ST. ALBANS CITY — If all goes as planned the moratorium on the sale of St. Albans City’s water and sewer services outside the city limits will end on Sunday, Nov. 15.

On Monday night the city council, in their first readings, gave unanimous approval to a final draft of the necessary ordinance changes.

The ordinance, essentially paving the way for new water and sewer hook ups in St. Albans Town that have been blocked for more than four years, requires that an affiliation fee be paid. That fee is based on the assessed value of the property for which the hook up will be provided and a list of criteria to determine whether the proposed use of that land (when outside the city) qualifies for access to municipal water and sewer services.

It is this criterion that has proven the most controversial. Opposition has come from the Franklin County Industrial Development Corporation (FCIDC), whose board argued earlier this year that the new rules create additional uncertainty for potential developers and would require the hiring of experts.

City manager Dominic Cloud disagrees, arguing many of the criteria are easy to meet, and applicants do not have to meet all of them to qualify.

The ordinance explicitly states that the goal is to allow for sales outside the city limits “while ensuring the city’s designated downtown, tax base, economic development interests, and employment opportunities are not negatively impacted in the process.”

The city has the asset – the city’s wastewater treatment facility – and is willing to make it available “provided we’re not slitting our own throats,” said Cloud.

Under the ordinance, the criteria will not apply to St. Albans Town’s Route 7-North Sewer District as long as the original allocation – an allocation is essentially a share of the plant’s processing capacity — of 100,000 gallons per day remains. Once that allocation is exhausted projects within the sewer district will be held to the same standard as others located outside the city.

The city manager will determine eligibility for projects in the city, the town’s sewer district, and one and two-family residential dwellings outside the city. All other projects will be decided by the city council in its capacity as the board of water and sewer commissioners.

The new standards

The standards applied by the manager and the council focus on the economic impact of the project on the city.

First, the applicant must show the project cannot reasonably be built in the city. The city has limited space for industrial redevelopment so projects would likely meet this criterion easily, which Cloud has noted previously.

Next, the applicant must answer the question of whether the project will directly or indirectly result in retained or increased economic activity or employment in the city. For example, would a project create jobs for people who would then spend a portion of their wages at city restaurants or shops? “That’s not a high bar,” said Cloud.

The city then asks the opposite question: would the project result in a loss of jobs or economic activity in the city, and, if so, could that loss could be mitigated through conditions. “The intent if for the applicant to be able to make their case so we can find the win-win,” said Cloud.

The criteria also looks at the regional impact of a proposed project and whether it would result in the retention of needed facilities, or address “unique environmental, public health or economic concerns for the region.”

Finally, the council must consider whether the project would result in a net financial benefit or loss to the city, and would it undermine the city’s economic development efforts.

“The city, as you know, is heavily invested in economic development,” Cloud told the council. “We have to have some ability to say ‘we’re not going to give you a water and sewer allocation for that project.'”

Mayor Liz Gamache noted not all criteria must be met for a project to be approved.

The application process, said Cloud, would be less expensive than the experts needed for a development review board hearing.

Something that doesn’t currently exist, couldn’t be built in the city and wouldn’t transfer jobs out of the city, such as a new manufacturing facility, would have little trouble getting approval, Cloud suggested, stating, “That strikes me as a very low lying analysis to do.”

It’s “designed to find a way forward and make the best of a bad situation,” he added.

Although similar ordinances have been adopted in other parts of the country. This is the first time such an ordinance has been adopted in Vermont.

The city is anticipating legal challenges and included in the ordinance is a statement that if a court invalidates the affiliation fees to be charged to new users, then the moratorium will automatically be reinstated.

Currently, users outside the city are charged slightly higher user fees than city users. New users, once they paid the affiliation fee, would be charged the same rates as city users. Current users would have the option of switching to the affiliation fee and equal rates if that would be cheaper for them.

The affiliation fee for both water and sewer is an annual fee of $0.28 per $100 of assessed value for properties up to $10 million. For a water-only connection the fee is $0.12 per $100 and for wastewater only $0.16.

For properties valued at more than $10 million, the fee is halved for the portion valued between $10 million and $20 million, and ceases after $20 million.

Existing properties converting to city water and sewer would pay an affiliation fee of $0.14 per $100 in property value for both water and sewer, $0.06 for water and $0.08 for sewer.

The affiliation fees will not go into the water and wastewater fund, but instead into the city’s general fund.

Former council member Jeff Young questioned the wisdom of the affiliation fee. “I think this is a legal field day,” he said, citing a state law prohibiting municipalities from profiting off their water and sewer facilities.

Cloud responded by saying that different standards apply when a municipality is providing services inside its borders and outside. Citing a decision by federal Judge William Sessions, Cloud said, “Outside our borders we can offer our water and sewer on any terms we want.”

Sessions, who sits in U.S. District Court in Vermont, ruled earlier this year in the city’s favor and against town developer and now St. Albans Town Selectman Sam Smith, who had challenged the moratorium in federal court.

“We acknowledge we’re pushing the envelope,” said Cloud. However, he added the city had found a “creative and entrepreneurial solution to a vexing problem.”

The history of lawsuits and failed negotiations between the city and town over water and sewer services was something he would be willing to share with the courts, Cloud suggested. “I want to talk about the need for the city to step up and find a way forward for the benefit of the region,” he said.

Acknowledging the possibility of court challenges, Gamache said, “We know for certain what happens with the moratorium.” The moratorium has been in place since April 2011, when settlement talks in a lawsuit filed by the town against the city failed.

The council must still hold a final reading of the ordinance. Prior to that reading the council instructed city staff to publicize the date of the reading in the local newspaper and publish a concise summary of the ordinance. In addition, the city will make copies of the proposed ordinance available to the public prior to that reading. No date for the final reading has been set.