North Smithfield will self-fund sewer extensions through forgotten $2.9 million ‘capital account’

North Smithfield will self-fund sewer extensions through forgotten $2.9 million ‘capital account’

NORTH SMITHFIELD – An account created to fund extensions to the town’s sewer lines has been accumulating cash since it was created in the 1980s, with no money actually used for that expense, an oversight the Town Council voted to change this week following a recommendation by Town Administrator Gary Ezovski.

The town’s Sewer Capital Account has a balance of $2.9 million, money that will allow North Smithfield to self-fund future extensions of the system, rather than take out bonds for the expense. Homeowners who connect will reimburse the fund through their assessments.

Benefits to town residents will include lower interest rates on projects to install the lines and the immediate savings of some $23,000 in town money annually.

“It’s a win/win circumstance,” Ezovski told The Breeze following a council vote to spend some of the money to finance installation of new sewer lines for Park View Drive and Edward Avenue, an infrastructure improvement that will affect roughly 30 homes.

Ezovski said he was reminded of the account, established by the Sewer Commission in the 1980s, when he noticed that the town has been paying back around $23,000 a year for design plans for one sewer extension that never took place. Typically, such charges are passed on to the homeowner via an assessment fee once the sewers are installed.

But that never happened after officials halted Phases 2 and 3 of a project to extend the lines back in 2009, and the $400,000 expense was instead passed on to the town at large.

“What should have happened then is the sewer assessment account should have been the vehicle paying that bill, not the people in the community,” Ezovski told council members this week. “I don’t think the idea was floated, and I think it should have been.”

Ezovski was a member of the commission that first established the fund, an account that holds lump sum payments from new homes and businesses built on vacant lots that then attach to existing lines.

Each time a sewer district is established, Ezovski noted, homeowners within the covered area split up the bill via annual assessment fees. The board determined that those who tie into the lines after the fact should also pay their share, paying a lump sum to connect. The amount of that payment has varied over the years between around $2,000 to $5,200.

“The conclusion of the commission back then was that it would be invested in more expansion of the system,” Ezovski said.

But it seems that never happened.

“That account hasn’t been used, to the best of my knowledge, since it was started back in 1981,” said the administrator, who is serving his first term after a landslide win in the election last November. “It has just been accumulating.”

At times, private business owners have instead funded the upfront investment, like when the Gallant family put in sewer lines extending the system from the Town Hall area to Slatersville Plaza in the 1980s. The family was later paid back by homes that tied in.

Recently, the owners of Gator’s Pub agreed to spend $300,000 to extend lines to that area, an investment that will benefit multiple businesses along Victory Highway.

On Monday, the council took several votes on how to finally spend the capital account money, first agreeing unanimously to pay back costs for the old Phase II and III design plans, rather than budget the expense annually. Ezovski noted that if the town ever opts to continue with that extension, new assessment payers would reimbursed the account, creating a revolving fund.

“We have a row of plans sitting on the shelf that could be used today if someone decided to move forward,” he said.

The council also voted to pay for an $80,000 design contract for the soon-to-be-installed Park View Drive and Edward Avenue sewer lines from the account, and later, to use it to fund the entire $600,000 extension. Homeowners along the two roads will pay back the account over 20 years at an interest rate of 2 percent, while they would have paid a roughly 3 percent rate if the project was bond-financed.

“What we’re doing is self-funding this as a community,” Ezovski said.

Comments

I think the sewers that were voted on for St. Paul St. and abruptly stopped should be started up again and finished.

Feeling like we have a competent administrator.We are just tired of political leaders telling us they have our back and don't.Show us more