EMWD extends financing program for Temecula Old Town special benefit area surcharge

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The Eastern Municipal Water District has a special benefit area which assesses a surcharge to cover the Temecula Old Town sewer improvement project. EMWD established a financing program in 2017 to allow property owners to make payments over time, although that program expired at the beginning of this year with regard to applications. The Wednesday, Sept. 16, EMWD board meeting extended the financing program for an additional five years.

The 5-0 EMWD board vote allowed applications for the financing program to be submitted until Dec. 31, 2024. The board action also authorized the execution of subsequent financing agreements by the EMWD general manager or their designee contingent upon those agreements being consistent with the financing program terms and conditions set by district policy.

The Temecula Old Town special benefit area is bordered by Rancho California Road on the north, Interstate 15 on the east, First Street on the south and Murrieta Creek on the west. Temecula adopted the Old Town Specific Plan which incorporated increased development densities in the Temecula Old Town area, and in 2016, Eastern completed the Temecula Old Town sewer improvement project which constructed a parallel relief sewer to accommodate the increased sewer flows from the anticipated development and increased density. The sewer improvements are expected to serve 1,704 additional equivalent dwelling units.

Eastern established a special benefit area surcharge fee for the area; the sewer system beneficiaries will reimburse the district as new or modified sewer connections are implemented. Sewer system beneficiaries are also subject to Eastern’s general connection fee for regional sewer collection and treatment facilities. In February 2017, Eastern established the financing program and its conditions.

Under the financing program, full payment for the general connection fee must be made at the time of the application for service, but the special benefit area fee may be financed for a period of five years. The financing program requires at least three equivalent dwelling units. Up to 20 equivalent dwelling units may be financed without board approval while projects exceeding 20 equivalent dwelling units can seek board consideration for financing. Financing agreements are executed between Eastern and each eligible property owner, and a lien is recorded against the property to secure payment.

The interest charged for projects taking advantage of the financing program is based on the prime rate plus 2%. The interest is compounded semi-annually. Installments are invoiced quarterly by the district with payment due within 30 days. A delinquent payment adds a 10% penalty for each unpaid installment, and there is a $30 administrative charge for each delinquency year.

The initial surcharge fee established in 2016 was $8,852 per equivalent dwelling unit, and the fee was subject to annual Construction Cost Index adjustments. The current surcharge fee is $9,972.

Since the special benefit area was created 53 sewer equivalent dwelling units have connected or been assessed. Two financing agreements cover approximately 20 of those equivalent dwelling units. Pending development projects include 143 equivalent dwelling units: 138 from residential or hotel projects and five from restaurants.

Joe Naiman can be reached by email at jnaiman@reedermedia.com.