At a recent workshop, Milford City Council discussed fees charged to residents who are constructing Accessory Dwelling Units (ADU) on their property. An ADU is a second residence either built new or constructed in an existing garage our outbuilding. The city changed their code last year to allow ADUs in city limits as long as either the main residence or the ADU was owner-occupied. Since the change in the code, several people who have received permission to add an ADU have found the permit fees were significant. According to Mark Svaby, Director of Public Works, the impact fees for an ADU can be as high as $9,500.
“So we have a city water impact fee of about $3,400 bucks, a city sewer fee about $1,800. The Kent County sewer impact fee, which isn’t really negotiable anytime we’ve dealt with it in the past, if it makes sense for us to waive any fees, Kent doesn’t waive that fee, the $3,000 per EDU,” Svaby said. “We don’t have that option. So, we just pass that along. The thing to keep in mind when we’re considering the impact fees is that sewer and water impact fees are collected for a specific purpose and it’s to address the capacity improvements for water and sewer infrastructure. So, we’re not just trying to make money here. When there’s new impacts on the systems of sewer and water, we have to collect money so that we can address those capacity issues that are occurring with sewer and water.”
Svaby continued, explaining to council that the fees were to address additional capacity that would exist with an ADU.
“So, the primary predicate for all of the assessment of sewer and water impacts, you need to do the equivalent in an accessory dwelling unit. It’s a term used to express the load produced on a sanitary sewer system, approximately one dwelling place as further defined in Kent County rules. And we use that same standard,” Svaby said. “I mean, it’s used across the board really and we’re not alone in using that. It’s a term used to express the load produced on the water system as well as the same capacity charge on our sewer system. EDUs are calculated based on language found in Chapter 128. And that’s in the content code. So, we use that much like other municipalities do.”
Svaby presented slides that showed how the fees were broken down as well as a few that indicated what fees were optional.
“So, this is a standard that we apply and we’re not alone in applying that. That’s the usual. so the next few slides you’re gonna see are what typically would be assessed if someone were approaching the city for an ADU. So, the first one is a typical single family detached dwelling. You’ve got your permit fees, the enhancement fund, water meter, issues with sewer and water backfill inspections, so on and so forth,” Svaby said. “Get to the bottom where the heavy fees are, the city water impact fee, the city sewer impact fee and the Kent County impact fee. So, all those things together in this particular scenario, we’re assuming this is a $200,000 construction cost at $2,000 per square foot and one EDU and that EDU is a norm looking to the next assumption, an accessory apartment assumption, here just looking at this same kind of things basically apply. There’s a little bit less on the fees we have the permit fee, city water impacts, the city’s sewer impact fee again, Kent County. Nope, we can’t waive that because that’s not our option. That’s a $9,500 total cost for somebody putting together something like an accessory apartment.”
Svaby stated that the city was aware that for a house, the fees were only about $1,000 more than for an ADU, but it would be difficult to waive many of those fees.
“So, I’m glad we’re discussing this again. I think the fact that we moved to an ADU language in our charter is a wonderful thing. Primarily because it’s small, affordable housing, whether you’re starting your career out or you’re retiring or whatever it might be. It does provide affordable housing. I think the common issue here that the impact fees, whether you have them or not, won’t impact the affordability of it. That’s subjective. Usually, the affordability is based on market rate,” Councilman Todd Culotta said. “Here’s the issue I have. If I understood, we could compartmentalize this in two ways. There are existing units that you’re converting like your garage and then there’s something you’re going to build new on your property much like Mr. Purcell did. Okay. And so you can have this as two separate arguments. However, if I run plumbing from my house, from the ADU to my house and tap into my plumbing there, I use the plumbing within my property already. And I can do the same thing with electric.”
Councilman Culotta continued, stating that he didn’t see why there were additional fees to connect an existing garage or outbuilding to the residence.
“We say that these are two separate dwelling units. And there’s no difference between a 10 unit apartment building and having this yet we make a regulation that you have to live in one. So, I don’t think you can have it both ways. If you want to make a regulation that you want the owner to live in one of the units, which I think is a good regulation, I do like that, then that owner should be able to tap into his own plumbing, his own electric if he would like and therefore, he could bypass any of the impact fees necessary,” Councilman Culotta said. “Now, we can still impose those impact fees if we want. But you would bypass that because I had this before I turned it into an ADU and then I said I’m making an ADU. Well, it’s already there. I’m not going to put it in, it’s already a cost to me. The physical costs of me getting plumbing and electric to that building. So, I think this is where we trip ourselves because if we don’t have language that says you may do that, then when you apply for this, we say here’s all your fees.”
Councilman Culotta felt that having such high permit fees could result in property owners choosing not to create an ADU.
“You are paying $10k out of pocket before you ever started. And most people, they want to do it for $20,000 or $30,000. I’m talking about an existing building, not building something new. Like I said, it’s kind of different. And also, if they don’t meet the setbacks built in our charter, they have to go get a variance now and there’s a cost there, $700 Or something like that. I think we should allow that. Because if we don’t have language there, I’ve got to do it,” Councilman Culotta said. “And then Tony comes out and says, ‘Oh, you got to connect the electric’ Now, I might have to dig up my driveway. Same thing with water. I got it’s our responsibility when you build a house in Milford to tap into the line. And if you tear up the road, you tear up your yard, you’re responsible for all that costs. So, we’re sabotaging our intent to make affordable housing by putting $10,000 worth of fees up front, right out of the gate. Now you can choose to do that, you can say, ‘Well, look, I’m building a separate building. I want to go out to the main,’ that’s your choice. But you’re mandating now, if you want to do that, that’s fine. But I think there’s a way around that and I don’t think it would be difficult.”
