The economic impact analysis on the effect on small businesses is cursory – at best. These regulations and implied authority claimed by the Virginia Health Department (VDH) as a direct service provider of proprietary services is devastating to the private sector. The EIA states the “majority” of the private sector service providers are estimated to be small businesses. In my opinion, “majority” underestimates the number of small businesses in this particular industry. My experience over the past 12 years is that ALL of the private sector providers are small businesses.

The overarching analysis that the proposed changes “do not impose any significant adverse impact on the small businesses” may be technically correct given the narrow scope of the EIA. The reality of VDH, Inc.'s current business model is:

1. VDH, Inc. is the largest single provider of direct site evaluation and design services in the Commonwealth of the Virginia – providing between 7,000 and 10,000 fee-for-hire service contracts per year.

2. The gross income of the fee-for-hire services ranges between $2.5 millon and $4.25 million per year.

3. All of VDH, Inc.'s fee-for-hire services are almost entirely tax subsidized.

4. VDH, Inc.'s net fee for a certification letter is $30 per site.

5. VDH, Inc.'s net fee for a conventional site evaluation and septic system design is $200 per site.

Compare VDH, Inc. with a private sector small business - the real cost of a site evaluation and preparation a certification letter submittal ranges between $500 and $1,500 per site. The real cost of a conventional septic system evaluation and design ranges $800 and $2,500 per site.

Therefore, tax payers subsidize nearly 100% of the cost of service for VDH, Inc.'s direct service business. It is easy to recognize the devastating impact on small businesses when forced to compete with a competitor of such magnitude coupled with the advantage of tax payer funding.

Consider the loss of tax revenue to the Commonwealth of Virginia. If the private sector provided 100% of the fee-for-service business in this industry, the tax revenue would be about $1 million per year. Contrast this revenue stream with the tax subsidy cost of $3.4 million per year. The economics do not work. Instead of gaining $1 million per year, the Commonwealth of Virginia is actually spending $3.4 million per year to provide a fee-for-service to individuals for improvements to their real property.

Another way to analyze the issue is the overall cost of this service to lot owner. Consider the cost of a house is about $250,000 and the cost of the lot is $75,000. The subsidy provided by the tax payer amounts to a trivial 0.5% of the overall project cost. Of course this percentage drops proportionally as the cost of the project increases. In many cases, the subsidy amounts to less than 0.1%.

Why is the Commonwealth of Virginia subsidizing a service to some of its citizens that the private sector can provide at a significant cost to the entire tax paying citizenry?

This regulation should be put on hold until the fee-for-service issue is resolved.