CCU chairman defends GWA’s system development fees
THE Guam Waterworks Authority will have to raise water rates by 15 percent to cover the cost of building new water and wastewater infrastructure systems if the Legislature moves to eliminate the system development charges, or SDCs, according to Simon Sanchez, chairman of the Consolidated Commission on Utilities.
Sanchez said it will cost GWA between $15 million and $30 million to develop new infrastructure that will provide water and wastewater systems to 3,000 new affordable homes that the government is targeting to build.
The CCU chairman was defending the necessity of SDCs against the Guam Housing Corporation’s push for its abolition and the pending introduction of Sen. Tina Muña-Barnes’ bill to grant fee exception for affordable housing projects.
“Developers of new housing projects should contribute at least $24 million to cover that cost of expansion,” Sanchez said.
He said GWA is about to dig new wells – each costing about $1 million – to accommodate the island’s growth brought about by the new projects.
“It’s not fair for our existing ratepayers to pay for the expansion of water systems for the new homes,” Sanchez said.
SDCs apply to new housing and commercial development projects. Sanchez said GWA has so far collected $3 million from about 1,000 new developers.
Obstacle
GHC President Martin Benavente earlier said the development charges were “an obstacle to affordable housing development” as they impose an extra burden on developers.
GWA levies a minimum of $5,000 in SDCs per new housing project, which translates to 50 cents a day.
“If a developer can afford to build a $250,000 affordable home, how can they not afford to pay 50 cents? If they are paying a mortgage of $900 a month, that is $30 a day, and 50 cents is a very small contribution to ask for,” Sanchez said.
“Whether you’re poor or rich, you need water. It’s a basic need and everybody has to contribute,” he added.
The SDCs were established by the 26th Legislature in 2003 in anticipation of the island’s growth. But they were implemented for the first time in 2010.
“When we heard about the military coming to Guam, the senators were quick to tell them that they must pay for extra water that will result from the growth, but when we cause our own growth, why don’t we have to pay?” Sanchez asked.
Comments
No matter how GWA parses the numbers, this fact remains. The System Development Charge (SDC), which pays for nothing, does not add value to a home. What it does do, for most families, is increase the size of the mortgage loan required to build a home. And it means that some families on the cusp of obtaining a mortgage loan will be declined. This is not right.
And why are developer’s of residential homes the bad guys here. GWA is discriminating against developer’s of planned developments. Build one home – the charge is $5,600; build 15 homes and the charge is $18,666 per home ($280,000 / 15 for a 6 “ water line.) Developer’s of planned residential home developments can build homes cheaper (making them more affordable), more efficient to run, and include landscaping and other amenities that make these developments attractive places to live. Yet the GWA system of SDC’s discriminates against this type of development by exponentially increasing these fees. This is not fair.
I am calling for a five-year moratorium on all GWA SDC’s. This would provide a welcome boost to small Guam homebuilders, and remove a major impediment to the goal of constructing 3,000 new, affordable, homes over that, ideally, will be privately owned.
Thank you for pointing out the crux of all problems on Guam. The residents of Guam always want the amenities and comforts of life, but they never want to pay for it. They always want someone else to pay for it.
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