Councilman Culotta mentioned Patti Persia who was approved for an ADU for her home on School Place last year.
“Miss Patti Persia who we approved a few months ago, has been put through the wringer trying to get hers built because of these limitations with physical and permit wise. If we allow her to go from her house to her garage with sewer and water and allow her to go from her house to her garage with electric that solves most of our problems,” Councilman Culotta said. “So that’s where I think we’re cutting ourselves off at the knees. And yes, I appreciate the comparison to the other municipalities, but I care about more about affordable housing. It is something we all talk about, but then we sabotage it by regulation.”
Councilman Mike Boyle disagreed with Councilman Culotta, stating that he saw a need for the fees as an ADU would be adding to the infrastructure as more people on one plot of land would be using water, sewer, and electric. Because some property owners intended to rent the ADU, they would likely want separate service for the tenants.
“Affordable is one thing giving it away is another. I mean, the additional unit still draws a demand on sewer water electric, regardless of if it’s a family member or not. You’re still putting a new demand on the system,” Councilman Boyle said. “If I live in the house, I’m the son or daughter, my parents already paid for the impact fee for the house when I move out. Just because I’m a relative doesn’t mean that I don’t put an additional demand on the system.”
Councilman Culotta argued that the city does not differentiate between a three and a five bedroom house when it comes to impact fees, so he did not see why adding an additional bedroom or two to a garage would make more of a difference. Councilman Boyle then pointed out that when a new or existing building was added to a property as an ADU, they were given a new address, indicating that the ADU was a completely separate residence than the original.
“That is correct,” Pierce confirmed. “I believe we’ve clarified that you do not have to run a new electric service to the ADU if there’s a capacity in your existing electric panel, that you can actually tie into your water line, and you don’t actually have to go back out to the road. I think that’s why Mike had shown on that the last four items in these cost breakdowns are optional. You can choose if you want to put a water meter in so you can meter that unit separately or you can just have a tie in behind your meter. Same thing with the sewer. You don’t necessarily have to go into the road.”
One suggestion Councilman Culotta made was to put that information into the charter so that it was clear some of those items were not required and at the discretion of the property owner. Pierce stated that there was a statement in either the water or sewer code that made that clear, but that the language could be added in other sections as well. Councilman Culotta still felt that if the city was going to require the property owner to live in one of the dwellings, it was not reasonable for the city to require the fees since the ADU would simply create a house and a half or quarter, not an entirely separate unit. Pierce explained that it is considered an improvement on the original property and that the tax bill would now show two dwellings rather than one. Mayor Campbell asked about a recent request from James Purcell who was building a new unit on his property for his mother.
“Jim is building that cottage for his mom,” Mayor Campbell said. “He’s got to apply to what everything is now. She’s going to increase his electric, his water and sewage. Am I correct? And that increases his bill. I understand that increases his bill as the whole unit.”
Councilman Culotta pointed out that Purcell was constructing a new building on his property as an ADU, and his argument was that the fees could be separated so they were different for an existing outbuilding as opposed to a newly constructed building.
“So, a couple of things for clarification, we did do a code review. It’s pretty clear in the code when we read it,” James Puddicombe, City Engineer, said. “The sewer can’t be run through the existing house, which we agreed with just for backup purposes. We don’t want sewer to back up and cause two houses to get damaged. The water we could allow a one inch service to serve two meters and two separate full houses and two properties. So that would be normal and electric can come off of the existing house. So, I just wanted to clarify that.”
Mark Whitfield, City Manager, explained that the issue was older systems that may still have four-inch sewer lines which may not be able to handle two dwelling units and could cause sewer backups into the two homes. He stated that if the home had a six-inch line, it may be able to carry a heavier load. The city used cameras to determine what size sewer line an existing property has if there is a question whether it was four or six inch. Whitfield also pointed out again that the only fees the city could change for ADU’s was the city sewer impact and the city water impact fees which totaled $5,200. The water meter, backfill and electric meter were options that the property owner could choose at their discretion. Councilman Culotta still felt that there were other options to keep the fees lower for an ADU.
“I don’t I don’t agree with you, Todd. As far as us controlling it and tell the person that’s put in the request, it’s not something that we would just upfront say,” Councilman Katrina Wilson said. “Now if you’re going to give people the option to pay less money, they’re gonna pay less money. But what’s best for that property? If they’re going to rent that property out, then it makes sense for them to have their own separate everything, not decide not to because the cost is too prohibitive.”
With affordable housing being of high priority to council, Councilman Culotta continued to express concerns that if the ADU fees were too high, it may discourage property owners from building them at all. Mayor Campbell pointed out that someone who rents the building would pass along those fees over time to a tenant.
“Sometimes it’s not a consumer, sometimes it’s like for Jim and his mother. It could be your child coming from college. It may not necessarily be a landlord tenant situation, but I think what was given here there were options,” Councilman James said. “There are some ways to do it differently, options of how you can hook up I just think that how we’re doing it should come before Rob or James or someone and say, ‘hey, you know, what are my options? You know, what can I do?’ Todd, to your point, what can I do as far as with my existing home to make this a dwelling unit two.”
Councilman Wilson suggested putting the information out so it was easy to understand, and Councilman Culotta agreed, suggesting that the code be clear on what fees must be paid and what fees are optional.
“One of the recommendations from the resident was to provide some better guidelines up front and that’s something that maybe the Planning Department and Public Works Department can get together on and say look, if you want an ADU, you need to make sure you have at least a six inch sewer line. Or you’re going to have to go to the street with a new connection. Or maybe we provide a one sheet for when people come in and it might help some avoid maybe some of the frustration.”
Pierce stated that he and Svaby would work on an instruction sheet and look at the code before bringing the information back to council at a regular meeting in the future.
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