7.0. SR 07-11-1994
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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.
.
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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
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$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.
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51. Paul, MN 55108
612-6U-,389
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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
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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
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Terry J. t;urer, P.E.
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612-546.0432
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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
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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
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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
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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
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File: 230-161-70
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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
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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