Changes to the management and future of Mt. Shasta’s civic infrastructure both above and below ground were addressed during Monday’s City Council meeting.
From a $3 million solar project to a temporary 75% reduction in water and sewer connection fees for commercial businesses, Council members looked at how to stimulate economic growth without going broke in the process.
An estimated 80% of the local sewer system is comprised of clay pipes, which are somewhat prehistoric by modern standards and are “collapsing,” according to city officials. Connection fees as well as development impact fees were seen as a way to pay for current repairs and fund future improvements.
But Council member John Redmond said the last thing a business owner needs when trying to get a new venture off the ground are added costs that can often be the result of building code requirements. Redmond said he was stunned to receive a $13,300 sewer and water connection fee for his pub, Handsome John’s Speakeasy.
“It screwed me over and kept me from opening for another year,” he said.
Those sentiments were echoed by other business owners, including Nion Sheppard, who wants to expand his kombucha manufacturing facility by moving to the old thrift store on Chestnut Street. Sheppard said his water and sewer connection fee alone came to $17,000.
“You are handicapping my business,” he said. “If you don’t want Starbucks, if you don’t want a Wal-Mart in here, you have to help the small guy.”
The Council voted 4-1 with Mayor Barbara Wagner in the minority to have staff members construct a resolution to be voted on at the next Council meeting that would require new businesses to pay only 25% of the connection fee for the next 18 months. The resolution would apply to businesses that open in existing buildings and not new construction.
Wagner based her opposition in part on the economic reality of finding a way to pay for “a tremendous backlog in our infrastructure projects.” Much of the financial planning for those projects was based on business models that had some element of growth occurring over time in Mt. Shasta.
According to the California Department of Finance, the local population was projected to reach 4,078 residents by 2018. That did not happen. As a result, there are no easy choices. According to the Census Bureau, Mt. Shasta’s current population is 3,394 residents, an 8.3 percent drop from what was predicted.
City Manager Bruce Pope acknowledged that “previous Councils just kicked the can down the street.”
“It is a critical issue facing the City and you are going to have to find an answer,” he said.
But a majority of the Council clearly thought that a serious reduction in commercial connection fees was worth the gamble in the hopes that the long-term economic benefits would outweigh a short-term drop in revenue. The Council previously passed a similar 75% reduction for residential connections. That three-year moratorium expires next year.
It is not clear from the data provided by the Public Works Department that the reduction in residential fees stimulated new home construction. But a thriving downtown commercial district would generate funds for city coffers in other ways such as a boost in sales tax collections or an increase in property values.
“There is more to the equation than a simple reduction in fees,” said Finance Director Muriel Howarth-Terrell.
Sheppard, for example, said he is doing a complete tear down and remodel of a “dilapidated building.” Like most startups, he works with a limited budget. The $17,000 connection fee would drop to approximately $4,250 if the resolution passes, which would free up funds to hire additional employees.
Council member Paul Engstrom said Mt. Shasta needs more entrepreneurs like Sheppard, who started at the local Farmer’s Market, and the City should do everything possible to support those types of businesses.
“I drive downtown and see the empty storefronts,” he said. “We just think somebody from San Francisco is going to come in here and open some fabulous restaurant (but) I think it is home grown stuff that is going to make us flourish.”
According to data provided by Public Works, the City collected $14,560 in connection fees during the 2017-18 reporting period.
That pales in comparison to the $248,607 in projected savings over a 20-year period that the solar project is expected to generate. Installations of solar panels are currently planned for the roof of City Hall, the Corporation Yard and the Wastewater Treatment Plan. The project would generate 600 kW of solar capacity.
Moreover, the contract with Johnson Controls, which passed with a unanimous 5-0 vote, comes with a guarantee from the contractor to reimburse the City if the projected savings fail to materialize. Officials with JCI said they plan to purchase the solar panels from local distributor, Wholesale Solar.
“It is a very positive, relatively risk-free project and a great addition to the City,” said Brian LaBrie, an account executive with JCI.
Also during Monday’s meeting, the City renewed its contract with Pacific Power that would increase the amount of franchise fees it collects from gross sales from 1% to 1.5%. The term of the new agreement is 15 years.