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PD Editorial: The story behind the $31 million fee

Employees preparing food at Amy's Kitchen in Santa Rosa.

KENT PORTER / The Press Democrat
Published: Thursday, May 16, 2013 at 7:00 p.m.
Last Modified: Thursday, May 16, 2013 at 2:23 p.m.

Did we hear that right? Thirty-one million dollars?

Wow. The estimated water and sewer permit fee for a new factory in Santa Rosa sounds as if ought to pay for an entire factory. Well, almost. When Amy's Kitchen announced its expansion plans in March, the estimated cost of the new facility was $40 million to $50 million.

The eight-figure water demand fee startled executives of Amy's, the Petaluma-based frozen food company. It also unleashed a tidal wave of ridicule, complete with premature conclusions that Amy's would build its new plant in Medford, Ore., denying Sonoma County 800 new jobs.

But Amy's isn't giving up on Santa Rosa. Not yet. For now, Amy's and the city are working on ways to reduce the fee.

Amy's, which has an existing facility in the Santa Rosa Corporate Center, already is the city's largest water user. Its expansion plans include taking over a building that used to house G&G Specialty Foods and adding a factory on an adjacent parcel. Which brings us to the fee. Amy's said it would use 600,000 gallons a day, or 12 million gallons a month. The $31 million fee reflects those figures.

This isn't an administrative fee for processing an application — some super-sized version of the “diploma fee” that many California State University students are getting hit with at graduation, or the admission fee that even graduating students must pay to attend commencement at UC Berkeley.

This fee is supposed to cover the cost of added capacity for Santa Rosa's water and sewer treatment systems required to accommodate Amy's new factory. All new developments pay a fee based on projected use.

(Monthly water and sewer bills cover water supplies and regular maintenance of the delivery and treatment systems.)

“Growth pays for growth,” is how David Guhin, the city's public works director, explained it to us.

That's another way of saying that existing residents and businesses shouldn't subsidize new development. Anyone who follows land-use issues in Sonoma County is familiar with that refrain.

A reasonable argument could be made that the 800 jobs promised by Amy's justify a break on water hookup fees. But someone has to cover the cost of expanding the system, and the alternative to Amy's is, well, the rest of us.

That argument was rendered moot by Proposition 218, a voter-approved initiative that, among other things, says cities cannot waive hookup charges and other fees that pay for new development.

OK, but $31 million still is a lot of money. How much it can be reduced may determine whether Amy's sticks to its goal of expanding in Santa Rosa.

To its credit, the city is working with Amy's to cut water use at its existing plant and to identify ways to reduce the demand at its new one. The city also is working on financing options for the fee, and Amy's CFO said the company is optimistic that costs can come down significantly.

No one is going to welcome a $31 million bill for a water hook up, but California voters have decreed that developers — including new businesses — must pay the costs of their projects. Here, it seems that Santa Rosa officials are working with a potential employer to pare back development costs. It's hard to argue with that.

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