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MEMORANDUM <br />TO: CITY COUNCIL <br />FROM: ADAM T. EDWARDS, PE <br />SUBJECT: NORTHERN UTILITITIES EXPANSION FUNDING <br />DATE: APRIL 27, 2014 <br />______________________________________________________________________________ <br />References: <br />2008 -2013 Community Management Plan <br />2014 Orono Fee Schedule <br />List of Exhibits: <br />A. Water Extension Estimated Costs and Fees <br />B. Water Extension Map <br />C. Sewer Extension Map <br />1.Situation. Developers have begun to show interest in developing properties along the western <br />portion of CSAH 112. The Community Management Plan (CMP) calls for these areas to be serviced with <br />municipal water and sanitary sewer. Currently water and sewer service only extends westward to the <br />corner of Old Crystal bay Road and CSAH 112. Two policy issues need to be resolved prior to the <br />extension of utilities along the CSAH 112 Corridor. <br />2.Issue 1: Cost Distribution Methodology. How should the city distribute the cost of the utility <br />expansion to the properties served? A rough order of magnitude example for the water system expansion <br />is at exhibits A and B. <br />a.Option 1A. Use the maximum # of units of each development area to calculate a cost for each <br />development area. With this option properties pay proportionally based on their development potential. <br />b.Option 1B. Use Option 1A but divide up pipeline projects to better associate specific portions of <br />a project with the benefiting property. With this option properties that are downstream on waterlines or <br />upstream on sanitary sewer pay proportionally more. This method has been used by the city in the past <br />for Sanitary sewer Improvements (Exhibit C) <br />c.Option 1C. Require each property to pay for the cost to run the respective utility across their <br />frontage. This option is often used in utility project that are built out sequentially and when the usage and <br />frontages are relatively uniform throughout the project area. Neither of these conditions exist for this <br />project area. <br />3.Issue 2: Funding Mechanism. How should the projects be funded? This question is especially <br />pertinent in this case as it is likely that the east and west ends of the expansion area will develop first with <br />the middle section not developing for years or decades. <br />a.Option 2A. This option would have the City fund the projects and then charge the developers for <br />their portion as each development occurs. This option is the simplest to administer but will result in the <br />City paying for sections of the project that may not be reimbursed for many years. <br />Page 22 of 49 <br />Item 4