Berlin Stormwater Study, Utility Costs Questioned

BERLIN — The formation of a new stormwater utility in Berlin took another step forward this week with the Mayor and Council officially introducing the ordinance at their meeting Monday. However, one local business person attacked the idea of the utility and called the feasibility study it is based on “disingenuous” and “not worth the paper it is printed on.”

“They’ve written this thing so slyly and so disingenuous,” said Jay Bergey of the study. “They’ve got stuff in here that is absolutely false and untrue.”

Bergey, who owns an accounting firm located on William Street, told the council that he was shocked that the University of Maryland Environmental Finance Center’s (EFC) suggestion for a stormwater utility, which they projected to cost $8.3 million over 10 years, had not been immediately thrown out after being presented last October.

“I assumed the first time I read it you all … weren’t going to let it go this far,” he said. “This is unconscionable to saddle this small town with an $8.3 million debt.”

The main faults Bergey found in the report, in his opinion, were the unrealistic bond rates the EFC believed Berlin would be able to secure and the burden a new utility’s fees would represent for business owners in town.

“If you read this study, they’re talking about $8.3 million and if that’s what you’re planning on spending, this study is very disingenuous in the way it explains it. It assumes a 0 percent interest rate on a revenue bond,” Bergey said.

Town Administrator Tony Carson sought to address a number of Bergey’s misgivings with the feasibility study by explaining that Berlin expects a large slice of the utility to be funded by outside grants and loans.

“The report does talk about that there’s going to be a need for loans and grants, that was very clear in the study, that of that $8.3 million or so there was going to be a shortfall. But the town has been very, very fortunate in the past to receive about 50 percent loans on our projects,” Carson said.

As far as interest rates go, Carson again highlighted the town’s ongoing success with being able to secure strong rates, though Bergey contested the point, asserting that favorable rates for the general obligation bonds Carson mentioned will be different than the utility’s revenue bond.

The study, which Bergey repeatedly referred to as “disingenuous,” contained too much bureaucracy in his opinion and put too much of a burden on businesses. While residents living in town will only have to pay $50 annually into the utility, non-residential properties will be required to pay $25 per Equivalent Residential Until (ERU), which is a measurement representing the amount of impervious surface on a property.

Bergey cited the cost as $400,000 annually from all non-residential properties in Berlin and claimed that all of the businesses in the town put together, minus the banks, didn’t see $400,000 worth of profit in any given year. However, it should be noted that Bergey was referring to figures listed in the original EFC study. At their last work session, the council voted to lower the non-residential cost from $45 per ERU to $25 per ERU, so that instead of about $400,000 in revenue from non-residential properties the utility would only be bringing in $200,000, with the difference being made up by a $300,000 annual contribution from the town’s general fund.

But that $300,000 per year isn’t guaranteed, continued Bergey. A future council would not be obligated to paying that amount every year. In that scenario, utility rates would likely increase.

Price notwithstanding, Bergey argued that it wasn’t fair to make town businesses pay for stormwater flooding issues. He laid the blame for the chronic flooding issues primarily on poor development in town.

“The developers screwed them,” he said referring to residents who live in low-elevation neighborhoods.

Even so, Bergey felt the responsibility for fixing those problems should lay with the properties currently dealing with flooding.

“You put more of the onus back on the properties that caused the problem and not on the business community that can’t afford it,” Bergey said.

The statement appeared to irk some in the room, including Henry Mills resident Jim Hoppa, who wondered how it would be more fair to make the neighborhoods suffering from stormwater pay the entire cost for fixing the problem than it would be to split that cost across the town.

“It’s just not fair to put a systemic problem, a town systemic problem, and put the financial onus on a few individuals in the town to solve that problem,” he said.

Hoppa also claimed that there was no flooding problem when he first moved to his property but over the years the neighborhood has “evolved into a flooding system” where runoff from other parts of town collects. Most if not all properties in Berlin contribute in some way to stormwater, asserted Hoppa, so all should have a share in paying to fix the problem.

“We can’t be held responsible for the sins of everybody,” he said. “We’re here as a community. I think we need to work together to solve it.”

Bergey admitted that he was not so much trying to offer answers for the stormwater scenario as arguing against the cost of the utility and the soundness of the EFC study, which he implied had been written with either no research or to confuse and trick the council.

Having heard Bergey bashing the EFC, a visibly frustrated Carson defended the report by highlighting the bias Bergey might have as a non-residential property owner in town.

“They didn’t have any other financial interest like you do, Mr. Bergey, of not wanting to pay it,” said Carson. “This was not a badly written report; it was badly written for you because it’s going to cost you some money.”

Councilman Elroy Brittingham and Mayor Gee Williams both questioned Bergey’s 11th hour timing since the town has been working on stormwater “intensely” for more than 18 months. In his defense, Bergey viewed the report as so absurd he figured it would have been immediately discarded.  

There is one more step before the finalization of a stormwater utility: a public hearing scheduled for Jan. 28. Residents and business owners are encouraged to address the matter at that meeting at town hall.