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HomeMy WebLinkAboutSP August 11, 1981 · ~ 01 ANDOVER SPECIAL CITY COUNCIL MEETING - AUGUST 11, 1981 MINUTES A Special Meeting of the Andover City Council was called to order by Acting Mayor Kenneth Ortte1 on August 11, 1981, 7:34 p.m., at the Andover City Hall, 1685 Crosstown Boulevard NW for the purpose of discussing the proposed trunk sewer assessment policy and the engineer for the 1981-2 project. Councilmen present: Jacobson, Lachinski, Peach Councilman absent: Mayor Windschit1 Also present: City Clerk, P. K. Lindquist; Financial Advisor from Springsted, King Forness; TKDA Engineers, Dewey Kasma, John Davidson, and Mark Schumacher. City Engineer, Larry Winner, was present following the recess. DISCUSSION OF PROPOSED TRUNK SEWER ASSESSMENT POLICY Mr. Forness stated they changed the proposal to the extent that they ran the figures at a higher rate on the City's investment to determine the constant rate of investment that would make it unnecessary to have any new connections in the '75 and '76 project areas to meet the debt service requirements of the bond issue. Then they factored that in to the new area and determined what the refund would be to keep it on a fair basis. If connection charges are not needed from the old area to service that debt, then the only thing that is needed from those connection charges is enough to do the proposal and the cost of recovering from previously made tax levies, which becomes $150 a unit. Mr. Forness felt assured that the figure of $900 per acre in the new area is sufficient and realistic, that $600 of that amount would be sufficient to cover the costs of the installation of the trunk line in the southwest area project, and the remaining $300 is for the recovery of the previous levies, administrative costs, and to make refunds in the old area. As long as at least 8.9 percent is received on the investment of that fund balance and all assessments levied in that area are paid on time and continue to be, then that issue washes itself out without any dependence on connection charges. The variable is that the investment income for the next 20 years is not known. Any surpluses collected from additional connection charges and investment will be accrued and will be used as a refund to those who made the $1,000 connection charge initially. At a certain point when it can be actuari1y shown enough funds have been accruedc to retire the rest of the bond, then the assessment income plus connection services income can be diverted to other uses. He suggested the City obtain a legal opinion as to what uses those funds can then be used for. Mr. Forness explained that in the old area, he is recommending a connection charge of $450 per unit, which will provide $150 from that area to be put into the kitty for refunds. The rate at which the connection charge income is received will determine the rate at which the refund kitty can be assembled. Discussion noted that the $900 an acre assessment proposed'~n the new area is for the trunk sewer assessment only; that the laterals, SAC charge, etc." are additional costs involved but are not a part of this evening's discussion. The area assessment will be received now whether the lateral system is installed or not, but service is available. Discussion was then on the estimated units per acre on future development; that the $900 per acre is based on two units per gross acre, but that the construction of multiples increases the number of units per acre. Discussion was on the suggestion that a connection charge be made per unit in addition to the acreage charge to take care of the density question, the feasibility of such a charge, the logistics of implementing it, and how such a charge would impact the proposed area assessment in the southwest area. H' _,.._, Special City Council Meeting August 11, 1981 - Minutes Page 2 Mr. Forness stated that typically multiple dwellings do not put the same demands on a sewer system that a single fami 1y residence does, and most communities adjust that charge based on some factor of a single-family residence. Mr. Davidson stated that normally multiples do not pay the full SAC charge per unit, but use some multiplier of the single-family residence, though he did not have that table with him. Mr~ Forness then reviewed Exhibit VI, stating that the $600 per acre assessment would provide the cash flow to service the debt being spread this fall; but the $300 per acre could be a $150 per unit connection charge, based on two units per acre, and its not necessary for debt service on the southwest area issue. And as long as investment income on the old fund balance stays at a level of at least the 7.9 percent and the aerial mapping levy is made, then there is no immediate dependence on the $150 connection charge. The speed at which those connection charges will come in will determine the speed at which the City is able to recover from the levies previously made and administrative costs and assemble the refund kitty. Doing it all as an assessment starts the cash flow on all of it now, but it does inhibit receiving more from multiple dwelling development. In discussion of the undeveloped land in the old area, Mr. Forness stated they considered