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6.3. SR 05-16-2011El REQUEST FOR ACTION ..~. River TO ITEM NUMBER Ci Council 6.3. AGENDA SECTION MEETING DATE PREPARED BY Community Development May 16, 2011 Catherine Mehelich, Director of Economic Develo ment ITEM DESCRIPTION REVIEWED B)/ Consider Sewer Access Charge (SAC) and Water Access Charge Tim Simon, Finance Director (WAC) Payment Program REVIEWED BY ACTION REQUESTED Consider approval of a payment program for City Sewer Access Charges (SAC) and Elk River Municipal Utilities Water Access Charges (WAC). Authorize staff to commence accepting applications and work with the city attorney on the appropriate legal documents. BACKGROUND/DISCUSSION City staff has recently been receiving concern from new restaurants regarding the financial impact of the WAC and SAC fees due at the time of the building permit issuance. The 2011 rates are as such: Sewer Access Charge $4,201 per unit Set by City of Elk River Water Access Charge $3,000 per unit Set by Elk River Municipal Utilities Per City Ordinance, the charges for full-service restaurants are calculated at a rate of 22 seats = 1 unit. For a typical full service restaurant, this can be a hefty charge that would be due at the time the building permit is issued. The attached draft policies were developed by city staff as an economic development tool that could be used as an incentive to encourage new or expanding full-service restaurants in the City of Elk River. The program was modeled after the City of Brooklyn Park, which developed the program for the same purpose. The program allows the restaurant to pay the Sewer Access Charge fee and Water Access Charge fee monthly over time through their utility bill versus at the time the building permit is issued. The Elk River Municipal Utilities Commission reviewed the draft WAC Payment Program policy at its May 10 meeting and approved the policy contingent upon the City Council's final approval. FINANCIAL IMPACT The City Finance Department and Utilities Department would coordinate the applications and structuring monthly repayments through the utility bills. City Attorney Peter Beck has reviewed the draft policies and will prepare the necessary legal loan documents for each application in order to secure the City and Elk River Municipal Utilities' interests. The loans would be secured by the ability to file a lien against the property in the form of a special assessment for repayment. N:\Public Bodies\City Council\Council RCA\Agenda Packet\05-1G-2011\5.16.11 CC Action Requested.doc ATTACHMENTS ^ DRAFT Policy fox Sewer Access Charge Payment Program ^ DRAFT Policy for Water Access Charge Payment Program Action Motion by Second by Vote Follow Up N:\Public Bodies\City Council\Council RCA\Agenda Packet\05-16-2011\5.16.11 CC Action Requested.doc POLICY City of Elk River Sewer Access Charge Payment Program In order to minimize the impact of the payment of the Sewer Access Charge (SAC) to new or expanding full service restaurant businesses within the City of Elk River, the City will provide a loan option to pay the Sewer Access Charge fee over time versus at the time the building permit is issued. Payments will be billed and paid monthly in conjunction with the. user's utility bill. The interest rate applied to the loan will be fixed to the city uivestment rate at the time of the loan. Loans with a repayment schedule of 3 year, or less will be charged an interest rate equal to the city investment rate. Those with a repayment schedule greater than 3 years will be charged an interest rate of 1% above the cit<~ investment rate, with no repayment schedule to exceed 5 years. Participants in the program need to be individually metered occupants and the minimum SAC fee to utilize this program is $5,000, kith a maximum loan amount being $50,000. Loans will be secured by a Promissory Note executed by both the property owner and business pledging to repay dle Note. The Note is also secured by the City's ability to file a lien against the property in the form of a special assessment for repayment of the SAC. POLICY Elk River Municipal Utilities Water Access Charge Payment Program In order to minimize the impact of the payment of the Water Access Charge (WAC) to new or expanding full service restaurant businesses within the City of Elk River, the Elk River Municipal Utilities will provide a loan option to pay the Water :access Charge fee over time versus at the time the building permit is issued. Payments will be billed and paid monthly in conjunction widz the. user's utility bill. The interest rate applied to the loan will be fixed to the Elk River D~Iunicipal Utilities investment rate at the time of the loan. Loans with a repayment schedule of 3 years or less will be charged an interest rate equal to the Elk River Municipal Utilities in~-esnnent rate. Those with a repayment schedule greater than 3 years will be charged an interest rate of 1% above the Elk River Municipal Utilities investment rate, with no repayment schedule to exceed 5 years. Participants in the program need to be individually metered occupants and the minimum WAC fee to utilize this program is X5,000, ~trith a maximum loan amount being $50,000. Loans will be secured by a Promissory Note elecuted b~~ both the property owner and business pledging to repay the`Note. The Note is also secured by the Elk River Municipal Utilities' ability to file a lien against the propertj- in the form of a special assessment for repayment of the ~y'AC.