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8.5. SR 09-02-2014 City of Elk Request for Action River To Item Number Mayor and City Council 8.5 Agenda Section Meeting Date Prepared by General Business September 2, 2014 Justin Femrite, P.E., City Engineer Item Description Reviewed by Stormwater Program Funding Tim Simon, Finance Director Reviewed by Cal Portner, City Administrator Action Requested Approve,by motion, funding options and direct staff to proceed with communication effort to engage the resident preference. Background/Discussion When reviewing the proposed stormwater budget on August 18, 2014, the City Council directed staff to bring back options available to fund the program. Projections indicate an annual investment of$500,000 is required to meet stormwater needs and comply with all regulations of our existing permit. Three funding options have been evaluated by staff and are as follows: 1. Eliminate/reduce services provided for within the current tax levy to cover funding shortfall. 2. Increase levy by$450,000 to make up the shortfall. 3. Decrease levy by$50,000 and establish a Stormwater Utility Fee to collect the necessary$500,000. Option 1 would require significant operating changes to existing services and is not considered a viable option. Options 2 and 3 provide reliable,long-term funding solutions to a program that is a mandated core service. It is understood that neither option will be popular;however city financial policies prohibit one- time revenue use for ongoing, operational costs. Staff proposes a community engagement effort to inform, educate and receive feedback on the options to fund the stormwater activity. There are pros and cons to each revenue source. Property taxes shift the burden to the "wealthy," properties/property owners,while a utility fee is more akin to a user fee based upon each property's contribution to the stormwater collection system. If the Council would consider an increased tax levy to fund the stormwater program,the Preliminary Levy,which will be approved on September 15,will need to be adjusted accordingly. The Council may decrease the levy if another option is approved following the community engagement effort. Financial Impact All costs associated with the action will come from the approved 2014 Stormwater Budget. Attachments • July 2, 2012, Stormwater Utility Fee Presentation P a w E A E U s r NaA f RE] i L w` 4--I > }+ LU r 4--' a) 4--j U..� _ (V C6 � o CD E (n N O C6 >' U cn � o •- �. L- � C G }, 4-0 O E o CD 0 N � L N a) Q m Q � � L N O U- 15- /lT C� C� 4) 4� O m E L.L E W tf A--+ O Q N N ^ L O 0 0 � u 4 — c C: E a o a) a 4 E co o cn o O E U c � C 0 N U •- C/) � Q U o 0- N L O N +� •— 4-0 O c6 U � ca N3DV >, � a, � � N � ,00 Q. to O CU C N •5 }, O 4-0 v I Ro (� •� O C: Q Q. E o- U Se 0 _ l !!qY ry T Y� ■ � aF w. - }+ ry KIN .t�;. 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J_ t7 H a 3 to a y O 0 E G7 '1, •" LI..w 'i Q uj ~ rr 0 coo Q d m v H c 21 U a t4 } Z'r C dl '7 °y �3 e Z ? r�1'j V1 c - + li n �� S 06 m [0.i �o � a J � h �` N A t93i c O E' E .-g E in 13 c!i5 N v ins $ m LU 1,0 LL M LLJ L N N Eu a s 'C m y 6 1% c'# a lu J LL 3 c ° ' _ o FO J d 3 - m ° Q r ~ C a Q 0 0. p U to m N W W rY i s - r. r. �A q 14 ,40, i A.—O >1 �-j 4-0 (D Co N OU to LL p O C/) L Q � U C c � — O O r co — N VJ N ? � •� O N V) N Co -2 +r C/) N ^L' � N N O \W > E LL N_ N_ -o � cn X < CL C/) Q .E � ii ii � W Elk River Stormwater low M Program September 2, 2014 OVA" El River - - -- - - _ Control Agency � � �j '.rte `� �• �� w v r ,.4.