Building a new home, hotel, or restaurant in Healdsburg isn't a cheap proposition, but developers are about to get a significant break when it comes to hooking up to water and sewer.
The City Council last week approved a new way of calculating costs for water and wastewater service that reduces the cost for a new single-family home by 31 percent and as much as 78 percent for a new restaurant.
Healdsburg has some of the highest connection fees in Sonoma County and this should help take the sting out of some of the development fees.
"It puts us back in a position where we can attract business and homes," said Councilman Gary Plass.
"It's definitely good news. The costs, fees, are always something that gets in the way of moving forward on projects," said Carla Howell, executive director of the Chamber of Commerce. "People always squawked about how much higher it was in Healdsburg, compared to somewhere else."
The City Council last summer hired a consultant, The Reed Group, to review Healdsburg's water and sewer "capacity" fees, which were last updated in 2005.
The study came at the same time redevelopment programs were eliminated by the state, doing away with a source of subsidies to new or expanding businesses that helped offset the connection fees.
Consultants in essence recommended a new formula that includes only the costs of existing city facilities and excludes the costs of future or planned facilities.
Currently, water and wastewater capacity charges are based on the estimated costs of planned projects at the time the charges were developed.
It's a complex formula, as reflected in the comment by Bob Reed in his 34-page report to the city:
"Not all details of the methodology are broadly understood," he said.
"It relies more on engineering studies, analysis and planning studies and things related to expansion of the system," Reed said Friday of the current way of calculating connection charges.
He said the city's existing cost structure works well for relatively rapidly growing communities.
But Healdsburg's growth limits and slow pace of development are better suited to the "system buy-in method" that he recommended and which was unanimously approved by the City Council.
"Buy-in is one that really looks at the cost of investment made in the utility infrastructure — the costs that have been incurred to construct and finance facilities," he said.
"The fee is based on new connections (that) buy into the system on par with what existing customers have paid," he said.
Most new development is expected to rely largely on existing system capacity, according to Reed.
"What we are trying to do is get away from a system that was fairly convoluted. And this one is fairly straightforward," said Councilman Tom Chambers.
The bottom line is that connection fees will be less.
"They're pretty significant reductions, for sure," Reed said.
As an example, a new single-family home which currently is subject to a combined water and wastewater connection charge of $21,455, will pay $14,750, a 31 percent reduction.
An eight-unit apartment building, now $171,640, will pay $92,884, a 46 percent reduction.
A retail store, now $29,334, will pay $24,632, a 16 percent reduction.
A new 75-room hotel, which now pays $809,141 for a water and sewer connection, will pay 319,383, a 61 percent reduction.
And the largest percent reduction — 78 percent — is for a typical 50-seat restaurant. Instead of the current fee of $381,351, it will pay $85,530.
"I think it's good," said Peter Seghesio, who just began building the Healdsburg Meat Co. on the site of the former downtown post office site.
He said his project, anticipated to open in late 2014 with a butcher shop, cafe, deli and several hotel rooms, will benefit from the reduction.
And he said the new connection fee structure will provide for diversity of business and help manufacturers stay in town.
If it's tough to afford sewer and water, he said, "you will limit yourself to just art galleries. There's a lot of art galleries and I love art. You want more (than art)."
But he also said Healdsburg needs to guard against facilitating too much growth.
"Healdsburg is so special. You don't want to mess it up," he said.
(You can reach Staff Writer Clark Mason at 521-5214 or clark.mason@pressdemocrat.com.)
UPDATED: Please read and follow our commenting policy: