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Question

Capacity Fee Subsidy

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Gregory Stopka

I have a member that is looking for examples of cities that have water tap fees or capacity fees that give some sort of subsidy to businesses based on their economic value to the community. The formula they are looking for would be calculated based on their economic value and their corporate income tax they pay to the city. Has anyone done any work in this area?

Thanks,

Greg Stopka, Central Regional Director
Alliance for Innovation
847-271-7104
gstopka@transformgov.org


Answers

 
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John Zakian

It will be interesting to see if this post generates some insightful responses. In some states, what is being considered as outside in this question, would probably not withstand court tests because these types of charges are considered user fees and statutorily user fees must be consistent and based strictly on a formula tied to use.

 
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Robin Saywitz

Hi Gregory,
While not specifically related to water subsidies here is a resource that should shed some light on your question in terms of figuring out how great the subsidy should be and what else to consider when creating an incentive for businesses.
• Here is an article about business attraction and retention that discusses incentives and what to take into consideration when creating them. http://icma.org/en/A..
Hope you find these resources useful!

Best,

Robin

 
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Gregory Stopka

Thanks everyone

 
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Dan Whited
Dan Whited said

Hello Gregory,

Apologies for the late response. I thought I'd chime in to let you know that the City of Delaware, Ohio has spent significant effort looking into this issue. In September 2012, we engaged an international professional environmental consulting firm, specializing in water resources management and economics sciences to provide recommendations as how to achieve an equitable approach to capacity fee rates while also enabling future economic development. The report was recently completed. We have not yet implemented any changes in our policy, but hope to integrate the recommendations into an Economic Development Incentive Policy for our community in the near future. I'd be glad to provide a copy of the report and discuss our approach with those who may be interested.

Thank you,

Dan

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