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6.2. SR 12-10-2012 Elk REQUEST FOR ACTION River TO ITEM NUMBER Mayor and City Council 6.2 AGENDA SECTION MEETING DATE PREPARED BY Administration December 10, 2012 Justin Femrite,P.E., City Engineer ITEM DESCRIPTION REVIEWED By Review Private Utility Connections and Financing Cal Portner, City Administrator REVIEWED BY ACTION REQUESTED 1) Discuss draft ordinance amendment to allow financing of costs, for private properties with sanitary sewer and water services available, to make the connection as required by city ordinance. 2) Discuss draft ordinance amendments for requiring sewer and water connections to be made at time of failure or sale of property. BACKGROUND/DISCUSSION Financing of Private Sewer and Water Costs Ordinance 12-06 was adopted on April 2, 2012. The ordinance allows property owners already connected to the city sewer and water system the option to have costs associated with repairs or modifications to their privatly-owned service lines assessed against their properties. The adoption of the ordinance was instrumental in successful completion of the River Line Sewer Abandonment project. It provided a needed tool to help those affected property owners cover the costs associated with the required service modifications at their properties. To build on the success of this ordinance, staff is asking the City Council to consider expanding the use of this ordinance. Staff recommends modifying this ordinance to allow for the program to be used by property owners who have public services available to their property,but are still on private systems. Expansion would assist owners required by ordinance to connect to sewer and water with the costs of the connections and associated fees. The recommendation is a result of recent cases where the city-levied sewer and water fees are far in excess of what property owners are able to afford or finance on their own. The city and the utilities benefit by having properties on city services and will improve the potential value of residential properties. The following shows an example of the costs associated with connection of one property to city services, which is currently on private septic and well. The property owner is responsible for the following costs: $17,915 Trunk/Lateral assessment -This fee covers the cost of the city-installed sewer and water mains and services to the property line. Current policy developed around this charge would allow for this cost to be assessed to the property over a term of 15 years at an interest rate of 5.5%. P a w E A E a 9 Y NA UR $4,285 Sewer Access Charge—This fee is paid by all new connections to the sewer system (The fee listed is for 2012 and is adjusted annually). Current policy would not allow for this cost to be assessed. $3,060 Water Access Charge—This fee is paid by all new connections to the water system (The fee listed is for 2012 and is adjusted annually). Current policy would not allow for this cost to be assessed. $5,000—$10,000 (estimate) - Cost to abandon existing private systems and connect property to sewer and water service stubs at the property line. Current policy would not allow for this cost to be assessed. Total Cost: $30,260 -$35,260 Staff is not recommending reductions to the city-levied costs, rather offering a property owner the ability to have all of the costs eligible for assessment against the property. The costs represented above are,in general, the same costs that all other system users have had to cover to be connected to the system. Staff recommends the ordinance change sunset on December 31, 2015, and revert to the original form of Ordinance 12-06. Ordinance Amendment on Requirement for Connection Currently, Chapters 78-21 and 78-97(d) of the Elk River City Code detail that all properties with access to sewer and water services be connected to the public systems within two years of said utility being made available. Alternatives to this approach were discussed at the City Council meeting on August 13, 2012. Council gave staff direction to return with an approach that combined elements from various options presented. With that direction, staff prepared the attached draft ordinance for your review and comment. The modification would replace the current code requirement for property owners to be connected to the public system within two years,with a requirement that they are to be connected to the municipal services at the time of failure of either the existing septic system or well or when the property is sold,whatever comes first. The city shall record a notice of the ordinance against all unconnected properties required to be connected so that buyers and lenders are on notice of the requirement and the connections are therefore made at the time of sale. As an incentive for property owners to make the connections within the next three years,they would qualify for having the costs assessed against their property if the ordinance modification described above is approved. All affected property owners would receive notice of the ordinance changes and their options for financing of the connections. Staff will take final direction on the draft ordinances and make any suggested modification before bringing them back for formal adoption at the December 17, 2012, meeting. paw IRLa 0 NAT- URA FINANCIAL IMPACT There is no financial impact associated with the discussion of this item. ATTACHMENTS • Draft Ordinance Amendment for the Assessment of Utility Connection Costs • Draft Ordinance Amendment for Connection to Public Utilities Action Motion by Second by Vote Follow Up POWERIO 0 NAT- URA ORDINANCE NO. 12- CITY OF ELK RIVER AN ORDINANCE OF THE CITY OF ELK RIVER AMENDING CHAPTER 78, ARTICLE I,DIVISION 1 OF THE ELK RIVER CODE OF ORDINANCES,WHICH PROVIDES FOR PAYMENT AND ASSESSMENT OF THE COSTS TO CONNECT AND REPAIR PRIVATE UTILITY LINES The City Council of the City of