El Paso’s Public Service Board took a significant step Wednesday on an effort that would make future developments pay a higher share of infrastructure costs that come with growth.
The board voted 3-1 to place an item on its January agenda to begin levying a monthly surcharge on new homes and businesses built on El Paso’s fringes. The proposed fee would be $59 a month for homes using a typical three-quarter-inch water meter, and higher for homes or businesses that use larger meters.
The money raised from what El Paso Water is calling a “sustainable infrastructure surcharge” would be used to pay to build new water and wastewater facilities to serve growth areas in the Far West, Far East and Northeast parts of El Paso. If adopted on Jan. 11, the surcharge would mark a major shift from the long-standing policy of having existing water customers share in the costs of new growth.
El Paso Water CEO John Balliew has described the surcharge as a means of protecting “affordability” to the almost 200,000 current customers of the utility.
Balliew acknowledged a “basic math problem” with the surcharge: it yields modest savings to current customers, while adding comparatively large costs to water bills for new customers.
“So the existing customers might be saying saving $2, $3, $4, $5 a month, and then the new customers coming in would be paying the $59 a month,” he said.
Balliew said the proposed surcharge would save the average current customer $549 over the next 10 years. By contrast, someone buying a new home in an area covered by the surcharge as it kicks in would pay more than $7,000 over the next decade.
The proposal would only impact houses or businesses built in three defined areas on El Paso’s outskirts. It would not apply to new “infill” development in parts of the city already built out.
The surcharge proposal has met resistance from developers and others in the El Paso business community. Representatives of the El Paso Association of Builders and the El Paso Chamber urged the PSB to proceed cautiously with fees that could slow growth and limit economic development in El Paso.
Ray Adauto, executive vice president of the Association of Builders, said the PSB is considering adding the surcharge at an already difficult moment for developers.
“This year … we will be building the least amount of homes that we have in the last 20 years. And that’s because of rising costs in supplies and the lack of developable land at a reasonable cost,” he said.
Balliew said the surcharge is necessary, in part, because elected City Council members have resisted raising impact fees for years. Such fees are charged to developers as they build out in a community, then passed on to people who build homes and businesses in the growth area.
He said San Antonio, which has twice as many people as El Paso, collects 75 times more in impact fees each year.
The PSB, which is appointed by City Council to oversee El Paso Water, considered several other options Wednesday, including reducing the fee or delaying its implementation a year to inform the community about the plans.
In the end, the board voted to place an item on its January agenda to implement the entire fee beginning in March 2023. Board members Bryan Morris, Charlie Intebbi and Stephanie Block Uribarri voted in favor of the full surcharge plan. Board Chairperson Ivonne Santiago voted no, saying she preferred testing a lower surcharge to start.
Three board members were absent at Wednesday’s meeting – Mayor Oscar Leeser, Kristina Mena and Lisa Saenz.