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7.0. SR 07-11-1994 r I ~\.) ( ){ ~1J{' ITEMS 7.1. - 7.3. MEMORANDUM TO: MAYOR & CITY COUNCIL FROM: PAT KLAERS, CITY ADMINISTRATOR DATE: JULY 7, 1994 SUBJECT: SURFACE WATER MANAGEMENT . The City Council may not be able to reach a final decision on the Surface Water Management Program at this one hour 7/11/94 special City Council meeting, but staff needs to present information to the City Council and, at a minimum, receive direction from the Council on how to proceed. The Utilities department will be doing the monthly billing part of this program for the City. The Utilities department had been requested to have the system ready so that the billing could have been implemented on July 1. This obviously has not happened, but the Utilities should be ready whenever we get our figures and dollar amounts approved by the Council. Each month that this monthly billing system is delayed is a loss of about $25,000 in revenues and we need this revenue as a City to payoff our bonds that we have already issued for surface water management projects. The list of surface water management projects is large and seems to be growing with every rain storm. The list will also continue to grow as we take over responsibility for the County ditch system. Already in 1994 we have issued approximately $1 million in debt for the east Highway 169 watershed area. In later 1994 we will probably be issuing close to another $1 million in debt for the Western Area Phase II trunk surface water system. Additionally, in either 1994 or 1995, we will need to do the Main/Evans Avenue project, and in 1995 and beyond we will continue to spend money on the County ditch system, the Western Area Phase III project, and the east Highway 169 project. . The numbers are large and it is very obvious that the City needs funding from the benefited property owners to finance the surface water management projects. Someone has to pay for the system as the City Council has already committed bond funds for improvements. The someone that has to pay for the system is the benefited property owners, and that is the entire City. One of our concerns at the staff level is determining the fair ratio of "who should pay what" to finance the system. The vast majority of the lands in Elk River are vacant and these vacant lands do generate surface water that needs to be managed. However, it seems unlikely that we will be able to obtain any P.O. Box 490 . 13065 Orono Parkway · Elk River, MN 55330 · (612) 441-7420 · Fax: (612) 441-7425 . significant monies from these vacant land owners and most of our revenue will therefore need to be generated from the developed areas (homeowners, business owners, etc.). . The Elk River Surface Water Management Program is composed of two parts: one is the monthly bills to property owners, and the other is a developerlbuilder fee. The monthly user fee will generate the vast majority of our revenues, but the developerslbuilders must also pay into the system. The developerslbuilders finance all of their internal improvements and the fee that they pay the City goes toward the trunk system. Please see the attached material from Terry Maurer on the developerlbuilder fee. Some of this material has previously been distributed to the City Council. Regarding this developerlbuilder fee, we are looking at rates on the order of $50 for non City sewered and watered residential lots, $100 for urban residential lots, and $600 per acre for non residential properties. It must be said that this $600 per acre amount is low. For example, consider the Guardian Angels recent proposal where they are constructing over one acre of hardsurface (building roof and parking lot) and contributed the sum of $600 to the Surface Water Management Program. The work at Main and Evans is estimated to cost over $250,000 and this improvement project is needed based on the development in this drainage area. The Council is encouraged to seriously consider raising this developerlbuilder trunk fee, especially the non residential rate. Regarding the utility monthly fee, please see the attached material from the Finance Director Lori Johnson. A number of options are offered for City Council review. In order to finance the existing $1 million bonds, the City needs to generate approximately $130,000 per year in revenue. If we are to issue another $1 million in 1994 and another $1 million in 1995, the City will need about $390,000 per year to meet our bond obligations. This does not even take into consideration additional