When we ran the story about the hookup charges for the proposed Brew Pub on Peach Street, several folks wrote or commented that we should investigate the sweetheart deal that the Shanty got from the town, mainly that hookup charges were waived for that project. Even as these charges were waived, we wondered if that still constituted a ‘sweetheart deal’; this writer has followed the Shanty project from before there was a ‘Shanty’, and given the details of that development, didn’t necessarily think ‘sweetheart’ is a label that accurately fit that deal.
Shanty proprietor, Jon Dempster, supplied the Mirror with his perspective, “The town got the “sweetheart deal” here. They leased an empty lot to someone who invested $700k on improving it to open a business that provides them with over $100k a year in meals taxes, pays all the property and real estate taxes they previously were responsible for, purchases over $300k a year on the shore, and employs up to 60 locals during peak season with no security on the investment. Should we fail they now have a turnkey operation they did not pay for that they can lease or sell for a higher amount. At the same time they are the property owner which is the main difference between us and the brew pub. I argued that we should not be responsible for paying water / sewer hookup fees for land we do not own. Let’s say you had an empty lot in town. You then decided you wanted to improve the value of that lot. So you put an ad out in the paper that read “Great rental property at a low rate for anybody willing to build said property and pay property owners town water and hookup fee.” How many eager responses do you think you would get? Maybe just like the town you’d get one person crazy enough to think it was a ‘sweetheart deal’.”
While we certainly agree with Mr. Dempster’s assessment, however, in terms of the Brew Pub, it does beg the question about fairness. Or maybe it doesn’t. In the case of the Shanty, the town really wanted something to anchor that end of the harbor, something to add value to the empty lot there, and they were willing to make concessions in order for that to happen. In the case of the Brew Pub, the structure is already there, and is privately owned. The question is, should the Brew Pub be afforded a similar incentive to develop that property? Of course, Historic Tax Credits may be available to the Brew Pub, just as they were to Kelly’s Gingernut Pub. While the town did not offer relief by waiving hookup fees (although, they were less than then they are now), the tax credits can alleviate a small bit of the pain of reinvigorating downtown structures. At this point, the Mirror has not been able to confirm what was offered the Brew Pub, only what the current ordinance states:
Sec. 71-42. – Connection charges.
(a) Connection charges shall consist of a connection fee and a facility fee. The connection fee contributes to the town’s costs associated with maintaining the treatment works. The facility fee covers the capital cost of creating treatment works capacity.
(b) Class I. The connection fee shall be $875.00 and the facility fee shall be $6,600.00, for a total charge of $7,475.00. For residences having fewer than two bedrooms, the charge shall be one-half of that amount.
(c) Class II. The connection fee shall be $875.00. The facility fee shall be calculated on a consumption based formula as follows: Class I facility fee x residential equivalent x 75 percent. Residential equivalent shall be the estimated daily water consumption rate for the building, as shown below, divided by the residential daily water consumption rate of 125 gallons per day. For buildings with a proposed use not shown below, and for water incorporated into a manufactured or processed product, the town manager will develop an estimated daily water consumption rate for approval by the town council. In no case shall the facility fee be less than a class I fee for a residence having fewer than two bedrooms.
| Building Use | Gallons Per Day |
| Food and beverage, principally sit down | 10 per seat |
| Food and beverage, principally carry out | 115 |
| Lodging | 45 per lodging room |
| Retail sales | 20 up to 5,000 sq. ft., 4 per 1,000 sq. ft. above 5,000 |
| Office | 25 up to 5,000 sq. ft., 5 per 1,000 sq. ft. above 5,000 |
| Medical office | 50 per provider |
| Manufacturing*, distributing, servicing | 135 up to 30,000 sq. ft., 5 per 1,000 sq. ft. above 30,000 |
* Excluding water incorporated into a product
For buildings qualifying under chapter 66, article VIII of this Code, the facility fee used in the consumption based formula shall be $1,375.00, rather than the class I facility fee, if construction activity is commenced after the submission of the application or within the ten-year period of tax exemption. For buildings being converted to a different use, a new facility fee shall be calculated and the increment shall be either charged if higher or refunded if lower than the previous use.
