Tuesday, Sept. 30, 2003 | 9:33 a.m.
While rate increases are cause enough for many Las Vegans to take notice, a portion of the sewer fee proposal to be presented to the City Council on Wednesday could create even more discussion than usual.
The proposal would raise sewer and connection fees by 40 percent over two years, to be followed by an annual increase based on the Consumer Price Index.
In addition, it would impose an annual 5 percent surcharge on sewer fees. The charge -- called a Payment in Lieu of Franchise in city documents -- is meant to set a value for the use by the sewer system of city streets.
"I have a problem with it," said Carol Vilardo, president of the Nevada Taxpayers Association. She said her group received a letter from the city describing the proposal last week.
Private utilities typically pay franchise fees for use of the streets, both as rent and to offset the cost involved in tearing up public property when they use heavy equipment to access such systems as telephone, power and cable. However, the Las Vegas sewer system, which is run as an enterprise fund, or a department that collects money to offset the cost of its operation, does not pay such a fee.
Franchise fees generally go to help pay for such municipal services as parks and libraries, which is how the 5 percent proposed charge would be used.
Mark Vincent, Las Vegas finance director, said the proposal was presented during May budget hearings, when he received the go-ahead from the council to pursue the idea. He said the wording -- "payment in lieu of franchise" -- was simply a way to describe the funding.
In plain language -- since the idea involves having municipal sewer customers pay the utility for the use of city property -- "it's a tax by any other name, I think," Vincent said.
Irene Porter, executive director of the Southern Nevada Home Builders Association, said her group has a meeting with the city this week.
"Everyone's reaction has been (that they are) pretty much flabbergasted, and most of them feel they have to some research," she said.
Both she and Vilardo questioned whether such a proposal -- to use a tax on a service provided by an enterprise fund department, and place the profit into the city's general fund -- was legal.
"I would say there is more legislation needed to address the parameters of enterprise funds for water and sewer," Porter said. "I think it's something that has been ignored far too long, not by anybody on purpose. It just hadn't reached those proportions, but I think it has now."
Marvin Leavitt, a lobbyist for a consortium of Nevada cities and a former Las Vegas city finance director, said he had not heard of the proposal, but didn't hear anything that made him question its legality.
"I don't think there's any question that the law allows it; there's no specific limitation or controls on enterprise funds," he said.
If so, Vilardo said, it's still not appropriate. "If that's the case, I'm going to look into it and look at the possibility of legislation so that cannot happen," she said.
If council directs staff to draft an ordinance, the soonest it could be introduced would be at the Oct. 15. meeting. The letter sent to Vilardo's group states that the next steps would be a committee hearing Nov. 3, then a vote by the full council Nov. 5. The proposal would increase sewer rates 20 percent this year and 20 percent next year, which combined with the 5 percent fee would raise the average sewer bill from $138.80 to $204.04 annually in two years, according to information provided by the city. Connection fees, one-time costs, would go from $1,200 to $1,680 over two years. In addition, the city would implement annual increases based on the Consumer Price Index.
The goal is to start charging the increased sewer and connection fees Dec. 1, and if the timeline described in the letter is not met, "these targeted dates will slip," the letter states.
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