improvements to the County ditch system. Clearly the City needs to generate funds to finance these needed improvements, and the only source of funds is, again, the benefited property owners, or the entire City. The proposal as outlined by Lori excludes capturing any revenue from the properties north of County Road 33. This is based on the ten acre zoning in this part of the City. It is assumed that a house on a ten acre parcel should be able to contain all of its water runoff on site. The fees as outlined by Lori for south of County Road 33 are based on zoning and the status of the development on the property. . Also attached for your review is a draft ordinance which approves the Surface Water Management Program. This ordinance is provided by the City Attorney Peter Beck. The fees established in this ordinance will be set by . Council resolution. The ordinance will provide for an appeal process for property owners. We suspect that the vast majority of the appeals will come from the vacant property owners and not from the developed properties. If this is a city-wide fee, much like the garbage program is a city-wide system, we will have to be very firm in our criteria on what constitutes a valid exception to the Surface Water Management Program. Surface water management is a vitally important issue for the City of Elk River. Stafflooks forward to a very productive discussion and receiving input from the City Council on 7/11/94 on how to proceed with the implementation ofthis program. . . 'M~ ImSll T/\G B\GI\EEIL\ Cll'!; ENGINEERING: fN~'i;'ON,WNrAI M:.JNiCfPAI ;LANNING Sir.i.JCrutAl .,fEYING 'ii"HfC rr.,:..t\'.5PORTATJON rEb 2.i !Sg~. February 25, 1994 File: 230-161-75 Mr. Pat Klaers City Administrator City of Elk River 13065 Orono Parl.:way Elk River, MN 55330 RE: STORM SEWER IMPACT FEE Dear Mr. Klaers: This is a follow-up io my February 24, 1994, memo in which I summarized our findings from a survey of several metrOjiolitan communities. In that particular memo, I neglected to include specifics on the impact fees charged by some of the metropolitan communities. As you will recall, the memo indicated that four of the communities we contacted in the metro area do have impact fees. We were able to recontact three of them and get the specifics on . those. The fOllowing table lists the costs in dollars per square foot charged by the Cities of Burnsville, Lakeville, and Lino Lakes. Single Family Multi-Family Churches Corn mercial/lnd ustrial RlIrnwill~ $0.11 0.15 0.15 0.[7 0.14 T ,~k~v;l1~ $0.105 0.116 Linn T ",k~< $0.10 0.147 As you can see from these three communities, a typical single family lot of 10,000 to 15,000 square feet would pay $1,000 to $1,500. On the other end, commercial/industrial property would pay on the order of $6,000 to $7,500 per acre. These rates are roughly 1326EnergyPorkDr.. ten times higher than those being contemplated by the City of Elk River. .' 51. Paul, MN 55108 612-6U-,389 fox: 612.6,.-9U6 9800 5helord Parkway apolis, MN 55441 612-5.6-0432 Fox: 612-5.406398 It is our understanding that these communities still require the developer to build lateral facilities within the developments and the impact fees are used for trunk facilities and/or any oversizing of the intemallateral facilities. . Mr. Pat Klaers February 25, 1994 Page Two I'm sure there are other metropolitan communities that have impact fees similar to these. If you would like, we could do further research on this issue. Please let me know if additional information is needed. Sincere! y, MSA, CONSULTING ENGINEERS T2~ TJM:tp 161.2505.feb . . . Mg r I:tJISI'L1l\G E~GI.\EEIL\ (Nil fNG;N!fRJNG: fNl'liON,\'.fNTAI MUNlCJPA; P:J.NNING STRUCruiAJ . lURVEYING w..mc TiAN5POW,TlON 1326 Energy Pork Drive 51. Poul. MN 55108 612./,44.,389 Fex: 612-6~H..6 _800 5helcrd Porkway ~inneopolisr MN 55441 612.546-0<32 Fox: 612'5~H39a February 24, 1994 File: 230-161-75 Mr. Pat Klaers City Administrator City of Elk River 13065 Orono Parkway Elk River, MN 55330 RE: STORM SEWER IMPACT FEE Dear Mr. Klaers: As requested by the City Council, we have researched various metropolitan communities to determine how they deal with storm sewer charges for improvements off of a project site. The communities we contacted and from whom we received responses back include Shoreview, New Hope, Golden Valley, Lakeville, Bumsville, Brooklyn Park, Lino Lakes, and Roseville. We found that the vast majority of these communities have already implemented a surface water management utility fee. However, they are split on the issue of an impact