^ „ Elk w ver M �r i T 1 _ �v iz An e - I g � Elk pw River r� " r Pl`• rim � � -'_ - yam-_ _ v} ' A-41 T low- - g What it affects . . . qr f IMPAIRED WATER _ r -- QUALITY Now- Elk River - Regulated MS4 Municipal Separate Storm . ewer System • Administered by MPCA • Elk River first permitted in 2003 • Revised permit with new rules - 2014 • Additional unfunded mandates • Compliance with rules subject to Audits h MS4 Permit Requirements 1 . Public Education and Outreach 2. Public Participation 9 , 3 . Illicit Discharge Detection and g . o Elimination 4. Construction Site Stormwater Runoff Control 5. Post-Construction Stormwater - y Management - -� 6. Pollution Prevention/Good Housekeeping ' f Additional Costs • Replacement of aging and undersized infrastructure ~- • TMDL limits for impaired waters - • Public Safety/Passable Roads • National Flood Insurance Pro r m g a • "•a. a• soosazt t 7U_1_p'I{Oiai r 7 A CY 1 u2n0o 4 )_1 0_1] 1-201 2+1 Public Health aolz-al roz •"',,.. - ` / T1 0013.02 901 • .7.1.001 Needed Funding • Needs - $500,000 annually revenue/expenditure (not one-time non-reoccurring expenditure) • Current levy impact - $50,000 annually (decreasing account balance to support expenses) Additional $450,000 annually h Funding Options I . Eliminate/reduce services funded within the current levy to cover shortfall. 2. Increase levy by $450,000 to fund the needs. 3 . Decrease levy by $50,000 and establish a Stormwater Utility Charge to collect $500,000 to fund the needs. h Fundin g Option Impacts :a Option I — Eliminate/reduce services funded within the current levy • No additional financial impact on users • Would require significant operating changes to existing services ,4 w Funding Option Impacts Option 2 — Increase Tax Levy by $450,000 • Simple collection through property taxes • Recognized taxing process understood by the public • No new utility fee listed on monthly bills • Ad valorem taxes — higher value properties pay more h Funding Option Impacts Option 3 — Establish a Stormwater Utility Fee Reviewed in Study completed in 2012 Estimated $2.50 to $3 .00 Monthly Residential cost Sto,mW°t°,°""" ,FP Commercial/Industrial rates stantec would be based on impervious area Fundin g Option Impacts $1500 $140 Average Monthly $1310 $120 . Bills 1110 Option 3 $100 $90 $80 • Widely used 60 $50 • Stable revenue 30 $20 $10 • Collects from all $- Electric Sewer Garbage Water Pavement Storm contributors , mt Water Stormwater Utilities 2012 • Smaller monthly fee • Transparent •s revenue collection '' • � ♦ #rMl•R % 1!A ♦ � s —fir • ♦ • . Fundin g Option Comparison Option 2 Option 3 Monthly Monthy Value Property Tax Utility Charge Residential Homestead $100,000 $ 1.27 $ 2.75 Residential Homestead $150,000 $ 2.23 $ 2.75 Residential Homestead $200,000 $ 3.19 $ 2.75 Residential Homestead $250,000 $ 4.16 $ 2.75 Residential Homestead $300,000 $ 5.12 $ 2.75 Residential Homestead $350,000 $ 6.08 $ 2.75 Residential Homestead $400,000 $ 7.04 $ 2.75 Small C/I Property C/I property #1 $ 4.32 $ 1.45 Medium C/I Property C/I property #2 $ 31.01 $ 54.04 Large C/I Property C/I property #3 $ 161.63 $ 157.04 _ . fit How are other Communities paying? Monthly Annual City 2012 Talal Revenue Residential Residential Fee Fee 1 Alexandria $525,000 $3.+00 $36.00 Andover $360.000 $2.57 $30.60 3 Arden Hills $550,040 $3.40 $40.76 4 Bemidji $1,000,1000 $6,44 $77.28 5 Blaine $875,000 $175 $21.01 6 Buffalo $393,000 $5,00 $60,00 7 Grand Fla ids $500,000 $5.35 $64.20 8 Champlin $325,000 $2.50 $52.00 9 Chaska $580,000 $4.50 $54.00 10 Clc uet $350,000 $4.00 $48.00 11 Coon Rapids $1,400,000 $3.47 $41.60 12 Mankato $1,200,000 $3.00 $36.00 13 Fergus Falls $400,000 $5.00 $60,00 14 Golden Valley $2}228,920 $7.33 $88.00 15 Grand Rapids $504,000 $5.35 $64.20 16 Hutchinson $615,250 $2.93 $35.16 17 Maplewood $2,414,130 $6.28 $75-36 18 Mcrhead $2,190,045 $10,21 $122.52 19 North Branch $270,000 $4.90 $58.80 20 Plymouth $3,000,000 $5.+00 '$52,00 21 Ramsey $624,000 $3.18 $33.20 22 Roseville $1,910,000 11-15 $133.80 23 Shorewood $216,000 $5.04 $6D.48 24 St. Cloud $800.000 $2.10 $25.20 25 St. Louis Dark $2,044,655 $5.17 $62.04 Average $994,680 $5 $57 Decision Schedule • Make final decision on funding option Or • Preliminarily approve Option 2 to allow setting of max levy on September 15, 2014 • Staff to engage community input on preferred option over the next two months • Return community input to City Council for funding decision on November 3 , 2014 -moon 0 1' Requested Action _^f selecting Motion, funding options and directing staff to proceed n effort to engage public on their preferred method . a, n er