02-17-1993 CC MIN - SPECIAL-JOINT
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JOINT MEETING OF THE ELK RIVER CITY COUNCIL
AND THE ELK RIVER UTILITIES COMMISSION
HELD AT THE ELK RIVER POWER PLANT
WEDNESDAY, FEBRUARY 17, 1993
Councilmembers Present: Mayor Duitsman, Councilmembers Scheel, Dietz,
Farber and Holmgren (arrived at 6:15 p.m.)
Commission Members Present:
Jim Simpson, Jim Tralle and George Zabee
Staff Present:
Pat Klaers, City Administrator; Terry Maurer, City
Engineer; Lori Johnson, Finance Director; Bill
Birrenkott, utilities General Manager; Glenn
Sundeen and Bob McCartney, Elk River Municipal
Utilities
Others Present:
Rick Foster, John Weicht and Don Heinzman
Mayor Duitsman called the meeting to order at 6:10 p.m.
Mayor Duitsman gave a short introduction of the topic relating to financing
water towers. He then turned the meeting over to Bill Birrenkott to discuss
the information that has been reviewed by the Utilities commission.
Roger Holmgren arrived at this time.
Bill Birrenkott reviewed a memo he had written regarding the water tower
financing issue. He indicated that previously the need had never come up to
increase Water Access Charge (WAC) fees in order to set aside funds for a
water tower. Bill indicated that in the past, WAC fees have been mainly
used for watermain improvements and expansions. Recently, accumulated
WAC fees have also been used for the financing of the well and treatment
facility near Orono Park. The WAC fees have recently increased from $300
to $700 per connection. This increase will generate funds to help finance
future wells that are needed, but it is uncertain as to whether or not any
funds from this WAC fee will be available for the financing of water
towers.
Bill Birrenkott introduced the idea of a Water Impact Fee which could be
charged to the developer of vacant lands and the money would be set aside to
pay for water towers. Bill also discussed the possibility of using TIF
funds and requested that the Utilities payment of $120,000 paid to the City
to fund the 1985 TIF issue be refunded to the Utilities and be applied
toward the construction of the next water tower.
Mayor Duitsman asked whether projections had been made as to the water fees
and revenues that would be received over the next few years. Bill
Birrenkott indicated that the net water income, excluding the WAC fees, is
now approximately $120,000 per year, but no future projections had been made.
Utilities Commission member, George Zabee, stated that there were several
criteria he felt the Utilities should look at when financing water towers:
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City Council/Utilities Commission Minutes
February 17, 1993
Page 2
1.
The method must be equitable and consistent.
2. It should not affect rate payers.
3. Developers should have to pay all associated fees prior to development.
4. If development doesn't occur, the Utilities must be able to handle the
payments.
5. A reserve must be set aside for emergencies.
George indicated that he agreed with the concept of a water impact fee.
A brief discussion was held regarding bonding for this project. Lori
Johnson, Finance Director, indicated that there were several methods
available; one being through water revenue bond, the other being a General
Obligation Bond. She indicated that pure revenue bonds are rather rare in
Minnesota and indicated there were several negatives including a higher
interest rate, a one year of debt service reserve requirement, and a pledge
of 120% of revenues to debt service. These factors make revenue bonds an
expensive and less desirable financing mechanism.
There was considerable discussion regarding the proposed water impact fee
policy and how it would be applied equally to new development and existing
development currently not served by the water utility. All concurred that a
policy would need to be approved in order to make collection of the Water
Impact Fees (WIF) equitable.
Mayor Duitsman indicated that TIF monies are available from TIF District No.
4, to help finance the water tower needed near Orono Park. Commissioner
Tralle gave background information on TIF No. 4 and the RDF settlement,
indicating that funds would be available from the source.
Mayor
if the
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Duitsman questioned how much additional water storage would be needed
Council approved the extension of water utilities along East Highway
Terry Maurer discussed water improvements needed to serve East Highway
Councilmember Scheel expressed concern over the City wells causing problems
with other wells in the area because they are all in the same aquifer. City
Engineer, Terry Maurer, explained that this would not be a problem.
Commissioner Simpson and Bill Birrenkott both indicated that the water
utility would be able to support the debt to construct a well in the western
area and a well in the northern area.
Mayor Duitsman asked whether the water impact fee would be a charge just to
developers or whether everyone hooking into the water system would need to
pay the Water Impact Fee.
Pat Klaers indicated that there was a
development proposals as fees are
that the WAC fee be raised in order
problem in collecting the WIF on
collected only on plats. He suggested
to cover an amount which would be
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City Council/utilities Commission Minutes
February 17, 1993
Page 3
charged as a Water Impact Fee, therefore, anyone hooking into the water
system would pay both fees.
There was discussion with developers Rick Foster and John Weicht regarding
the payment of fees. Rick Foster indicated that he felt the up front fees
were excessive now and that adding additional fees would drive development
out. Councilmember Scheel agreed, indicating that the Council must figure
out a way to keep development fees low.
The City
time of
of water
further
help the
Council agreed that everyone should pay a WAC and WIF fee at
hook up. Mayor Duitsman indicated that he would like to see $60,000
utility profit annually dedicated to pay for water towers. He
indicated that the City would be willing to use TIF reserve funds to
Utilities fund the water towers.
The City Administrator summarized the discussion and stated that this
meeting related to an overall plan to help finance future water towers and
wells and did not necessarily concentrate on any specific area of the
community; that there was an agreement that a fee needs to be collected from
everyone that hooks up to the water system in the future and that this fee
could consist of the WAC and an assessment or Water Impact Fee. The City
Administrator indicated that the Utilities and City staff would get together
to review all available revenues and costs for future improvements in an
effort to determine a recommendation on an appropriate fee and method for
collecting the necessary fee.
The Utilities Commission agreed to authorize bids for the construction of
the water tower in the high pressure zone.
The joint meeting of the Elk River City Council and the Elk River Utilities
Commission adjourned at 8:15 p.m.
Respectfully submitted,
~.J2l ~
Lori Johnson
Finance Director