7.5. SR 07-17-2006City of Elk River Item
REQUEST FOR COUNCIL ACTION 7.5.
Administration I July 17. 2006 1 Lori Tohnson. Citv Administrator
Consider Funding Trunk Water Improvements for County Road
40 Proiect
Introduction
Sherburne County is undertaking a project to improve County Road 40, and to provide water service to
this area, Elk River Municipal Utilities will be installing trunk water main along County Road 40 in
conjunction with the County project. ERMU has requested that the city fund the trunk improvements at
an estimated cost of $800,000.
Discussion
Typically the city funds water and sewer trunk line expansions through a bond issue with special
assessments levied to the benefiting properties. In this case, the benefiting properties are not being
assessed at this time; they will be assessed as development occurs sometime in the future. The earliest
assessments may occur is 2008 for Liberty Heights if it proceeds on the developer's original schedule.
Since assessments are not being levied now, there is no revenue stream to fund debt service on a bond
issue.
The city has a reserve fund for trunk water and sewer improvements that is intended to be used to fund
future trunk improvements in areas that have already been assessed but may need additional trunk
installed. There is not an ongoing revenue source to fund the reserve; once the funds are used, they will
not be replaced. Because the CR 40 project is a unique situation with trunk water lines being installed
prior to levying assessments and because there is not sufficient cash in the Water Fund to pay for the
improvements, the trunk water and sewer reserve is the best option available to fund the improvements.
The ERMU Commission at its July 11 meeting agreed that if the city funds the improvements, the city
will receive all of the assessment revenue for water trunk fees associated with the installation of this trunk
line. The assessment revenue will be used to repay the trunk water and sewer reserve.
The trunk water and sewer fund will not be available to fund other projects for the water utility so future
provisions need to be made by ERMU to fund other projects such as this. Ideally, trunk lines will be
extended only when development is imminent and assessment revenue is available to pay for the
improvements.
Financial Impact
Use of Trunk water and sewer reserve to fund approximately $800,000 of trunk water improvements.
Attachments
None
S:\Council\Lod\2006\CR40'rrunk Water Improv.doc
Action Requested
The City Council is asked to approve funding trunk water improvements along County Road 40 at a cost
of approximately $800,000 with all trunk water assessments levied to properties benefiting from the
installation of this line to be retained by the city.
Council Action Motion by Second by Vote _
Follow Up
5:\Council\Lori\2006\CR40 Trunk Water Improv.doc