(d) Such charges, plus $100.00 for inspection fees and review fees, shall be paid to the building department at the time of building permit issuance, or to the town treasurer pursuant to any payment programs authorized by town council, prior to the initiation of connection related construction activities.
(Ord. No. 20110210, 2-10-11; Ord. No. 20120510A, 5-10-12; Ord. No. 20140918, 9-18-14)
Sec. 70-35. – Connection charges.
(a) Connection charges shall consist of a connection fee and a facility fee. The connection fee contributes to the costs associated with maintaining the waterworks. The facility fee covers the capital cost of creating waterworks capacity.
(b) Class I. The connection fee shall be $875.00 and the facility fee shall be $4,000.00, for a total charge of $4,875.00. For residences having fewer than two bedrooms, the charge shall be one-half of that amount.
(c) Class II. The connection fee shall be $875.00. The facility fee shall be calculated on a consumption based formula as follows: Class I facility fee x residential equivalent x 75 percent. Residential equivalent shall be the estimated daily water consumption rate for the building, as shown below, divided by the residential daily water consumption rate of 125 gallons per day. For buildings with a proposed use not shown below, and for water incorporated into a manufactured or processed product, the town manager will develop an estimated daily water consumption rate for approval by the town council. In no case shall the facility fee be less than a class I fee for a residence having fewer than two bedrooms.
| Building Use | Gallons Per Day |
| Food and beverage, principally sit down | 10 per seat |
| Food and beverage, principally carry out | 115 |
| Lodging | 45 per lodging room |
| Retail sales | 20 up to 5,000 sq. ft., 4 per 1,000 sq. ft. above 5,000 |
| Office | 25 up to 5,000 sq. ft., 5 per 1,000 sq. ft. above 5,000 |
| Medical office | 50 per provider |
| Manufacturing*, distributing, servicing | 135 up to 30,000 sq. ft., 5 per 1,000 sq. ft. above 30,000 |
* Excluding water incorporated into a product
For buildings qualifying under chapter 66, article VIII of this Code, the facility fee used in the consumption based formula shall be $1,375.00, rather than the class I facility fee, if construction activity is commenced after the submission of the application or within the ten-year period of tax exemption. For buildings being converted to a different use, a new facility fee shall be calculated and the increment shall be either charged if higher or refunded if lower than the previous use.
(d) Such charges, plus $100.00 for inspection and review fees, shall be paid to the building department at the time of building permit issuance, or to the town treasurer pursuant to any payment programs authorized by town council, prior to the initiation of connection related construction activities.
(Ord. No. 20110210, 2-10-11; Ord. No. 20120510A, 5-10-12; Ord. No. 20140918, 9-18-14)
In terms of sweetheart deals, the elephant in the room is still the old school, which for many, is the poster child for corrupt, insider deals.David McCormack of Petersburg, who bought (?) the school, which sits in the geographic center of the historic district (at the time, assessed at over 900k) for $10, also cultivated an interesting business relationship with the town by which he negotiated to receive free water. Oddly, while the Town Council was obsessively eager to grant several water concessions to McCormack, no ordinance was every created giving him free water.
Town code specifically requires payment for the utility connection fee when a building permit is issued. In the old school case, the developer was not charged before the issuance of a Certificate of Occupancy. Supposedly for construction purposes, the school has always been connected to the town’s water, and during construction, crews used town water for free. The town ignored the existing water hookup to the school, which otherwise would have been billed a minimum of $108/month – this would have totaled $2,500 in utility for anyone else.
The questions don’t stop there. If you go to the school now, you will see 17 electric meters (one for each apartment), but only 2 water meters. Why? From what we can gather, the building enjoys a minimum use fee for each apartment; that is, if you have one user that is way under, and one user that is over, they each pay the median amount. The opposite argument is that this setup ensures that the town collects a fair amount for the hookup each month, whether a percentage of the apartments are used seasonally, or on a part time basis. The Mirror contacted Town Staff, but as of this printing, has not received an explanation regarding the meter setup at the school.
In terms of sweetheart deals, that, like most other things, is in the eyes of the beholder.
Update: Mirror received this update on the meters from Town Staff,”I believe that is correct; multiple individual accounts on one meter. Several multi-unit properties in town are set up that way, e.g., Fairways condominiums. They were billed for one construction account during the renovation, now 17″.
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