Elk River hereby ordains as follows: Section 1. That Chapter 78, Article I, Division 1 of the City of Elk River Code of Ordinances shall be amended to read as follows: Division 1. Payment and Assessment of Costs to Connect or Repair Private U\Lin Section 78-1. Finding of Public Health and Sa My ��zard. a) The City Council finds that failure to connect to the city water system as required by section 78-21 of this code, failure to connect to the city sewer and sewage disposal system as required by section 78-97(d) of this code, and failure to maintain in good, operable condition private water and sanitary sewer utility lines, creates public health and safety hazards on private property which must be eliminated. b) In addition to the provisions of section 78-22 and section 78-97(d), which authorize the city to make connections to the city water and sanitary sewer systems and to assess the costs therefore to the affected property, and the provisions of chapter 46, article 11 of this code, which declares defective sewage systems and plumbing a nuisance affecting the public's safety and health and authorizes the City to abate such nuisances and to assess the costs therefor to the affected properties, the City Council fords that it is necessary and in the public interest to provide a mechanism for costs incurred by private property owners to eliminate such public health and safety hazards on private property to be assessed against the property as a special assessment. Section 78-2. Petition Authorized. Property owners who are required to connect to the city water and/or sanitary sewer system pursuant to section 78-21 and section 78-97(d) of this code, or who have private water and/or sanitary sewer lines which have failed, and such failure has been determined by City land development staff to be a public health or safety hazard, may petition the City, on a form provided by the City, to pay the costs to connect (including any outstanding lateral/trunk assessments and applicable water and sewer connection charges) or repair the private utility lines and to assess amounts paid as a special charge under Minnesota Statutes, Section 429.101. The City may accept or reject such petitions in its sole discretion, and may impose such conditions and requirements to acceptance as it deems appropriate. Section 78-3. Work to be Completed by Property Owner. If a petition to pay and assess the costs of connection or repair is accepted by the City, installation of the required connections and/or repairs to private utility lines on private property shall be the responsibility of the property owner, shall be contracted for by the property owner, shall be completed by the property owner as required by the policies and ordinances of the City of Elk River and Elk River Municipal Utilities, and shall be inspected and accepted by the city building official before payment of costs is made. Section 78-4. Payment and Assessment of Costs Authorized. a) Upon completion and acceptance by the City of all work required, the City will make payment to the party or parties who performed the work in an amount not to exceed that set forth in the petition accepted by the City. Such payment by the City, and all other outstanding fees and charges required for connection to the public systems, shall constitute a special charge against the affected property pursuant to Minnesota Statutes, Section 429.101 and shall be specially assessed against the property by the City pursuant to the provisions of Minnesota Statutes, Section 429.101. Special assessments levied under this Section shall be payable in a single installment, or by up to 10 equal annual installments, as provided by the City Council. b) The City Council shall establish, and may amend from time to time, policies regarding: (1)projects eligible for this program; (ii) petitions which may be accepted by the City Administrator; (iii) petitions which may only be accepted by the City Council; (iv) the number of annual installments over which amounts paid and assessed will be levied; and, (v) the interest rate applicable to unpaid installments. Section 78-5. Sunset on Payment and Assessment for Connections. Petitions to pay and assess the costs of connection to the City water system and the City sewer and sewage disposal system will not be accepted by the City for any connection project which is completed after December 31, 2015. Section 2. That this Ordinance shall be published and take effect as provided by law. Passed and adopted by the City Council of the City of Elk River this day of , 2012. John J. Dietz Mayor Attest: Tina Allard City Clerk PETITION, WAIVER AND AGREEMENT FOR PAYMENT OF THE COST OF INSTALLATION AND CONNECTION OF, OR REPAIRS TO, PRIVATE UTILITY LINES AND ASSESSMENT OF AMOUNTS PAID AS A SPECIAL CHARGE UNDER MINNESOTA STATUTES, SECTION 429.101 TO: City Council of the City of Elk River (the Owners), owners of the property located at and legally described on Exhibit A attached hereto (the Property), Fes. Petition the City of Elk River (the City) to pay the costs of installation and connection of, or Repairs to, (the Work)private utility lines loc n the Property or in the Right-of-Way directly adjacent to the Property, including: Installation and connection of private water service lines Installation and connection of private sanitary sewer service lines Repair of private water service lines Repair of private sanitary sewer service lines In an amount not to exceed that set forth on Exhibit B attached hereto (Cost of the Work); and, To levy a special assessment against a �the r unpa id special charge pursuant to Minnesota Statutes, Section 429.101 in the amburif of the Cost of Work plus the total of the following charges (if Applicable):. Cost of the Work(from Exhibit B) Sewer Access Charge (fill in current year fee) Water Access Charge (fill in current year fee) Trunk/Lateral Charges (to be determined based