fee versus trunk storm sewer assessments. The Cities of Shoreview, New Hope, and Golden Valley currently do not have any type of impact fee. However, they do still charge trunk assessments for improvements outside the boundaries of developments. The City of Brooklyn Park is currently in the process of developing a new plan to include a surface water management utility fee and are considering an impact fee as part of that. The Cities of Lakeville, Bumsville, Lino Lakes, and Roseville have impact fees. For the most part, they are charged on a square footage basis with rates varying for different types of development. Interestingly, the City of Lino Lakes has a policy to not assess for storm sewer; therefore, their only method of paying for it is the impact fee charged on a square foot basis. The City of Lakeville has used this approach for over 10 years. If the City of Elk River were to consider an impact fee as discussed at the last meeting, I believe it should be considered not an additional charge, but a charge in lieu of a trunk storm sewer assessment. I believe it is the intent to construct trunk storm sewer facilities utilizing the impact fee and the surface water management utility fee. In most cases, if not all, this type of approach should be less expensive for developers. This is because they will be paying only the impact fee and the potential owners of their development will pay the ongoing surface water management utility fee. . Mr. Pat KJaers February 24, 1994 Page Two As we discussed last Monday, the potential rates for an impact fee would be $50 per unit for rural residential developments, $100 per unit for urban residential developments, and $600 per acre for commercial and industrial properties. These rates would be collected similarly to the park dedication fee, that is, payable prior to recording of the plat. I hope this additional information is helpful. If you have any questions or would like me to do further research, please call. Sincerely, MSA, CONSULTING ENGINEERS ~.;~~c:-u~ Terry J. t;urer, P.E. TJM:lp . 161-240S.fob . . . M~ OO,ISL"L1lNG &IGlSEERS CIVil fNGINff~ING: EN"IONMENTAI MUNICIPAl PlANNING STRUCTURAl SUIVEYING TRAfFJC TRANSPORTATION 1326 1no'9)' Park Drive 51. Pa~, MN 55108 612-644-4389 Fax: 612-644-9446 . 9800 5helard Parkway Minneapolis, /IN 55441 612-546.0432 Fad 12-544-6398 ITEM 7.11. May 10, 1994 File: 230-161-75 Mr. Pat Klaers City Administrator City of Elk River 13065 Orono Parkway Elk River, MN 55330 RE: STORMW A TER IMP ACT FEE Dear Mr. Klaers: As you are aware, in mid-April we sent out letters to seven developers in the City requesting input on a potential stormwater impact fee. The letter that was sent out explained briefly the proposal the City Council is considering and asked for any comments either in writing or by phone. We also indicated if there was a desire a meeting between developers and City staff could be arranged sometime in early May. As of today's date, we have received no comments from any developers, either positive or negative. Since the letters have gone out, we have had reasons to have conversations on other issues with all persons to whom these letters were sent, and none have mentioned the storm water impact fee. Please let me lmow how you would like to proceed with this issue. If there is any additional follow-up with the developers I should be doing, please let me know. Sincerely, MSA, CONSULTING ENGINEERS 0-- Terry J. TJM:tw 161-110S.may Iff{ MEMORANDUM TO: MAYOR & CITY COUNCIL FROM: ALICE HEINECKE, ADM. SECRETARY JULY 8,1994 DATE: SUBJECT: SURFACE WATER MANAGEMENT ORDINANCE City Attorney Peter Beck will be in attendance at Monday night's meeting to present this item. . . P.O. Box 490 · 13065 Orono Parkway · Elk River, MN 55330 · (612) 441-7420 · Fax: (612) 441-7425 I ~\j ( >; !Ii( MEMORANDUM TO: MAYOR & CITY COUNCIL ~ LORI JOHNSON, FINANCE DIRECTOR7f~ JULY 8, 1994 FROM: DATE: SUBJECT: SURFACE WATER MANAGEMENT Several storm sewer projects have been completed in the last several years and additional work is being done in 1994. In 1994, the City issued $1,080,000 in revenue bonds to finance storm drainage projects. Additional projects are anticipated in 1994, 1995, and beyond. In 1994, the Western Area Improvement of approximately $1 million is being discussed as well as improvements to the Main Street/Evans Avenue intersection and, of course, the probable takeover of certain County ditches. . The City is planning on implementing two fees in order to finance storm drainage projects; one is the Impact Fee which