avenue, wanted to put seating outside, those added outdoor seats would increase the use of water, based on the city’s formula, Gibson said. That meant those business owners were paying the full fee for each of those seats, even though they were only using that seating area for about 25 percent of the year, Gibson said.
“In the past, businesses have wanted to do business with the city, but couldn’t because how extreme those fees were. You have to be able to attract businesses and not have (high) fees,” Gibson said.
The changes would make sure that a business wouldn’t be charged as much when adding on or expanding.
“This is a short-term Band-Aid we can offer to existing tenants. They’ll show what they paid in sewer availability fees compared to what they actually use and show that it’s not near as much,” Gibson said.
“We are looking at how out of alignment our calculations are for our sewer availability fees. We are a city that favors new businesses coming in, and we want to make sure they aren’t being gouged.”
Stone will do a study to find out how much water businesses are actually using per day. The city can then use that information to determine a new formula that ensures business owners will be paying for only what they use, rather than for a projected amount. The study will also help the city get a better idea of how much a new business should pay when they hook up to the sewer system, Stone said.
The city will also figure in the hours the business is open, and the type of business, since a retail shop would use less wastewater than a restaurant, for example.
And for current businesses using less water than the formula projected, they will have the opportunity to go before the city to show why they were overcharged, Stone said. The city could then decide to credit that amount back to their sanitary sewer account, Stone said.