08-22-1994 Council Packet - Laserfiche WebLink

Home Browse Search

r TO: FROM: Mayor and City Council Ron Moorse, City Administrator DATE: August 8, 1994 SUBJECT: Reconveyance of MWCC Interceptor to the City Background nf Interceptor and Reconveyanc e In 1976 the MWCC purchased a city sewer line to be used as an interceptor to serve other cities as well as to serve properties in Orono. The MWCC agreed to pay the city for the sewer line over a period of 30 years. These payments have been received as credits toward the MWCC sewer treatment charges. In 1989 the MWCC constructed a new interceptor to take the place of the former interceptor. As part of this project the MWCC wanted to reconvey the former interceptor back to the city of Orono since the majority of the line now served only Orono. Orono agreed to accept the line and to accept responsibility for the maintenance of the line. However, the city indicated it would not pay the MWCC for the line. Payment for Reconveved Interceptor Subsequent to this agreement the MWCC and Metropolitan Council adopted a policy that required those cities receiving reconveyed interceptors to pay the MWCC for the reconveyed lines. Based on this policy the MWCC calculated that the city was responsible for paying $131,000 for the reconveyed sewer line. The city’s response was that the agreement regarding the new interceptor indicated the city would not pay for the reconveyed interceptor. The Metropolitan Council and MWCC have now reevaluated their position regarding payment for the reconveyed interceptor. They have indicated the city does not need to pay for the reconveyed interceptor. New MWCC Proposal The MWCC has principal and interest payments remaining for the initial purchase of the former interceptor. These payments run through 2006. The MWCC believes it is not reasonable that they should continue to pay the full principal and interest payment when they are no longer usi^ the interceptor. The MWCC has proposed that the remaining payment to the city be reduced by the portion of the pipe capacity that is needed to serve Orono (53.79%). I have attached a spreadsheet that shows the amount by which these payments would teredu^ effective back to 1990. The annual reduction in principal payments ranges from $4,346 m lVW to $8,145 in 2006. The total principal payment reduction over a 17 year penod would be $103,006. The spreadsheet also shows that even with the proposed adjustment the MWCC would pay the city a total of principal and interest payments of $3^,386 between the years 1990 and 2006. Although it would be preferable to contmue to receive the full principal and interest payments from the MWCC, the fact that ^e sewer me reconveyed to the city and is currently being used by the city as part of its oca sewer n makes the MWCC’s position a reasonable one.