190718

This legislation will expand the loan options available to BES customers and supports the safe disposal of sanitary sewage and ensures that the cost of making a sanitary sewer connection does not become a barrier to providing a new affordable housing opportunity or put people at risk of experiencing houselessness.  

1. The legislation allows for BES to offer market-rate loans and low-interest deferred-payment loans through the existing Safety Net program for private property owners to install a sanitary sewer dump only for the purpose of accommodating a permanently occupied RV. This is an addition to the current loan offer for sewer work on private property to make a mandatory sewer connection. 

2. Additionally, this legislation allows for BES to offer low-interest deferred-payment loans through the existing Safety Net program to income-qualified homeowners for emergency repair and utility work related to the emergency repair. Currently, the Safety Net program offers loans for line/branch/SDC fees and work on private property for mandatory sewer connection. Adding the ability to offer Safety Net loans for emergency repairs to sewer laterals on private property is intended to prevent housing displacement. 

In parallel with this legislation, changes are currently proposed to City Code. The BES director will approve changes to ENB-4.28 after public comment from February 7th to March 7th. The proposed changes will make financing more accessible, particularly to low-income property owners. Changes include: 

· Increasing the private plumbing loan borrowing limit from $10,000 to $20,000 for market-rate loans on private property to align the program with current costs for work. The borrowing limit has remained the same since the start of the program in the 1980s. 

· Increasing the Safety Net eligibility criteria from gross household income of 80% Median Family Income (MFI) or less to 100% MFI or less to make the low-interest deferred-payment loan available to more households. 

· Increasing the Safety Net asset limit from $50,000 to $100,000, at the time of application. This removes an implicit penalty for savings. 

BES has historically used its discretion, as authorized, to offer Safety Net loans to income-qualified property owners for repairs on private property to continue sanitary sewer service. Therefore, BES does not anticipate that it will receive loan applications for funds beyond current or future planned budget allocations. 

The sanitary dump station installation program has only been in place since August 2021, so it is difficult for BES to precisely quantify the budget impacts of additional loans for this program expansion. An analysis of nuisance complaints from October 2020 to October 2021 (one year) showed that about 18 RVs and tiny homes may have been required to install a sanitary sewer dump to meet the requirements of PCC Chapter 29. Estimates for a plumber to install a sewer dump vary from $2,800 to $4,200. BES conservatively estimates that dump station loans will be about $35,000 next fiscal year and would likely not exceed $75,000 per year as the program gets fully up and running. 

A total of $300,000 per year is currently budgeted for the sewer connection loan programs. In FY 2018-19, BES financed 14 private plumbing loans totaling $152,800; In FY 2019-20, BES financed 19 loans totaling $215,700; and in FY 2020-21, BES financed 23 loans for total of $268,900. Although the trend is increasing, BES will keep the current year budget at $300,000 and cap the amount of loans to stay within that budget allocation. For FY 2022-23 and beyond, BES is expecting to keep the budget at $300,000, but will monitor the demand and value of the program and seek to adjust the budget as necessary. Regardless, BES will continue to recover the costs of this program through borrowers’ loan repayments. 

BES believes funding the loans and the existing two FTE needed to administer the program is the most cost-effective way to foster compliance with public health and safety regulations around proper sewage disposal while also supporting houselessness issues. In the absence of public financing to alleviate the financial burden of connecting private property to public sewer, private property may delay compliance, which increases the risk of improper sewage disposal and the cost associated with BES abatement of such nuisances. Improving people’s access to sanitation will also reduce the incidents of unintended or illicit discharge of sewage from RVs, tiny houses, or inadequate private plumbing. This will benefit BES by reducing BES staff time and resources needed to clean up discharges and to take enforcement actions (with associated costs for property owners). 

The legislation will result in additional BES sewer connection loan agreements and contracts. The OMF Revenue Division services the loans under an existing agreement.