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Wednesday, 11 September 2013 13:35

Sewer credits: a commodity market in Cashiers

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To relieve sewer gridlock in the Cashiers area, the Tuckasegee Water and Sewer Authority may change its rules to let developers swap, transfer and even sell unused sewer capacity.

 

The change would let developers unload sewer allotments on their hands that they don’t need after all. And it would also free up sewer plant capacity, which is high demand but short supply.

“You got a lot of people that are holding allocations and want to do something with them,” said TWSA Executive Director Dan Harbaugh. “Transfers are nothing more than another option to put some flexibility into the process.”

TWSA held two public meetings on the subject last week, one in Sylva and another in Cashiers. 

Under the current system, a developer pays up-front to reserve sewer capacity for future construction projects. It ensures TWSA’s sewer plant doesn’t get over-extended. But if a developer’s plans change — a building project is halted or scrapped, for example — they have few if any options to unload the sewer allocations.

The Cashiers sewer plant has a daily capacity of 200,000 gallons. About half of that is tied up in allotments that were sold but aren’t being used — meaning they can’t be doled out by TWSA elsewhere. The other half of the plant’s capacity is being used or is in reserve as a buffer for spikes in flow or emergencies.

Plans are in the works to build a costly new sewer plant to serve the Cashiers area, an expansion that Harbaugh says is inevitable. However, making use of the existing plant’s underutilized capacity in the meantime is logical.

“If this frees up some of the logjam, it’s the cheapest capacity we have right now,” Harbaugh said.

Harbaugh has even floated the idea of developers putting their extra allotments in a TWSA-run sewer bank to be resold to an interested party looking for capacity.

Either way, relinquishing the allotments wouldn’t be a total loss to the owner. 

But Harbaugh said rules would have to be put in place to deter trading and reselling of the allocations for profit.

“The idea is you don’t want profiteering,” Harbaugh said.

 

Developers want flexibility

At a public meeting in Cashiers, a small group of TWSA board members, property owners and developers listened about potential changes and asked questions of Harbaugh. Attendees were curious about how many people are holding onto the allocations, if an amended set of rules would make building another sewer plant in the area unnecessary and what the timeline is for enacting rule changes.

Harbaugh hopes to have some sort of changes in place come October, but the exact details are being worked out. The TWSA board discussed it at their own board meeting Tuesday as well.

Much of the Cashier’s system woes can be traced back to the housing market downturn. 

Prior to 2008, developers and property owners were rapidly buying into the Cashiers sewer system in preparation of their building projects. However, many projects were halted when the real estate boom went bust.

“A lot of plans were made before 2008 that have not been economically feasible,” Harbaugh said.

Those with unused sewer capacity include individual lot owners with just a few hundred gallons in sewer allotments and big developers with thousands of gallons of sewer capacity that they’re not using.

After a short grace period, anyone with an unused sewer allotment has to pay a fee to keep hanging on to it. The fee keeps people from buying up sewer capacity they don’t truly need just to have it. For a three-bedroom house, for example, it is $30 or so per month to reserve the allotment even if the home isn’t built.

The fees put pressure on the developer, said John Hale, a local real estate broker. He was at the meeting in Cashiers last week representing a development project in the area. He said the project is holding more than 30,000 gallons of daily sewer capacity for a large project that got its start in 2006 but was never completed.

The upfront price for the capacity was about $1 million, and it costs nearly $3,500 per month to keep the allocations.

“And we’ve been paying it for years,” Hale said.

Nonetheless, there is still hope for the development in the future, but only if it has the allocations, Hale said. So the TWSA bills get paid.

“Without the sewer, it can’t work,” he said. So, “we’ve just got to keep paying it.”

What would be beneficial, Hale said, is allowing some of that capacity to be transferred to another tract of land or project.

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