OWASA adopts developer reimbursement policy for water and sewer extensions

OWASA adopts developer reimbursement policy for water and sewer extensionsTo alleviate the financial burden on initial developers and support regional growth, the Orange Water and Sewer Authority has approved a mechanism to share the costs of new infrastructure among future connecting parties.

The OWASA Board voted 5-1 to approve the policy, addressing concerns that upfront infrastructure costs create a barrier to development.

Original developers can now recover eligible off-site construction and engineering costs from future connections over a 20-year period.

Reimbursement fees will be calculated using an Equivalent Residential Unit (ERU) methodology.

Existing single-family homes on well or septic systems are not required by the utility to connect to new mains passing their property.

The Orange Water and Sewer Authority (OWASA) Board of Directors voted 5-1 on September 10 to adopt a new reimbursement policy for water and sewer extensions, establishing a formal mechanism for developers to recover a portion of their infrastructure costs from future connecting properties. Historically, developers expanding OWASA's system into unserved areas have borne the full financial burden of the infrastructure, even when subsequent developments benefited from the new lines. The local development community has cited this "first-in" burden as a significant barrier to project feasibility and new housing. Under the newly approved policy, developers who fund eligible off-site water and sewer extensions can receive reimbursement from future benefiting parties that tap into the infrastructure. Reimbursement fees will be calculated using an Equivalent Residential Unit (ERU) methodology. The reimbursement period is capped at 20 years or until the developer recovers their verified eligible costs, which include engineering, permitting, and construction, but exclude interest. A representative from the Chamber for Greater Chapel Hill-Carrboro spoke in favor of the policy, noting it provides a way to bring new customers onto safe water and sewer systems without placing additional financial burdens on existing utility ratepayers. During the public comment period, a former board member urged the board to delay the vote or explicitly exempt existing single-family homes from the reimbursement fees, expressing concern that the policy could negatively impact housing affordability for residents currently relying on wells and septic systems. In response, OWASA staff and board members clarified that existing single-family homeowners are not mandated by the utility to connect to newly installed water or sewer mains passing their property. The choice to connect—and incur the associated reimbursement and connection fees—remains with the homeowner, unless their existing septic system fails and cannot be repaired. The finalized policy also includes a provision allowing developers to assign or transfer their reimbursement rights to a third party, subject to OWASA's approval. Staff indicated they will monitor the policy's implementation in coordination with the towns of Chapel Hill and Carrboro and Orange County to assess its effectiveness and any potential community impacts.