COVENTRY — The Coventry Town Council on Monday got its first look at an amendment to the town’s sewer ordinance that, if adopted, would result in a significantly lower interest charge to sewer customers.

Under the amendment, the interest charged to ratepayers would be brought from the current 6 percent rate to .5 percent above the interest the town pays for its borrowed sewer-related funds.

“This would, in all probability, result in a significant reduction in the interest rate paid by constituents of the sewer system who have received an assessment from the town,” Coventry Town Solicitor Nicholas Gorham said. 

While the ordinance amendment proposes the same interest rate mandated by legislation recently passed by the General Assembly, it also clarifies that the town’s interest rate will be determined using a weighted, rolling average of the interest on all sewer-related bonds. 

“The problem with what the state’s got… it just says ‘a half point over.’ Does it mean any new bonds? Is it the old bonds? It doesn’t say,” Interim Town Manager Ed Warzycha said. “It doesn’t talk about how you handle the fact that our bonds all charge a different amount of interest.”

Warzycha said the town currently has a “substantial” number of sewer bonds, the interest rates on which range from 1.25 percent to 4.23 percent. He said this amendment would make the interest amount paid by residents “fair for everybody,” adding that he expects the resulting interest paid by residents will be between 2 and 3 percent.

The average will be adjusted every June for the upcoming fiscal year, said Warzycha, who added that changes from year-to-year would be slight. 

Councilor Ann Dickson said that, while the amendment “sounds very fair for the residents,” she worries that the sewer enterprise fund could be negatively affected by language dictating that interest collections will begin the year following sewer installation.

“I’m just concerned about the delay in us capturing some of this revenue,” she said. “We’re really giving people interest-free loans for, it could be a year-and-a-half or more.”

Warzycha said, however, that that’s how interest has always been collected. 

In addition to adjusting the interest charged to customers, the amendment would also fix what Gorham called an “accounting nightmare.”

Currently, if a large property on the sewer line becomes subdivided, the interest is split among the pieces, and the owners of the smaller lots are then charged a betterment in addition to their portion of the initial assessment.

That, however, has made it difficult for the sewer department to evenly apportion the initial assessment among the divided pieces of the property, Gorham said, adding that the tax collector had requested a change.  

“When that original piece of property is broken up, that lot actually ceases to exist, and the lots get new lot numbers,” Warzycha added. “If they don’t voluntarily pay this, [the tax collector] doesn’t even have anything she can put on tax sale, because it doesn’t exist anymore.” 

The amendment, which presents what Gorham called “the simplest, easiest and most practical” solution, would require the initial sewer assessment to be fully paid by the property’s original owner when the property is divided. 

“So, for example, if you had a big subdivision on a 20-acre piece of property and you get, let’s say, 10 lots out of it, and the planning board approved it… once you begin marketing the small lots, you would be required to pay off that initial assessment,” Gorham explained. 

“This is the simpler, better way to do it,” he continued. “And it’s fair.” 

This proposed sewer ordinance amendment comes as the town delves into making numerous much-anticipated changes to its controversial sewer program.  

Warzycha said he’s received proposals from two firms regarding conducting an overall sewer rate study, and that those firms will be coming before the town council soon. 

Gorham said the public hearing on the amendment will likely take place during the town meeting next month.

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