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Posted August 22, 2011 | Leave a comment
Council approves fee deal
By Preston Knightemail@example.com
STRASBURG -- The Town Council will honor a "gentleman's agreement" between former Town Manager Kevin Fauber and a developer that allows the latter to build, having paid water and sewer connection fees at 2007 rates.
In June 2007, DorZak Builders Inc. filed six applications to connect into the town system on lots on Thompson and Stonewall streets, according to a memo from Town Manager Judson Rex. The cost was $5,500 each for water and sewer, plus a meter fee.
The first of those fees was applied in May 2009, and the second in February of this year. At that time, Rex states, staff discovered that the fees had been prepaid and informed DorZak, per town policy, they were only good for 30 days from the time of the original payment.
Rex told the developer it would need to pay the difference between the fee it paid and what it is now -- $11,950 each for water and sewer.
After a discussion, according to the memo, the staff allowed the February connection, but stipulated that the remaining four fees would be refunded with interest.
The matter came before the council on Aug. 15, with Rex recommending that members seek legal advice (Strasburg does not have a town attorney) before moving forward.
DorZak President Jamie Walter and Jay Winkfield, vice president of Virginia Savings Bank, were seeking to have the verbal agreement that was made with Fauber kept intact -- thereby avoiding having to pay the $51,120 difference -- as a third house is ready to be built. The bank agreed to give DorZak a loan to build, but wants the tap fees to remain the same.
"This new house will not appraise if we include the additional tap fee expense," Walter wrote in a July 18 letter to Rex. "It makes the house and lot and tap fees cost more to build than the house is worth. Secondly, we have been paying interest and renewal fees to the bank for the tap fee loan since 2007. It would put a substantial burden on our company and it lessens our equity in the lots we currently own if the originally accepted tap fees are not honored."
Although council members said they need to balance their own budget, they agreed it was best to let DorZak's deal stand.
They voted 7-0 to skip seeking the advice of an attorney and allow construction at the 2007 fee price.
"I guess I'm just bewildered," Councilman Scott Terndrup said. "It just astounds me. I'm just really disappointed. ... We've got to pay our bills, folks. We can't just offer 50 percent discounts to everybody and expect to meet our budget. But we have to be fair to these people."
Councilman Justin Ritenour said, "Clearly, town administration messed up."
At the suggestion of Mayor Tim Taylor, the council moved past the subject and will attempt to avoid similar situations in the future by having everything in writing.
Rex said he has reviewed material for the last eight years and has not found any other prepaid fees that could prove to be problematic.
"We don't ... want to get the reputation of not keeping our word," Councilman Bob Baker said.
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