on costs to provide services) TOTAL ASSESSMENT AMOUNT (Sum of all listed amounts) Owners acknowledge and agree: Installation and connection: 1) that the Property is required to be connected to the City water and/or sanitary sewer systems; 2) that the Property is not connected to the public water and/or sanitary sewer services as required; 3) that the Work identified on Exhibit B is reasonable and necessary to connect the Property to the City water and/or sanitary sewer system; 4) that the Cost of the Work identified on Exhibit B is reasonable and necessary to affect the Work and is the responsibility of Owners; and 5) that Owners have been provided the opportunity to pay the Cost of the Work without the City's involvement and have elected, instead, to petition the City to pay the Cost of the Work and to assess the full amount of the Cost of the Work to the Property. Repairs: 1) that there has been a failure of the utility lines on the Property; 2) that the failure of the utility lines has created a public health and safety hazard on the Property; 3) that the Work identified on Exhibit B is reasonable and necessary to eliminate the public health and safety hazard on the Property; 4) that the Cost of the Work identified on Exhibit B is reasonable and necessary to affect the Work and is the responsibility of Owners; and 5) that Owners have been provided the opportunity to pay the Cost of the Work without the City's involvement and have elected, instead, to petition the City to pay the Cost of the Work and to assess the full amount of the Cost of the Work to the Property. Owners acknowledge that the City may accept or reject this Petition, Waiver and Agreement in its sole discretion, for any reason, including, but not limited to, the availability of City funds to pay the Costs of the Work and agree, if the City accepts this Petition, Waiver and Agreement: 1)to have the Work identified on Exhibit B completed as required by the policies and ordinances of the City; 2) that the Work performed shall be privately contracted by the Owners; 3) that the City shall bear no responsibility for or liability related to the performance of the Work; 4) that Owners shall hold harmless and indemnify the City from any claims related to the performance of the Work; 5) to procure and pay the cost of all permits required for the work; 6) to submit evidence to the City that the Work has been inspected and accepted by the City Building Official; 7) that, upon completion and acceptance of the Work, City shall make payment to the Owner's contractor or other parties who performed the Work in an amount not to exceed the Cost of the Work identified on Exhibit B; 8) that payment by the City of the Cost of the Work shall create an unpaid special charge against the Property; 9) that this unpaid special charge shall be specially assessed against the Property by the City pursuant to Minnesota Statutes, Section 429.101; and 10) that the special assessment shall be payable in equal annual installments with interest accruing on unpaid installments at the rate of %. Owners expressly waive the right to a hearing on assessments levied pursuant to this petition; expressly waive objection to any irregularity with regard to the assessment of the Property for the Cost of the Work; expressly agree that the amount assessed is reasonable; expressly waive any claim that the amount assessed is excessive; expressly waive all rights of appeal, including any rights under Chapter 429, Minnesota Statutes, from the assessment by the City of the Cost of the Work; and expressly agree to pay when due all assessments levied for the Cost of the Work. Owners represent and warrant that they are the sole fee Owners of the Property; agree to make payment of all assessments levied pursuant to this Petition, Waiver and Agreement for Payment of the Cost of the Work; agree that they shall be personally liable for payments not made; agree that this Agreement shall be binding on Owners and Owner's successors and assigns; agree that all assessments levied pursuant to this Petition shall be paid in full prior to or at the time of transfer of the Property to a subsequent owner; agree that this Agreement may be recorded against the title to the Property; and agree that any unpaid or outstanding trunk utility assessments already levied against the Property shall remain in effect and will not be rolled into the assessments authorized by this Petition, Waiver and Agree t. Dated this day of , OWNER By: Its: For Office Use Application App ate: Permit No(s): Work completed on: Approved for Final Payment: By: Date: EXHIBIT A Legal Description EXHIBIT B Work: Cost of the Work: CITY OF ELK RIVER POLICY FOR PAYMENT AND ASSESSMENT OF THE COSTS TO CONNECT AND REPAIR PRIVATE UTILITY LINES Adopted: December 17, 2012 The City of Elk River has adopted an ordinance which provides for payment and assessment of costs to install and connect or repair private utility lines. As detailed in the ordinance, the following policy has been developed to detail (i) projects eligible for this program; (ii) petitions which may be accepted by the City Administrator; (iii) petitions which may only be accepted by the City Council; (iv) the number of annual installments over which amounts paid and assessed will be levied; and (v) the interest rate applicable to unpaid installments. Policv 1. Eligible Projects Eligible projects include but are not limited to the fol\publicsanitaury4hd A) The connection of an existing building to an exist water line(s). Properties that have both sewer and water service available are required to connect to both utilities at the same time. B) The repair of a leaking sewer or water service that has created a public health or safety hazard on the Property or to improvements within the public right-of-way or on a neighboring property. C) The separation of a shared sewer or water service line. D) The proper