will be paid by developers at the time of development, and the second is a Surface Water Management Fee which will be billed to all property owners. At this time, the billing includes only property south of County Road 33. The Council will need to discuss the merits of a city-wide billing versus exempting properties north of County Road 33. The fee is proposed to be billed based on five different classifications. A residential classification which would include residential lots on a per lot basis. Residential would include both City sewer and water and non City sewer and water lots. Other classifications which would be billed based on acreage include commerciallindustrial, multifamily, undeveloped, and government/church. The fee will be billed by Elk River Municipal Utilities and be included on the monthly utility bill. Many of the customers will already be in the Utilities customer base, however there are numerous customers which will need to be added. At this time there are 4,568 parcels which will be billed for Surface Water Management fees. . The attached sheet provides some sample monthly rates for each classification and the amount of annual revenue each of the rates will generate. The bottom portion of the spreadsheet shows the minimum amount of revenue necessary to pay for projects which have already been authorized and the 1994 Western Area Phase II project. This minimum amount does not include funds for Main Street and Evans Avenue or ditches. This minimum amount of $270,000 would not allow for any additional projects until 1998. However, it is almost certain that additional projects will P.O. Box 490 . 13065 Orono Parkway · Elk River, MN 55330 · (612) 441-7420 · Fax: (612) 441-7425 . be authorized. Therefore, it is important that the amount of revenue generated include sufficient revenues to fund at least another $1 million bond issue. This $1 million could be used for the Main and Evans project, ditches, and other ongoing storm drainage projects. A few other things to consider when reviewing the attached spreadsheet: . The rates are expressed in monthly rates and annual revenues generated . There are parcels which may be excluded from the fee. Any deletions or appeals granted would decrease the amount of revenue available. . In addition to the Surface Water Management revenues, the Impact revenues will also be available to pay storm drainage projects. . As was mentioned earlier, the billing for Surface Water Management is to be done by Elk River Municipal Utilities. In order to include this fee on the upcoming bill, all of the information would need to be provided to the Utilities by July 12 as the bills will be printed on the 19th. Given the fact that there are numerous new customers and there are still some software changes to be made, it is almost impossible for the Utilities to accommodate a July billing. Unfortunately, this means the loss of one month's revenue. It is anticipated that all the software changes will be made and the Utilities will be ready to include this on the August billing. The August billing will actually be for July fees. The final issue to be discussed with the Utilities is the amount that will be charged for providing billing services. It is anticipated that the billing will be similar to that for garbage billing. Of course there will be up front costs for programming changes and for initial input of all of the data. In conclusion, the Council must approve Surface Water Management fees within the next two weeks to allow for August billing. The Council had previously committed to billing when the $1,080,000 Storm Sewer Bonds, Series 1994C were issued. Without implementing an adequate fee on a timely basis, funding will not be available for any additional storm sewer projects. . . RESOLUTION 94 - A RESOLUTION OF THE CITY OF ELK RIVER A RESOLUTION ESTABLISHING THE SURFACE WATER MANAGEMENT FEE RATES WHEREAS, the City has decided to restructure the method of financing trunk storm sewer improvements; and, WHEREAS, the new structure will include a Storm Sewer Impact Fee together with a Surface Management Fee; and, WHEREAS, the policy requires the Surface Water Management Fee to be established by resolution. