Sewer Water Connection Memo_Gaffron

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Dunn& McCuskey S&W Charges Analysis April 15,2008/April 7,2009 Page 2 The Development Agreement also stated that "all applicable City of Long Lake connection fees and charges associated with the sewer and water system serving the development shall be paid to Long Lake by the Developer. Developer shall be responsible for any charges to the City of Orono from the City of Long Lake in relation to the provision of municipal sewer and water from Long Lake." On February 14, 2005 Tom Goodrum on behalf of Creekside in Orono LLC paid the City of Long Lake via check #10855 the amount of$3 7,800 for the seven sewer & water units for the seven new lots within the Plat of Creekside in Orono, based on the following rates: Water: Tap fee per unit $1600. Hookup fee per unit $1100. Sewer: Tap fee per hookup $1500. Hookup fee per unit $1200. Total S&W Fees per unit $�800. The Development Agreement also stated "As part of the installation of sanitary sewer and water improvements per the approved plans, Developer shall install two sewer and two water stubs for future service to the Dunn property and one sewer and one water stub for future service to the McCuskey property." No connection fees were paid to Long Lake on behalf of Dunn or McCuskey. Those Long Lake fees would be due at the time of connection, at whatever rate Long Lake has in effect at the time of connection. ANALYSIS Is an Orono Connection Fee Warranted? The vast majority of City of Orono sewer and water systems are the result of the City retrofitting existing neighborhoods with sewer and water lines, assessing the costs of construction back to the benefitin� property owners, sometimes partially subsidized by the general tax levy. It is a relatively recent phenomenon in Orono that sewer and water extensions have been installed for new development at the expense of a developer, and even more recent that such developer-installed systems have the potential to directly serve adjacent properties without an intervening City project. Eaamples include Glendale Cove and Creekside. For City-driven projects, Orono has normally established connection fees for new connections to an existing City project equivalent to the original per-unit cost of the given project,plus a� annual inflation factor. For instance, a property connecting in 2008 to the 1992 Stubbs Bay NE project that was originally assessed $12,630 per unit now would pay $19,750 as a connection charge if it had never been assessed. For developer-driven projects, the City has not formally established a policy regarding appropriate connection fees for additional direct connections of properties outside the subdivision. There is no precedent direction on this. However, the basis for the CiTy charging