Should Akron council give a utility usage credit to a business?

Posted October 31, 2019 at 5:00 am

By Julie Ann Madden

Editor’s Note: This is the first in a series on Lazy H Campgrounds owner’s two requests to the Akron City Council at their Oct. 22 meeting. Both require monetary consideration.

In addition to requesting help with constructing a walking and biking trail into Akron from the rural Lazy H Campground, owner Justin Higman requested an approximately $125,000 credit on the campground’s usage of city water and wastewater systems.

If the council approves this request, Lazy H Campground would not pay for water and wastewater until the bill equaled approximately $125,000.

In the Sept. 11, 2019, Utility Interconnect Agreement with Akron, Lazy H Campground was to pay all utility connection costs between the city’s water and wastewater lines.

The water and wastewater utility work has been finished to the campground, and the total cost is “just over $123,000,” Higman told the council at their Oct. 22 meeting.

“My goal is to really help Akron with this (campground),” Higman told the council. “I look at this as a team effort so there are some things we need to decide as a body together — how to best make use of this in the long run.”

With weather and contractor delays, Higman noted the campground infrastructure won’t be completed this fall but he’s still hopeful to have it all done by May 1, 2020.

“We have a lot of expense out there,” he said. “It’s become more of an investment than I initially ever thought it would be.”

“I’m really doing this (campground) to help Akron,” said Higman. “This is where I grew up. I think I told you why I did this. When some of the businesses were closing on main street, that’s when we, out there, decided the best thing we could do is open (the campground) to the public to help keep Akron from being a bedroom community — bring people in from the outside to help Akron.”

“I think we’ve had a small taste of that with the few cabins we have,” he said, explaining creating the campground’s 85-site Recreational Vehicle (RV) park has had significant expenditures as each campsite will have electric, water and sewer hookups and WiFi.

“I’d hoped to have it done this fall and all ready to go when we open in spring,” said Higman. However, the weather and contractors’ delays haven’t cooperated this construction season.

The paving of RV campsite pads and campground roads plus individual RV campsite sewer and water hookups, a grass irrigation system and landscaping still need done but the campground is now connected to Akron’s water and wastewater system, he said. WiFi should be installed yet this fall.

“Hopefully, the goal is, if we would get a decent spring for once, we’d get in there and have everything ready (for a May 1 opening of the RV Park),” said Higman, noting the worst case scenario is the opening would be delayed to June 1.

“I’m confident we will be full right off the bat once we open up,” he said, adding there will be between 200 and 300 people coming through Akron out there as he already has a waiting list of more than 200 with 10 people signing up for annual spots.”I think the waiting list alone kind of tells you (how the campground will benefit Akron.)”

With the campground project delays, “my loans are going to carry through the winter and into spring,” said Higman. “I’d never ask Akron to write me a check or anything like that but I was wondering — it would help me if I could tell my bank — in spending that money to (connect the utility systems under Iowa Highway 12) that the campground could have a (water and sewer usage credit).”

“There isn’t an additional huge cost to the city for that,” he said. “(Campground) sewage goes straight to the treatment plant. I don’t think there’s significant cost there.”

“Our rates are really low compared to other communities,” said Akron City Administrator Dan Rolfes, who had done preliminary calculations for a usage credit, using the “high” usage of Akron-Westfield Community School and Ridgewood Apartments as comparables. “Basically, say you use 60,000 gallons a month, it would take over 30 years. I don’t think it was even close to $125,000 in that.”

“So from the city’s side it’s pretty insignificant but on my side in paying these loans off, I don’t think I’ll live long enough to see that happen,” said Higman. “It would help me in dealing with my (Sioux City) bank to work the loans and everything.”

Saying “before everyone says ‘I can’t have a utility usage credit, city officials have never done that for anyone else,’” Higman reminded the council of two projects in the last 10 years he did to help Akron:

• Higman paid the $150,000 purchase price plus clearing costs of the former Finzen Trailer Park. The city has since sold a portion of this property to DeRocher Brothers Construction for a housing development.

“I gave it back to the city,” said Higman. “I didn’t get any benefit out of that. You’re getting some development there so you’ll have a tax base there;” and

• He paid the $45,000 purchase of the 111 S. Eighth St. property plus house demolition costs. This property has since been developed with a residence and is now the home of Hollie and Adam St. Pierre.

“I’ve given way in excess of (my $125,000 request) to the city,” said Higman, adding his request is just for the cost of connecting the campground to city water and sewer lines, which involved boring under Iowa Highway 12.

“One of the things I looked at is how much does it cost to pump 1,000 pounds of sewage,” said Rolfes. “It’s going to have to go through two lift stations to get up to that point. I was thinking like 50 cents per 1,000 is what that would cost.”

“That’s one of the things everybody else would have to pay for because we’d have to pump that,” he said. “I know it’s a credit back to your end and that would be extra money. We’d have to front part of it, and the same thing with the water and the treatment, pumping and everything else.”

“That’s one of my concerns,” said Rolfes. “It’s one thing with the rate but that’s not really costing us anything. At the same time everyone else is going to have to burden that electrical expense to actually pump and treat. Obviously, every time there’s a rate increase that would also affect you, too.”

“Obviously, our credit would go along with the rate increases, too,” said Higman, who explained the campground’s water and sewer usage is six months, not the whole year as Rolfes was calculating.

“If you look at the cost that way it’s low but every little bit helps me on my loan progression,” said Higman, noting he was meeting with his banker the next day.

When Mayor Sharon Frerichs asked if the council had any other questions for Higman, she was met with silence.

Councilor Joseph Small suggested deferring this request so city officials could come back with options and a total cost.

Councilor Jenell Lanning agreed, adding, “To give that big of a credit, you have to figure out how many years, conceivably we’re making promises for the city for a lot of years. You want to investigate the research before you sign off for (so many years).”

“Every little bit would help right now,” said Higman suggesting putting a 20-year cap on the usage credit. “The other thing is when we become cash-positive out there, I hope to use some of that money to fund things in town like the city park project and things like that, too.”

Rolfes asked if a $123,500 usage credit would cover this request, and Higman responded, “The costs are really racking up out there. That was just my original thought. If you look at the land I’ve donated back to the city, that more than covers it.”

“As the Mayor of Akron, I do want to thank you for doing all this for Akron,” said Frerichs. “You know my family goes out there regularly. The kids and grandkids just have a grand time…It’s never a dull moment. I thank you from my family and the City of Akron.”

“What’s going to be published in the paper, it’s important to have in there Justin is paying for the cost to install all this,” said Councilor Alex Pick. “He’s asking for a usage credit, which is not costing the taxpayers.”

“I just think it’s important because those conversations are going to come up,” said Pick, “and it’s important we stay ahead of it — that he’s asking for a usage credit that doesn’t hinder the taxpayers but there will be some other arguments around that I’m speculating. Let’s make sure we get it out and be positive and get after it ahead of time.”

“I think the general consensus is we need more time on this but I just want to make sure we keep the general public positive around this,” said Pick.

“Because it could take a turn for the worst,” said Small. “There is no doubt about this.”

Frerichs instructed the council and city officials “to get busy and research this” as the council plans to take action on this at their Nov. 12 meeting.

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