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Elk River, Minnesota: 1. That the Surface Water Management Fees be as follows: Residential $ per lot . Commercial/lndustrial $ per acre Multifamily $ per acre Government/Church $ per acre Undeveloped $ per acre 2. That the minimum Surface Water Management Fee be $ per parcel. BE IT FURTHER RESOLVED that the rates be reviewed and adjusted as necessary to provide sufficient revenue to finance all storm sewer projects. Passed and adopted this 11th day of July, 1994. Henry A. Duitsman, Mayor ATTEST: . Sandra A. Thackeray, City Clerk SURFACE WATER MANAGEMENT FEE . I Classification Government Comm/lnd Residential' Multifamily Undeveloped Units** 1,262.60 270.30 3,084.00 132.11 10,433.06 Monthly Rate 2.00 10.00 0.50 10.00 0.50 Annual Revenue 30,302.40 32,436.00 18,504.00 15,853.20 62,598.36 Monthly Rate 2.50 12.50 1.00 12.50 1.00 Annual Revenue 37,878.00 40,545.00 37,008.00 19,816.50 125,196.72 Monthly Rate 3.00 13.75 1.50 13.75 1.50 Annual Revenue 45,453.60 44,599.50 55,512.00 21,798.15 187,795.08 Monthly Rate 3.50 15.00 2.00 15.00 2.00 Annual Revenue 53,029.20 48,654.00 74,016.00 23,779.80 250,393.44 Monthly Rate 4.00 16.50 2.50 16.50 2.50 Annual Revenue 60,604.80 53,519.40 92,520.00 26,157.78 312,991.80 'Each residence is a unit regardless of acreage. All other charges are based on acreage. "This includes all parcels south of County Road 33. Some parcels (tax forfeit, Historical Society and State of Minnesota) may be deleted decreasing the revenue projected. . PROJECT/BOND FINANCING Internally Funded 1990-1992 (120,000 repaid over 4 years) 1994 Bond for Deerfield IV, Co Road 12/13 & Eligible Past Exp. 1994-1995 Western Area Phase II (1 Million) MIMINUM ANNUAL REVENUE REQUIRED (Based on approximately $2 million in projects) (This would not provide revenue to add any additional projects until 1998 when the $30,000 would be available.) $30,000.00 $120,000.00 $120,000.00 II $270,000.00 II A RESERVE FOR FUTURE PROJECTS AMOUNT SHOULD BE ADDED TO FINANCE MAIN/EVANS, COUNTY DITCHES AND OTHER STORM DRAINAGE PROJECTS. RESERVE FOR FUTURE PROJECTS ANNUAL REVENUE $120,000.00 l $390,000.00 I . 7/8/94 FINANCE STRMSWR2.xLS I SURFACE WATER MANAGEMENT FEE SAMPLE PARCEL BILLS . Monthly Annual Type of Parcel Units Rate Payment Payment Undeveloped 2BO 0.50 $140.00 $1,680.00 Undeveioped 280 1.50 $420.00 $5,040.00 Undeveloped 280 2.00 $560.00 $6,720.00 Undeveloped 280 2.50 $700.00 $8,400.00 Undeveloped 80 0.50 $40.00 $480.00 Undeveloped 80 1.50 $120.00 $1,440.00 Undeveloped 80 2.00 $160.00 $1,920.00 Undeveloped 80 2.50 $200.00 $2,400.00 Residential 1 1.00 $1.00 $12.00 Residential 1 2.50 $2.50 $30.00 Commercial 8 12.50 $100.00 $1,200.00 Commercial B 16.50 $132.00 $1,584.00 Multifamily 5 12.50 $62.50 $750.00 Multifamily 5 16.50 $82.50 $990.00 Government 3 2.00 $6.00 $72.00 Government 3 3.50 $10.50 $126.00 . . 7/8/94 FINANCE STRMSWR2.XLS .,,!:l,H- 7 q4 THU 13:45 MSA ST PAUL P.02 M~ '--~'--'-" .--."-- t:IlNSIII,TINGENGlNRDIS July 7, 1994 File: 230-161-70 CiVil fNClN[I:~ING fNVIWNM(NrA/ MUNJCIPAI PlANNING eiXUCIURAJ 5URVfr"ING T~AHlC If.'ANSPORJArroN 1326 Energy Pari Drive St. Paul. MN 55106 612-644.4369 F",,: 612-6.l.l.9.l46 . 9600 Shdatd Par\way Minneopali., MN 55441 612.5.l6.0A32 Fn" AI?.I..!U398 Honorable Mayor and City Council City of Elk River 13065 Orono Parkway P.O. Box 490 Elk River, MN 55330 RE: STORM SEWER IMPACT FEE POLICY Dear Council Members: As previously discussed, on several occasions, a Storm Sewer Impact Fee in conjunction with a Surface Water Management Fee is being proposed in lieu of trunk storm sewer assessments. Much like the Sewer Availability Charge (SAC) and the Water Availability Charge (WAC), the Storm Sewer Impact Fee is the property's cost for facilities constructed outside of the immediate boundaries of the development. This fee is intended to generate monies, together with the Surface Water Management Fee, for the City to utilize to construct storm sewer facilities which collect runoff from many different developments. By utilizing this method, the actual users of the system will pay for the system. The Storm Sewer Impact Fee would not be charged until the time of development or construction on existing properties. Therefore, the situation of an improvement causing a trunk storm sewer assessment to a large area; a portion of which is developing and a portion of which is undeveloped property should be avoided in the future. We would recommend that the City policy be to collect the Storm Sewer Impact Fee at the time of platting or, in the case of existing lots, at the time of building permit. As previously discussed, the proposed initial rates for the Storm Sewer Impact Fee is $50.00 per lot for rural (non city sewer and water) single family residential lots, $100.00 per lot for urban (city sewer and water) single family residential lots, and $600.00 per acre for other