Davis-Monthan Air Force Base, the county’s third-largest wastewater customer and fourth-largest employer, owes the wastewater reclamation department nearly $3 million in connection fees it hasn’t paid since 1993, according to county records and estimates.
Whether the base ever pays is another matter.
For several years after the issue was uncovered in 2009, Pima County pursued repayment aggressively, even enlisting then-U.S. Rep. Gabrielle Giffords’ help and contemplating a lawsuit against the base.
“Given all of the legal review that has already occurred, (litigation) may be the last option available to the county,” County Administrator Chuck Huckelberry wrote in a June 2013 memo to now recently retired Deputy Administrator John Bernal, instructing him to draft a report apprising the Board of Supervisors on what seemed to be an imminent filing.
However, that lawsuit was never filed and the county’s position has since softened. Officials now say they’re willing to forgive the long-standing bill, especially considering how costly a more-accurate accounting of the total owed, as well as how damaging a lawsuit against one of the most important local employers, could be.
“Given that we want to expand missions at the base, we certainly aren’t going to sue the Air Force,” Huckelberry said recently.
“I’m willing to move on, but the primary reason is it would be so much effort and staff time on both sides to try and figure out legitimately what really is ultimately owed,” said Wastewater Director Jackson Jenkins. “I would be satisfied to just move forward … and live happily ever after.”
Base and county officials are also hopeful that a new wastewater-flow meter system installed at the base in 2015 will provide a way to avoid connection-fee conflicts in the future.
Between 1988 and 1993, the base paid roughly $75,000 in connection fees, and then abruptly stopped. Those payments were made according to the terms of an agreement reached between the base and county in late 1988, which states that D-M would pay both user fees and connection fees, the two principal sources of wastewater revenues, on “a timely basis.”
The base has consistently paid volume-based user fees, which totaled nearly $830,000 in 2015, according to records and officials.
“The reason for the cessation of payments is not clearly recorded,” reads a 2013 memo from Jenkins to Huckelberry, one of dozens of documents on the matter obtained by the Star.
Another document suggests the “payments ceased due to loss of procedural continuity when changes in personnel occurred at both base and county.”
However it occurred, roughly 17 years lapsed before the issue was discovered in early 2009 by county staff looking into an unrelated violation involving the unreported discharge of toxic materials at the base in 2008.
“It is believed that there will be a substantial payment due wastewater upon resolution of this investigation,” then-wastewater Director Michael Gritzuk wrote to Bernal in March 2009.
Shortly thereafter, Huckelberry asked Michael Toriello, the base’s deputy civil engineer, that the unpaid bill, then estimated to be between $1.5 and $2 million, be paid “as soon as possible” and “with appropriate interest.” The last invoice sent to the base in June 2013 totaled roughly $2.3 million, with another $416,000 in interest.
In the 2015 fiscal year, connection fees countywide brought in roughly $13.1 million, or 7.6 percent of total wastewater revenues. User fees, which are largely based on volume, brought in nearly $159 million that same year.
Though the base and county collaborated in 2009 to come up with a tally of all new fixtures added at the base between 1993 and 2009, which were previously used to calculate connection-fee liabilities, a dispute over whether the county could even legally charge connection fees sprang up. There has been no such collaboration since 2009 to document additional base development, though Jenkins believes “a detailed evaluation is needed,” according to a November 2016 memo.
The base and Air Force legal staff have argued the connection fees are akin to a tax, which local governments are prohibited from levying on the federal government, according to documents.
“Federal Government Agencies can pay for services rendered, as Davis-Monthan AFB has been paying user fees to Pima County for use of the county’s sewer system,” Capt. Allan Jungels, of the Air Force’s utility litigation team, wrote to a deputy county attorney in April 2010. “The problem that arises when looking at the connection fees requested … is that there is nothing Pima County has identified to this point that indicates these fees have or will provide a specific benefit for the base.”
It is the base’s view today that whether local government charges are “legally permissible ... is dependent upon the specific facts of each case,” according to written comments provided by base spokeswoman Lt. Sydney Smith.
“The Air Force has advised Pima County that the sewer connection fees are not determined or calculated in a manner that represents a fee that shows the Air Force impact to the county’s wastewater treatment facilities,” the statement went on to say.
Responding to Jungels, Deputy County Attorney Charles Wesselhoft said that a connection fee “is not a tax, nor does it resemble a tax.”
“The money is used to pay for the connecting customer’s share of the cost to (the wastewater department) of building new conveyance and treatment capacity,” he wrote, before going on to describe a number of sizable system improvements paid for with user revenues and pointing out the base’s obligations under the 1988 settlement agreement.
“That agreement signaled a clear understanding by the Air Force that the County’s connection fees were, and clearly remain, appropriate ‘service’ fees,’” he concluded.
In her April 2010 letter to Air Force Secretary Michael Donley requesting assistance in getting the base to “honor the 1988 agreement,” Giffords described the connection fees as “equitable.”
Other local federal facilities — like the Veterans Affairs hospital and federal prison — have reliably paid hundreds of thousands of dollars in connection fees, as have a number of federal facilities elsewhere in the Southwest, including several other military installations, according to research conducted by county staff and summarized in a June 2010 letter from Huckelberry to then-355th Fighter Wing Commander Brig. Gen. Paul Johnson.
“Based on the survey results and Pima County’s direct experience with other local federal facilities, it is difficult for us to understand why connection fee payments present a problem for D-M,” Huckelberry wrote, adding later: “I simply cannot understand why D-M would choose to breach the contract.”
But now Huckelberry says the county is willing to defer to the base’s previously stated legal opinion on connection fees. When asked if it’s likely that the Air Force will never pay whatever share of the bill could be fairly attributed to the base, he said, “That’s correct.”
“If they’ve got a legal basis to their decision that says that’s the case, then obviously we’re not going to push it,” he added.
That shift is due to a number of factors, including what Huckelberry described as stepped-up community outreach efforts and commitments to “better integrate with the community.”
“They’ve become community partners, and partners don’t sue each other,” he added.
Davis-Monthan and the county have “an excellent working relationship” and the base “intends to continue collaborating with Pima County on this matter,” according to its statement.
Moving forward, the county hopes to use data from the new wastewater meter system, which was installed at Davis-Monthan’s expense, to gauge future demand increases, and charge additional connection fees accordingly. That would require a new agreement with the base.
In its statement, the base seemed to suggest that the system would address some of its concerns about connection fees, noting that “the metering station data will show DMAFB’s actual demand for sewer system capacity and will allow us to accurately assess our impact to the wastewater treatment plant.”