SalemNews.com, Salem, MA

May 13, 2013

$96,000 water fee is disputed

Beverly: Developer doesn't think charges should apply to veterans housing project

BY PAUL LEIGHTON
STAFF WRITER

---- — One of the city’s major developers said he will “think twice” about doing more business in Beverly after a dispute over a $96,000 fee the city is charging on his latest project.

Windover Construction President Lee Dellicker said the water demand fee, which charges a developer $3,000 for every new unit, should not apply to the company’s veterans housing project on Pleasant Street.

The company requested a waiver of the fee but was denied by a City Council subcommittee in a 3-0 vote.

“I’m thinking twice of building more units in Beverly,” Dellicker said. “If I build 50 units, that’s $150,000 just for water. In my opinion, it’s ridiculous.”

Windover, which has built many of the newest buildings in the city, is transforming a four-story box factory at 62 Pleasant St. near the train station into 32 subsidized apartments for homeless veterans.

The fee in question is a one-time charge that the city is authorized by city ordinance to collect from new residential, commercial or industrial units. The purpose of the fee is to help the city keep up with the demand of supplying water to new units.

The city charges $3,000 per unit. With 32 apartments in the Pleasant Street project, the cost to Windover is $96,000.

But in a letter to the City Council, the attorney representing Windover, Miranda Gooding, said the Pleasant Street apartments should not be considered individual units because of the project’s “unique use as veterans housing in a congregate setting.”

The building will include shared common areas and on-site services such as counseling and job training.

If the project were considered congregate rather than individual housing, Windover would be charged a single building service fee of $18,200 rather than the per-unit fee of $96,000, or a difference of $77,800, the letter said.

Windover’s letter called the fee a “significant, unanticipated increase in the project budget” that could result in the loss of “nonessential amenities for residents.”

The estimated cost of the project is $7.4 million. Windover is receiving $2.7 million in state and federal housing subsidies and tax credits for the project and has applied for another $2.2 million in historic rehabilitation credits.

Dellicker said the company was led to believe by the city that it would not have to pay the per-unit fee, but then was told the fee does apply.

Mayor Bill Scanlon said the city has consistently applied the fee to units with full kitchens, which the Pleasant Street apartments will have.

“We have a significant obligation to have a dependable water infrastructure, and when new demands are placed on that infrastructure, it’s important that we be able to maintain it at a high level,” Scanlon said. “We have a good record in that respect, and these fees, which were passed long before I ever came along, have helped us to do that.”

Dellicker said the city did not charge the per-unit water fee to the Colonial Gardens senior housing project on Conant Street. But Scanlon said those units do not have full kitchens.

The City Council’s finance subcommittee turned down the waiver request by a 3-0 vote on April 22. City Council President Paul Guanci sent the request back to the committee last week for further discussion. But Dellicker said he has decided to withdraw it.

“It was clear from talking to people that nobody on the council was going to support this,” he said. “I’m just going to have to suck it up.”

Staff writer Paul Leighton can be reached at 978-338-2675 or pleighton@salemnews.com.