types of property. Since the City has already spent approximately one million dollars on storm sewer within the last twelve to eighteen months and can foresee additional substantial investments with the current developments and potential take over of the county ditch system, we would recommend that the Storm Sewer Impact Fee rate structure have built into it a escalating factor. Attached is a draft resolution, for the consideration of the city council, which would set the 1994 rates at $50/$100/$600 with escalating factors in each of these. In the past discussions, there have been questions as to whether these fees are too much of a burden on potential developments. There are several recent examples of the impact of these fees relative to the amount of runoff generated. We believe that these show that the fee is not a burden and in fact, provides a substantially lower cost to the development than _J_~;_-Z 94 THU 13:47 MSA ST PAUL P.03 . Honorable Mayor and City Council July 7, 1994 Page Two if there were trunk storm sewer assessments. Three examples from recent developments are as follows: 1. The Guardian Angels expansion on Evans Street will create approximately one additional acre of roof top and parking area which are totally impervious. This will generate a substantial amount of increase in runoff that flows directly to the intersection of Main and Evans. Based on this impact fee their cost will be $600. Certainly if the proposed improvements to the Main and Evans intersection would be assessed, the cost to Guardian Angels would be substantially higher. 2. T.J. Properties is currently constructing a commercial building at the intersection of Main Street and Holt Avenue. This construction removed a single family home and replaced it with a commercial building and parking lot. The change has again significantly increased the runoff characteristics of the property. Their development site is slightly under one acre and their contribution to storm sewer improvements, again at Main and Evans, will be approximately $450. The estimated cost of the Main and Evans storm sewer improvements is approximately $250,000. With the relatively small but intense drainage area which contributes runoff to this intersection an assessment of this improvement would be in the range of $2,000 to $3.000 per acre. Much greater than the impact fee of $600 per acre. . 3. The Hillside Crossing Commercial Development is approximately thirteen acres in area and will be charged a $7,800 impact fee, based on $600 per acre. Drainage from this development flows to the regional pond adjacent to Trunk Highway 169 south of 193rd Avenue. As you are aware, the Comprehensive Storm Drainage Plan calls for an outlet from this pond, in the future, all the way down to County Ditch 10 in the Earl Hohlen property. Once again an assessment against Hillside Crossing, for their proportionate share of this outlet pipe, would be substantially greater than $7,800. Once the City Council adopts the Storm Water Impact Fee policy, staff will prepare a concise summary of the policy which can be distributed to all the potential developers in the City. If you have any questions, or comments, regarding this issue I will be in attendance at your July 11, 1994 City Council meeting. . Sincerely, MSA. CONSULTING ENGINEERS ~ .fr/I~8 T~urer, P.E. Attachment 161-0703 Jul . . . RESOLUTION 94-_ A RESOLUTION OF THE CITY OF ELK RIVER A RESOLUTION ESTABLISHING THE STORM SEWER IMPACT FEE RATES WHEREAS, the City has decided to restructure the method of financing trunk storm sewer improvements; and WHEREAS, the new structure will include a Storm Sewer Impact Fee together with a Surface Water Management Fee; and WHEREAS, the policy requires the Storm Sewer Impact Fee to be established by resolution; NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Elk River, Minnesota: 1. The Storm Sewer Impact Fee for all rural (non city sewer and water) single family residential lots shall be $50.00 in 1994. On January lst of each succeeding year the rate shall increase $5.00. 2. The Storm Sewer Impact Fee for all urban (city sewer and water) single family residential lots shall be $100 in 1994. On January 1st of each succeeding year the rate shall increase by $10.00. 3. The Storm Sewer Impact Fee for all non single family residential property shall be $600 per acre in 1994. On January 1st of each succeeding year the rate shall increase by $50.00 per acre. Passed and adopted this 11th day of July, 1994. Henry A. Duitsman, Mayor ATTEST: Sandra A. Thackery, City Clerk