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Aberdeen / Havre De Grace

Havre de Grace council nixes 15 percent water rate hike

Havre de Grace's City Council substantially reduced a proposed 15 percent water and sewer rate hike, increasing the charge by 5 percent, which already had been approved.

Councilman Bill Martin, the most vocal opponent of more increases, said the council was able to make cuts in supplies and other planned expenses to eliminate the second rate hike.

Councilman Fred Cullum was the lone dissenter, pointing out the projected savings meant once again banking on additional development.

The council was able to make the projection work, he highlighted, only by including the take from 15 anticipated new water and sewer hook-ups.

"Personally, I think 15 additional connections is a long shot. We will be lucky if we get what we projected originally," Cullum said. The city was originally expecting 50 hook-ups.

"I just think we are spinning our wheels. We are putting it off another year, and the price goes up every year you put it off," he said.

Councilman Randy Craig and others disagreed, saying a rate hike would further deter new development.

"A 20 percent increase, this year or next year - in fact, a 50 percent increase this year or next year - does not solve the problems with the water and sewer fund," Craig said, adding that news of such a hike would make it less appealing for potential homeowners and businesses to move to Havre de Grace.

"I think the council has plans to be a lot more aggressive on the hook-up side," he said.

Cullum said the city has "no contingency" and no money to make repairs to its water plant if there is a problem.

"That is not the way to run a business and that is what the water and sewer fund is. It's a business," he said.

Steve Gamatoria, who was recently elected to the council after an absence, agreed the current model for running the fund is "flawed" and said he hopes to have a "business summit" with developers and other stakeholders to discuss ways to encourage development.

"I know this is a touchy subject, but if we have to drop the hook-up fees to encourage people to build," he would be open to that, he said.

"I am certainly open to new ideas because the old ideas are not working," he said.

Council members put pressure on newly-hired economic development director Tom Lofland to be part of a push for more development.

Martin said he has a "strong feeling" construction will pick up soon. After the meeting, he explained he had heard projects like Greenway Farms, Scenic Manor and potentially Bulle Rock could be seeing movement on residential projects. Residential development has been stalled locally and nationally since the 2008 real estate market collapse.

"I assure the public we are not playing fast and loose with these numbers just to come out of here saying, 'Hey, we got a 5 percent increase,'" he said. "You have my full faith and confidence we can pull this off."

"This is not a shell game we're playing," he said, adding the city still has the largest freshwater source on the East Coast right outside its front door.

"We shouldn't be paying the highest rates in Harford County," he said.

Cullum noted there is a limited number of hook-ups, and "sooner or later, there's going to be no more connections and you are not going to have any more money coming in through that."

Gamatoria agreed, but said: "In my opinion, we have over-supply and zero demand."

"Let's encourage people to come here and want to build, not go to Cecil County or Baltimore County or somewhere else," he said.

Cullum said the first thing developers say is they are not building because of the fees.

"The reality is, they are not building products people can afford to buy," he said.

Councilman Dave Glenn also said the council must take "a hard look at the homebuilds in Havre de Grace," as developers are building elsewhere.

"That was a big concern and my concern was, if you raise the water and sewer rate, you are going the wrong way," he said. "We are hoping, piece by piece, it's like eating an elephant one bite at a time. And hopefully, just hopefully, we will hit that cash cow."

Mayor Wayne Dougherty called the evening a "great debate" and Craig said it is one all residents should participate in.

Boy Scout Andrew Gresock, 16, who attended the meeting, also weighed in, suggesting privatizing the water system.

Budget introduced

The council also introduced Dougherty's proposed budget for 2015, which projects about $15.25 million in spending, $1 million less than the current fiscal year.

Dougherty also proposes keeping the property tax rate at 56 cents instead of lowering it to 55.56 cents, as suggested by the Maryland Department of Assessments and Taxation in keeping with the constant yield tax rate.

Dougherty has called this "the most challenging budget of my administration," noting the water and sewer fund is expected to close out the current year with a $1.075 million deficit.

Dougherty also proposed continuing the $500 personal property tax credit in hopes of stimulating business. He included a $200,000 draw from the emergency reserve fund, which he expects to be restored over the next few years once the water and sewer fund "has overcome its current financial difficulties."

The Marina Fund is expected to have a $115,000 surplus, mostly because of a rate increase on slip rentals.

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