Having fallen for the hollow promise of easy residential development money years ago, the Havre de Grace city government is in the unfortunate situation of not being able to pay the debt service on what it has spent to make that development possible.
Going back when Havre de Grace embarked upon the building boom that started with Bayview Estates and Grace Harbour, the city was limited in its ability to provide public services — specifically sanitary sewer service — to a large number of new homes. In the late 1980s and early 1990s, it was expected Grace Harbour and Bayview would consume any remaining capacity at the city's waste water treatment plant.
As expected, property tax revenue from the new developments rolled into the city, initially faster than the demand for city services in those neighborhoods absorbed that money. Eventually, however, the demand for services caught up and there was more demand for more money. The solution: build more houses to increase the tax base. The cycle had begun, but the need for sewage treatment capacity had not been dealt with in a meaningful way.
A decade and a half later, the wastewater plant was upgraded, and it was presumed new development hookup fees would offset the substantial cost of the upgrade. They didn't.
Now Havre de Grace is faced with a half million dollar shortfall between what it costs to run its water and sewer operation and what it takes in. By law, these funds must be balanced based on user fees — water and sewer rate charges — not with money from the property tax rate. As most of the costs associated with running such facilities are fixed, that means a rate increase is in the offing if not this year, sometime in the relatively near future.
There are benefits to development. Many of the people living in the new neighborhoods built over the last 25 years are the children and grandchildren of people who live in older parts of the city, and newcomers have been able to join a vibrant community as a result of the new construction.
Unfortunately, visions of easy tax revenue resulted in pursuing development that wasn't required to pay for itself. Now the people left in the city will be required to pay the bill for developments past.