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4.4. SR 10-25-1993 M~ NSULTING ENGINEERS e 13"25 EBerro' Park Drive 81. PJIIII, MN S51118-S2lt2 5It-5(H389 e Fin: 5It-544-9445 9SOO Shelard Parkway, Ste,llt2 Ilinneapolis, M~ 5SW-5151 "t-~5-fl.f32 Fax: 512-~4-li398 ITEM 4.4. October 21, 1993 File: 230-152-10 The Honorable Mayor and City Council City of Elk River 13065 Orono Parkway Elk River, MN 55330 RE: Sanitary Sewer/Water Trunk Assessment Policy Dear Council Members: As you are aware, Mr. Rick Foster has raised issues relative to the city's trunk sanitary sewer and water assessment policy. At the request of the City Administrator, I have prepared this correspondence to give my input on how the City has dealt with this issue in the past. In February 1992, a feasibility study was prepared to discuss the extension of utility service to the area Mr . Foster is concerned about. That report estimated trunk assessment rates in the neighborhood of $1000 to $ll00/acre and water assessment rates anywhere from $2500 to $5700/acre depending upon the improvements assessed. It would not be fair to base the estimated actual cost of trunk sanitary sewer and water improvements in this area on this fea'sibility study. Many things have changed relative to Elk Park Center since the date of this initial study. The only reasonable way to estimate the total cost of improvements in this district would be to wait until the Elk Park Center development plan is approved in preliminary form and a feasibility study dealing with all major issues is authorized. That study will indicate the cost of trunk sewer and water improvements through the Elk Park Center area and will also estimate any lateral benefit those trunk facilities will provide. The estimated cost together with portions of the February 1992 feasibility study estimate would need to be combined to give an accurate reflection of the total cost of trunk improvements, thereby allowing an actual assessment rate per acre to be calculated. I believe Mr. Foster's contention is that the City's assessment policy indicates that trunk sanitary sewer and water assessments will be on a service district basis. He further maintains that the service district that his Hillside Estates and Cherryhill Bluffs projects fall in would have a total trunk sanitary sewer and water assessment less than the $3800/acre that has been charged to the initial developments. I believe that Mr. Foster's interpretation of the written text in the City's assessment manual is correct. However, the question is, whether or not the policy the City has followed in recent trunk utility assessments is in line with the written text e The Honorable Mayor and City Council~ October 21, 1993 Page Two or has been modified. As an example, the City Council is aware that the current assessment policy on reconstruction of residenti!ll streets is to charge a unit cost of $22/front foot. However, the assessment manual's written text would indicate that the reconstruction of residential roads is to be assessed 100% to the abutting property owners. This is just one of many examples throughout the assessment manual of items that have been changed by Council action in the past but hav.e not yet been indicated by a redraft of the entire policy. A similar example would be lateral storm sewer where the City Council has settled in on a policy of assessing $8/front foot. e The first major trunk sanitary sewer and water improvement project the City undertook was the Western Area improvements. This was begun in the late 1980's. Through the various studies, designs, and estimated costs, a rate of $3800/acre was arrived at as the cost needed to fund the entire extension of trunk utilities to the western City limits. We really will not know if this rate is correct until all trunk improvements are completed in the Western Area, which will likely be several years. As other projects have followed the Western Area improvem.ent, the same $3800/acre for trunk sanitary sewer and water have been utilized. Examples of this would include all properties assessed in the first phase of the Western Area improvements, Hillside Estates 1st Addition, Cherryhill Bluffs 1st and 2nd Addition, Meadowvale Heights 1st Addition, and the Nord property north of Meadowvale Heights. This $3800/acre cost has also been presented to the developers of the proposed Elk Park Center. In addition, rough cost estimates of the improvements proposed for the East Highway 10 corridor in the next several years have indicated assessment rates in the neighborhood of $3800/acre. City Council discussion on the East Highway 10 area has seemed to indicate a desire.to utilize this $3800/acre cost for trunk improvements and to have the City fund any cost above that amount, should the assessments not cover the entire project cost. I hope this information is helpful in the City Council's consideration of this issue. I will be in attendance at Monday evening's City Council meeting should you have any further questions. Sincerely, MSA, CONSULTING ENGINEERS ~9>>f~ Terry J. ~~r~;,-p.E. TJM:ds e 152-2109.OCT rei ~'\) ( )j 'l~ FROM: MAYOR & CITY COUNCIL \) PAT KLAERS, CITY ADM~R OCTOBER 21,1993 \J,/::>? i, TO: DATE: SUBJECT: TRUNK ASSESSMENT POLICY A very important City assessment policy is scheduled to be reviewed by the City Council at this 10/25/93 meeting. It may be that the issues involved in this policy are of such a nature that the Council will need to review all the circumstances and defer a decision on changing this policy (if necessary) to a later date. On the other hand, in very practical terms, the issue is relatively simple. The issue is whether or not the City should follow past practice of assessing trunk sewer and water out to benefitted properties at the rate of $3,800 per acre, or whether the City should attempt to assess out the actual costs of these improvements on a district by district basis. (The actual cost of these improvements are not known until long after the assessment process is completed.) e The issue before the Council is not interpreting what is stated in the assessment manual as a policy, as this manual is in need of being updated due to many changes that have been made over the past few years by the City Council. For example, the most recent assessment hearing for the Fresno Street improvement project resulted in yet another City Council initiated change in this Assessment Manual. This policy change relates to the assessment of street benefits based on the actual length of the surface not on the length of the right-of-way. Similar to street or storm sewer improvements, it is believed that all properties should pay the same fair and equitable amount for the benefit of trunk sewer and water. In the western area project, it was determined that the cost for the trunk system would be approximately $3,800 per acre. This amount has since been the standard that has been used throughout the community in actual projects and in planned future projects (i.e., East Highway 10). The City also has standard assessment rates for street and storm sewer benefits. This $3,800 trunk sewer and consideration that the trunk line lateral benefit. If this lateral consideration, the trunk costs would basis. water amount took into sometimes also provides benefit was not taken into be higher on a per acre e Mr. Foster is presenting the case that in each district the exact amount of the trunk system should be assessed and if this P.O. Box 490 · 13065 Orono Parkway · Elk River, MN 55330 · (612) 441-7420 · Fax: (612) 441-7425 e e . is below the $3,800 amount, then these property owners should receive reimbursement after the project area has been completed. In the case of the western area improvement project, this would be very difficult and a great deal of negotiations would be necessary in order to determine precisely what is included within the trunk system (i.e., sanitary sewer lift stations, wells, towers, etc.). Also, the project in this district will not be completed for a number of years until the trunk system gets out to Waco Street. If the cost is lower than $3,800 per acre, the City would then have to mail a rebate (plus interest) to all the property owners in the western area that received a trunk assessment. On the other side of the issue, I don't believe the City or the developer would find it reasonable to reassess their property if the actual cost of trunk sewer and water was $4,500 per acre when the original assessment amount was $3,800. Currently the City believes that $3,800 per acre is reasonably accurate for the cost of trunk sewer and water and that this amount can be justified through the assessment process. We don't believe this amount generates a profit, and if this amount is short, we hope that assessment prepayments will cover any shortfalls. We have used this amount in the past and are planning on using this amount in the future and to change this policy, based on the concerns of the developer in one particular district, may have significant ramifications on all future projects.