the option of levying an assessment against those undeveloped areas on a per- acre basis, but determined it would be an extremely difficult action to justify. He explained that the $450 per unit connection charge recommended for the old area is based on the $900 an acre in the new area at two units per acre development. He felt it is possible to equalize the charge to the old area by calculating the square footage of each lot and assessing the connection charge based on the square footage; however, he felt that would be a bookkeeping nightmare and would not recommend it. The present ordinance calls for a unit charge in the old area; and he recommended it remain that way, only use the figure of $450 per unit from now on. He also felt a compromise would be to leave the $450 per unit connection charge in the old area, which he felt was a figure that could be justified, and to adopt the policy the MWWC uses for the SAC charge for the adjusted charge for multiples. There was then a lengthy discussion on the pros and cons of assessing the entire $900 per acre in the southwest area now or assessing just $600 per acre in that area now and charging a connection charge per unit, either $150 per unit or some fraction of that amount for multiple dwellings. Arguments for assessing $900 per acre now were that it would begin collecting all funds now rather than waiting for the connection charge, which would be to build up the refund kitty; that actual costs of the trunk sewer extension amounts to $600 an acre and the additional funds generated by charging connection charges per unit on multiples may be excessive and a profit should not be realized; that there are no guarantees as to how many units will be developed and when the connection charges will be realized; that the City doesn't assess for trunk sewer extension unless the property has availability, to that service and it was felt that the extension to the southwest area was to encourage development in that area; and that projections would not have to be run periodically utilizing speculative figures on development to determine the status of the fund, creating some of the same problems that were created by the connection charge in the old area. Arguments for assessing less than $900 per acre now and charging a per unit connection charge were that it would collect an equitable amount from multiple dwellings; it would provide a lower assessment at this time to those 5-, 10-, or 20-acre lots in the area where the owner does not wish to be forced into developing the land because of the high trunk sewer assessment but it would still encourage the developer to develop his land; that the $600 per acre assessed now would provide the funds to meet the debt service on the new bond; and that the funds from assessing $900 per acre would not be coming in any faster than if $600 an acre were assessed and connection charges made per unit. f' - ~ --- ". . Special City Council Meeting August 11, 1981 - Minutes Page 3 Discussion was also on various proposals using different figures for the area assessment and connection charges per unit in the new area and on equalizing a connection charge in the old area, after which the following motions were made and discussed. MOTION by Jacobson, Seconded by Ortte1, that we set the area assessment rate for the 1980-3, which is commonly called the Southwest Area, rate on an acre basis be set at $900 and a connection surcharge be placed of $50 each unit for four or more units on one acre. DISCUSSION: There was some question as to whether the surcharge should be on units of four or more per acre or per lot, discussing the logistics of each and how it relates to equalizing the amount for the old area. Mr. Forness also stated that to assess $900 an acre but to use $300 of it for the refund kitty in the old area, two assessment rolls will have to be spread -- one for the $600 an acre to be used to retire the debt fund in the new area and one for the $300 recovery in the old area. By using the figures of $800 an acre assessment and $100 per unit connection charge, the bookkeeping would mean one assessment roll of $600, one assessment roll for the remaining $200 being assessed plus the collection of the $100 connection charge, which complicates the bookkeeping. At this point, he tends to lean toward the $600 an acre assessment, plus $150 per unit connection charge with some adjustment off that amount for multiples. If the choice is to assess $900 an acre and a connection surcharge above that, he suggested the amount be left open and be based on the same formula as the SAC charges. Councilman Jacobson CHANGED MOTION to instead of saying $50 per acre, leave that open and that factor to be determined by the engineering firm and to tell us what that factor sþould be; with that factor to be applied per unit over one. DISCUSSION: The intent is that an additional charge would be made for anything over one unit. The $900 per acre will be assessed this fall for the trunk sewer extension and would include one unit per parcel. Additional units over a single family home on that parcel will require the payment of the surcharge factor. Discussion returned to the suggestion of assessing $600 per acre in the new area and collecting a