Septic vs. Sewer Cost Comparison

According to two of the most frequent septic installers in West Acton, ABC Cesspool and G. Nichols Construction, the average cost of septic replacement in West Acton is $30,000, with an expected annual maintenance of $170.


If the sewer is expanded to West Acton, each homeowner would have to pay a sewer betterment fee, regardless of whether he or she uses the sewer. Betterment fee estimates range from $34,000 to $39,934 for single-family homes. However, the actual betterment fee could be higher, as it is determined by the final sewer construction cost. (The South Acton sewer construction cost was estimated at $18.5 million, while the final cost was $25.1 million.)


West Acton homeowners would be required to start making betterment fee payments as soon as the sewer is constructed. Sewer hookup, however, would not be required until septic system failure. At hookup, the homeowner would incur a cost of ~$5,000 to connect to the sewer, and then pay quarterly sewer usage fees based on water usage.


To understand the relative cost of sewer vs. septic for West Acton residents, let's compare two homeowners. Both currently use septic, but one homeowner lives on the newly-constructed West Acton sewer. All other parameters are the same.


What do we know about their costs?


From the Acton Water District, we know that on average, homes in West Acton use 120 gallons of water per day (winter usage). Although the South Acton sewer usage fee has risen by 70% since 2002, let's estimate conservatively and assume it doesn't increase any further. Therefore, assuming the usage fee rate remains fixed at 0.0173 dollars/gallon, the average sewer usage fee would be $730 per year.


Acton Health Department records show that most homeowners in West Acton will not need to replace their septic system in the next 30 years. Nevertheless, for this comparison let's suppose that septic failure occurs just 25 years from today.


Let's also assume that septic replacement and sewer betterment are each paid over 30 years. Northern Bank & Trust offers a 3.806% APR for a 30-year home equity loan with good credit. Estimating conservatively, let's assume an APR of 4% for the septic replacement loan. Finally, let's assume that the homeowner on the sewer route waits until septic failure to hookup to the sewer. (He or she is still required to make betterment payments starting at year 0.) The APR for the sewer betterment loan has not yet been announced, but is likely to be in the neighborhood of 3.25%.


With these parameters, we can now compare the costs of these two homeowners. Both homeowners have a septic system that will fail 25 years from today. The only difference is that one lives on the sewer route, and the other does not. As can be seen from the plot below, the cost for the homeowner on the sewer route is much higher:

Plot explanation: The cost for the homeowner not on the sewer route is in green, while the cost for the homeowner on the sewer route is in red. For the first 25 years, the homeowner on the sewer route (red) pays an annual septic maintenance of $170 plus sewer betterment of $1,900 per year. ($1,900 is based on $37,000 paid over 30 years at 3.25%.) During this time, the homeowner not on the sewer route simply pays $170 per year for septic maintenance.


When septic failure occurs (in this example, at year 25), the homeowner on the sewer route pays $5,000 to hook up, and then begins paying $730 per year in usage fees. Usage fees are in addition to the $1,900 annual betterment payment. During this period, his or her annual payments total $2,700. At year 30, the sewer betterment fee is paid off and the annual cost for this homeowner falls to $730 per year for sewer usage.


What about the homeowner not on the sewer route? For the first 25 years, this homeowner pays $170 per year for septic maintenance. At year 25, he or she begins paying off a $30,000 loan for septic replacement, while continuing to pay $170 per year for maintenance. Annual cost for years 25 through 55 is the loan payment plus septic maintenance, or $2,100 (based on $30,000 principal, 30-year term and 4% APR). After the loan is repaid, the annual cost for the homeowner on septic falls to $170 per year for maintenance.

How would a failing septic system affect our cost comparison? In this next example, let's assume septic failure occurs at year 0, and the homeowner not on the sewer route pays for septic replacement up-front. Again let's assume the homeowner on the sewer route pays the betterment fee over 30 years. In this comparison, there is an initial period of nine years when sewer is cheaper than septic. However, after nine years, sewer rapidly becomes the more expensive option:

Plot explanation: Since septic failure occurs immediately, the homeowner not on the sewer route (green) pays $30,000 for septic replacement at year 0. Modern, maintained septic systems are expected to last 60-80 years, so after septic replacement this homeowner's annual cost is simply $170 for maintenance.


Meanwhile, the homeowner on the sewer route (red) pays $5,000 to hook up to the sewer and then pays usage, betterment and interest payments totaling $2,700 per year for 30 years. ($2,700 is based on 120 gallons/day, 0.0173 dollars/gallon, $37,000 betterment fee, 30-year repayment term and 3.25% APR.) After 30 years, the homeowner on the sewer route will have spent $83,000, while the homeowner on septic will have spent just $35,000. In this comparison as well, sewers are by far the more expensive option.


Now let's suppose that the replacement septic system is financed via a 30-year home equity loan at 4% APR, instead of being paid up-front:

If septic replacement and sewer betterment are each paid over 30 years, then sewer is much more expensive than septic at every point in time, despite a failing septic system requiring immediate replacement.


[Please note: Homeowners who do not qualify for a home equity loan can take advantage of Acton's Community Septic Loan Program. This program has no minimum credit rating or minimum income requirement. However, homeowner income must be less than $150,000 per year. Loans cover the full cost of septic replacement and are repaid at 2% APR over 10 years.]

Finally, just as there are a few homeowners in West Acton whose septic systems will soon need replacement, there are a few homeowners who just installed a new septic system in the past few years.


The plot below shows the cost comparison in the case where a new septic system was just installed:

Plot explanation: For the foreseeable future, the cost for the homeowner not on the sewer route (green) is $170 per year for maintenance. Meanwhile, the cost for the homeowner on the sewer route (red) is $2,100 per year for 30 years ($37,000 over 30 years at 3.25% + $170 annual septic maintenance).


After 30 years, and for the foreseeable future, the homeowner on the sewer route will have spent $58,000 more than the homeowner not on the sewer route.


Also note that if the homeowner on the sewer route happens to live in an area served by low-pressure sewer, his or her cost would be even higher, as sewage grinder pumps fail every 7-10 years and can cost up to $4,000 to replace.

What would your cost comparison look like? Find out using your own values for septic maintenance, payment term, APR, etc. using the Calculator.

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