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Connection Charges Related to the 1989 Highway 12 Water and Sewer Improvement Project January 27, 2000 Page 2 The comparison of the revenues generated from the various properties under each connection charge option is shown below. Property Per Unit Charge Per Acre Charge Medium Density Residential $869,000 $520,000 Commercial $290,000 $221,000 Orono Ice Arena $120,000 S58,500 Orono Schools $595,840 S390,000 Total $1,874,840 $1,189,500 As the above table shows,while the Orono Schools and Orono Ice Arena connection charges would be reduced significantly,the most substantial reduction is related to the medium density residential property; which is the property on which the City is most interested in facilitating a quality development. Potential Connection Charge Credits In 1967, the City installed sewer and water lines along Highway 12 to serve the Orono Schools and the City's industrial district. The project also provided water and sewer facilities to serve the area north of Highway 12 between Willow Drive and Old Crystal Bay Road in the event the MUSA was expanded to include that property. This property was assessed for the water and sewer project in the total amount of$44,146 based on both a cost-per-lineal-foot and a cost-per-unit. Although the 1989 water and sewer project provided additional facilities to enable water and sewer service to the property between Willow Drive and Old Crystal Bay Road, the property owners may claim a credit against the 1989 connection charges based on the assessment paid for the 1967 project. The amount of credit they could claim could be as high as 30 units since that is the number of units allowed by the zoning in 1967. If they received a credit for 30 units, it would result in a loss of $290,850 in connection charge revenue. The City would argue that the 1989 project provided increased capacity without which the 1967 water and sewer facilities could not have been used by the property. Therefore, the property owners should not receive any credit. The Council may want to take into account the potential credit against the connection charges in determining any changes to be made in the current connection charge amounts. Staff will try to further clarify the potential for credits if the Council determines the connection charge amounts should be changed.