connection charge per unit with some factor for multiples, repeating arguments for and against it. Discussion was also on applying the charges as made in the motion to various instances and determining an equitable charge in the old area. It was also noted that it would make it simp1ier for assessment purposes to consider the surcharge as a separate ordinance and attached to the SAC charges, and to deal only with the acre assessment in the new area and the $450 connection charge in the old area. Councilmen Ortte1 and Jacobson, WITHDREW the Second and the Motion. MOTION by Peach, Seconded by Jacobson, that the Southwest Area Improvement be assessed at a rate of $600 per acre plus $150 per unit charge, and the SAC adjustment on the formula is to be used for all property that is not single-family dwellings. Motion carried unanimously. Recess at 9:47; reconvenedat9:58 p.m. Discussion was then on equalizing the connection charge in the old area. Mr. Forness felt that the entire $450 should not be adjusted, but the problem would be having to equate the other $300 to the square footage of the parcel coming in for a permit. He suggested that the $450 per unit connection charge be used in the old area, and anything other than a single-family permit would be factored on the same SAC formula applied against the entire $450. Discussion noted that the connection charge would be escalated at 5 percent a year. Though the connection charge in the old area may be somewhat higher than the per-acre assessment and connection charge in the southwest area, that undeveloped land in the old area has not had to pay anything for the sewer trunk line; yet it has been available for five to six years. Simply applying the per-unit connection charge would also simplify the administrative work involved. Special City Council Meeting August 11, 1981 - Minutes Page 4 MOTION by Lachinski, Seconded by Peach, that the connection charge for the 1975 and 1976 sewer projects be changed to $450 per unit adjusted for other than single-family units as per the SAC formula to be determined by the TKDA engineers, and that the $450 be adjusted annually based on a 5 percent per year escalation factor USin9 1980 as the base year for that calculation. Motion carried unanimously. MOTION by Jacobson, Seconded by Peach, that we ask the City Clerk to prepare resolutions for the Council based upon the discussion and the motions made by the Council tonight and present them at the next regular scheduled meeting of the Council. Motion carried unanimously. There was a brief discussion with the TKDA engineers on the water assessment in the southwest area. The suggestion was that the same princples just established for the sanitary sewer be used for the water assessment; that some fund be built up for future expansion; or that an assessment be made based on the ultimate system of some limited size. The matter is to be discussed again at the August 18, 1981, Council meeting. Discussion was then on the fees for the proposed trunk sewer assessment and connection charge refund policy. Mr. Forness stated that .the $15,000 is a figure they plugged in when they began the study because it was felt that the costs for doing this ought to be recovered. He expected that the total costs will be less than $15,000, it being based essentially on the time and effort put in by both Springsted and TKDA. At the time the work was commissioned, a specific figure was not mentioned. The cost will be recovered through the connection charge, of which the figure of $3.96 'comes back to the City to pay for the cost of doing this study. Council noted for future consideration that they be advised of the costs involved. Mr. Forness stated there are a lot of other little things that need to be cleaned up to put this assessment into effect. He recommended that the Resolution prepared by the Clerk include all of the things necessary to accomplish it -- to establish the funds into which the connection charge income will go, the three accounts within that fund, plus establish a separation of the sewer usages into two categories. Council verbally agreed to the suggestion. SMITH'S ROLLING OAKS PROJECT The Clerk stated she has verbally checked with Bonestroo and TKDA as to their costs for completing the Smith's Rolling Oaks project for staking and inspections. Bonestroo stated a price of approximately $7,000 and TKDA stated a price of approximately $8,000; and she explained the amount of time and what they would do for that price. The Clerk explained that 8 percent of the project was budgeted for engineering; but if the engineering costs to date are projected to the end of the project, total engineering would would be approximately 13 percent, that being based on the consulting engineering firms' estimate of utilizing approximately 40 to 45 percent of the engineering costs through the plans and specifications stage. It was agreed by the Council to take no action until after the meeting of August 18 when the contract will be awarded and more accurate costs will be known. MOTION by Peach, Seconded by Jacobson, to adjourn. Motion carried unanimously. Meeting adjourned at 10:26 p.m. Respectfu lly submitted ,__~ \~ ~;=?~ ~'- C,--'o f' Ma e11a A. Peach Recording Secretary ->. ~~ f'