abandoning or disconnection of a sewer or water service line that has been disconnected from a building. E) The reconnection of a private sewer or water service line if modifications to the public mains has caused the property owner to no longer have service in the existing qqlkjocatlon. Oth ' ible projects« ll be c idered by the City on an individual basis. All work shall be contrao between the Property owner and their Contractor. The City will reimburs ._ ible '"" s in accordance with the terms listed below, but shall not warrant or be i i i :any claims that arise from the work. 2. Eligible Project Costs Eligible expenses include costs that are directly related to the connection or repair of said service line. This includes the following: Installation of required pipes and connection to the service stubs Restoration of disturbed areas Interior plumbing to facilitate proper connection to the external sewer or water service line Abandoning and sealing of existing wells and septic systems Sewer Access Charge and Water Access Charge (SAC and WAC) for initial connections only 3. Initiation of Project Projects shall be initiated by the submission of a Petition, Waiver and Agreement, on a form supplied by the City, which has been signed by the Property Owner. Eligible Project Costs shall be detailed on Exhibit B of the signed Petition, Waiver and Agreement and approved by City Staff or the City Council prior to any work being completed. Any expenses that are determined, by City staff or the City Council, that are not required to facilitate the service connection or repair, will be deducted from the requested amount. R{F All permit fees and any escrow money, {"" gyred by said permits will not be eligible for reimbursement. 4. Approval and Terms of the essment Petitions shall be limited to a miniu n request of$3,000 and a maximum request of $40,000. The City Administrator shall have the authority to approve all petitions up to $5,000. Those petitions above $5,000 will require the approval of the City Council. All qualified expenses, reimbursed by the City, will be levied as a special assessment against the property, pursuant to the Petition, at the current bonding interest rate available to the City plus a 1.5% administrative fee. The final rate will be determined at the time of improvement. The term of the assessment will be as follows: 7Single mily Residential $3,000 to $5,000 Up to 3-years mily Residential $5,001 to $10,000 Up to 5-years mily Residential $10,001 to Max Up to 15-years Properties $3,000 to Max Up to 3-years GP:3301030 v1 ORDINANCE NO. 12- CITY OF ELK RIVER AN ORDINANCE OF THE CITY OF ELK RIVER AMENDING SECTIONS 78-21 AND 78-97 OF THE ELK RIVER CODE OF ORDINANCES, REQUIRING CONNECTION TO THE PUBLIC WATER UTILITY AND THE PUBLIC SANITARY SEWER SYSTEM The City Council of the City of Elk River hereby ordains as follows: Section 1. That Section 78-21 of the City of Elk River Code of Ordinances shall be amended to read as follows: t (1) All buildings connected to the water utility shall remain co ed to the water utility for so long as the building is occupied or used for any purpose. (2) All buildings constructed on property to which water utility service ailable at the time a certificate of occupancy is issued for the building shall be requ connect to the water utility prior to occupancy. (3) All buildings to which water utility service becomes available following legal occupancy of the building shall be required to connect to the water utility, provided that the water utility is within 300 feet of the structure requiring service and the water utility is located in a public right-of-way or easement for utility purposes adjacent to the property, as follows: (a) Connection shall be required if either the well or septic system serving the building fails; and (b) Connection shall be requetl prior to sale of the building or the property on which the building sits. Section 2. That Section 78-97, Subsections (d) and (e), of the City of Elk River Code of Ordinances shall be amended to read as follows: (d) All buildings constructed on property to which a public sewer is available at the time a certificate of occupancy is issued for the building shall be required to connect to the public sewer prior to occupancy. All buildings to which a public sewer becomes available following legal occupancy of the building shall be required to connect to the public sewer, provided that the public sewer is within 300 feet of the structure generating wastewater and the public sewer is located in a public right-of-way or easement for utility purposes adjacent to the property, as follows: i. Connection shall be required if either the septic system or well serving the building or property fails and needs replacement; and ii. Connection shall be required prior to the sale of the building or the property on which the building sits. (e) If sewer connections are not made pursuant to subsection (d) above, the City shall serve written notice on the affected property owner stating that if the connection is not made within 90 days after the date of such notice, the connection will be made by the City at the expense of the owner and that, if unpaid, the charge for such work will be made a special assessment against the property concerned. Such assessment, when levied, shall be a lien against the property and shall bear interest at the legal rate for local improvements and shall be certified to the county auditor and collected and remitted to the City in the same manner as assessments for local improvements. The rights of the City under this subsection shall be in addition to other remedial or enforcement rights provided under this division. Section 3. That this Ordinance shall be published and take effect as provided by law. Passed and adopted by the City Council oft t River this day of , 2012. John J. Dietz 'Mayor Attest: Tina Allard City Clerk GP:3300785 v1