State Sen. Douglas J.J. Peters was puzzled. He had recently spent $4,000 to replace a water pipe linking his Bowie home to the public water supply. That got him thinking: Why had he — and thousands of homeowners like him — already paid the Washington Suburban Sanitary Commission more than $15,000 for a pipe that cost him only $4,000 to replace?
Armed with complaints from confused constituents, Peters (D-Prince George’s) decided to seek answers. And on Wednesday, he won key support in Annapolis for a bill he hopes will help unravel a host of mysteries about how much suburban homeowners are charged for water and sewer connections and whether that matches what utilities and developers actually paid to install them.
“Some people refer to this as the ‘developers’ retirement account,’ ” said Mark Kestner, a Rockville lawyer who has studied Maryland’s collection system, which since 2000 has been largely managed by private companies set up by developers.
“They are often not listed on tax bills. They are not associated with a municipality or jurisdiction. A lot of people do not understand them, sellers do not know how to disclose them and a lot of people got caught unaware,” he said.
Although Peters’s bill specifically addresses those who collect the fees in Montgomery and Prince George’s — WSSC and private companies acting on behalf of developers — it could be a prototype for legislation that would affect other jurisdictions. In many places, including Anne Arundel and Baltimore counties, many communities have delegated the responsibility for building water and sewer systems to developers and have allowed them to collect fees from homeowners with little or no government oversight.
The fee that caught Peters’s eye is known as a front foot benefit charge. Every year, thousands of residents of the Washington suburbs collectively pay millions of dollars in such charges, in many cases for more than 20 years after the actual connection was made.
Peters hopes to determine the actual cost of the hookups and the total cost to residents, and he wants to figure out whether WSSC or the private firms are making a profit and not disclosing the markup. His bill establishes a task force to try to answer those questions. It also requires more-detailed disclosure of homeowner payments to WSSC on the Prince George’s property tax bills, which is currently done in Montgomery.
On Wednesday, the bill won approval from a Prince George’s delegation committee that oversees WSSC. To become law, the bill requires the approval of the Montgomery delegations and the full General Assembly.
The private fees have sparked particular concerns, Kestner said.
He pointed to a case in which a client learned nearly two years after buying her home that she owed the fee to a private company. The $600 annual payment had not been disclosed by the seller at closing, which is voluntary.
The fee-collection systems, Kestner said, “probably deserve to be put on a microscope, and there needs to be disclosure at the county and state level and penalties for non-disclosure.”
WSSC officials said Wednesday that they supported the bill, as do Prince George’s County Executive Rushern L. Baker III (D) and the Prince George’s County Council.
Peters said the bill is an effort to “educate constituents and encourage greater transparency. It’s all about transparency now, particularly in government operations,” he said.
The task force also would examine whether there should be a cap on WSSC water and sewer rate increases, which have hovered near 8 percent annually for the past several years as the water authority has attempted to rebuild much of its aging system of pipes after several major water-main breaks.
Next month, the Montgomery County Council is planning to consider a related measure, introduced by council members Valerie Ervin (D-Silver Spring) and Marc Elrich (D-At Large), to forbid developers from double-billing the county and residents for infrastructure. A report last year by Montgomery’s inspector general found that the developers of a West Germantown subdivision collected more than $6 million in government funds and utility credits, including for WSSC pipes, on a project that cost them about $3 million.