HomeMy WebLinkAboutSewer Water Connection Memo_Gaffron ,, MEMORANDLTM C.Work Session 4-14-09
To: Mayor & Council
Bill Wells, City Administrator
From: Mike Gaffron, Asst. City Administrator
Date: April 13, 2009
Subject: Sewer and Water Connection Charges:
Dunn, 20 Brown Road South & McCuskey, 130 Brown Road South
SYNOPSIS
As part of the municipal sanitary sewer constructed by the developer of the Creekside In
Orono residential subdivision, sewer stubs were install�d to serve the properties of Mary
Dunn (20 Brown South, 2 stubs) and David McCuskey (130 Brown Road South, 1 stub) at
their individual requests. To our knowledge, neither Dunn nar McCuskey paid the developer
(Henry Lazniarz) for these future connection points. However, Dunn may have concluded
that her stubs were at no cost, in partial payment for the road easement she granted Lazniarz.
We don't know the specifics of her agreement with Lazniarz.
The sewer system serving Creekside (7 lots) as well as Dunn & McCuskey, discharges to the
Long Lake sewer system at Apple Glen Road. Lazniarz paid Long Lake the Long Lake
sewer and water connection charges of$5800 per unit for each of his 7 lots, but did not pay
such connection charges for the Dunn & McCuskey stubs.
Although the Creekside development is not yet complete or ready for construction of new
homes, Mrs. Dunn is requesting that Orono provide her with the dollar amount of the �
connection charges she must pay to connect to the sewer and water. In order to establish an
appropriate amount for such charges, staff has come up with a formula that seems fair and
reasonable, but requires Council input. The formula takes into account: 1) the estimated per
unit cos�to the developer of installing the sewer and water systems and access to them; 2) the
additional costs of connection fees that Long Lake will expect to collect from Orono for
these additional connections.
There are a number of questions that need to be answered in relation to this issue:
L What connection fees will Long Lake will be chargin� for these connections? Given
the lack of a joint S&W Agreement with Long Lake after 5 years of negotiations,
what is the best way to approach this without causing an undesirable outcome?
2. Does Council concur with staff regarding the method being used to determine a fair
connection charge, or the applicability of the charge in this or similar situations?
3. What are the expectations of Dunn regarding these fees?
Additional background on the following pages may provide some insight as to why this is not
as simple as we'd like it to be.
Dunn & McCuskey S&W Charges Analysis
April 13,2009
Page 2 -
BACKGROUND
Fox Ridge Sewer Conneetion Option. As part of the Fox Rid�e sewer project in 2000, a
pressure sewer line was installed alonb the west side of Brown Road from Fox Ridge Road to
Watertown Road. Property owners along the west side of Brown Road were asked if they
wanted to participate in the project. A few did, most did not. Some of those who did not were
provided with a stub access point along that pressure line for future connection, with the idea
that they would pay the ``going rate" connection charge at the time they connected. That rate
has climbed to $21,140 per unit for 2009 for any new connections not previously assessed.
This is the rate that Dunn or McCuskey would pay for a sewer connection to the Fox Ridge
system if the Creekside subdivision had not happened.
Properties on the east side of Brown Road were not provided with connection stubs; although
they were offered the opportunity to connect to the Fox Ridge project, they were also advised
that a gravity line serving the property east of them may be in the offinb, which would allow
for future gravity connection. To serve either the Dunn property or the McCuskey property
from the Brown Road pressure line would require boring service lines under Brown Road
and installation of individual "E-1" pump stations for each property. The total cost to the
homeowner for connection charges, SAC charge, permits, and actual pump station
installation and connection to the sewer, would potentially exceed $30,000.
Creekside Connection Option. The Dunn and McCuskey properties were subsequently each
provided connection stubs to the Creekside gravity sewer system. That gravity system was
completely paid for by the developer, and it discharges directly to the Lon� Lake sewer
� system at the south end of Apple Glen Road at the north end of the subdivision. Municipal
water is also provided by a parallel line from Long Lake.
The Development Agreement between the City of Orono and Creekside in Orono LLC
establishes that "upon completion by the developer and acceptance by the City of Orono, the
sanitary sewer and water facilities within Outlot B and within the 30' utility easement of Lot
7, shall become the property of the City of Orono and become part of the City of Orono
utility system, to be operated and maintained by the City of Orono."
The Development Agreement also stated that `'all applicable City of Long Lake connection
fees and char�es associated with the sewer and water system serving the development shall
be paid to Lona Lake by the Developer. Developer shall be responsible for any charbes to the
City of Orono from the City of Long Lake in relation to the provision of municipal sewer and
water from Lon� Lake."
On February 14, 2005 Tom Goodrum on behalf of Creekside in Orono LLC paid the City of
Lonb Lake via check #10855 the amount of�37,800 for the seven sewer & water units for
the seven new lots within the Plat of Creekside in Orono, based on the followinb 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 $5800.
Dunn & McCuskey S&W Charges Anal,ysis
April 13,2009
Page 3
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 far 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 benefiting 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. Examples
include Glendale Cove and Creekside.
Far City-constructed 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 an 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 i�had never been assessed.
For developer-constructed 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 a connection fee is largely an issue of fairness and equity. No property should
be afforded the privilege of connecting to the sewer sy�stem without payinb its reasonable
share of the costs to build and maintain that system. In the typical case where the cost of a
"retrofit" sewer project is assessed equally to all benefitin� properties, a nearby property not
originally assessed should pay its share of those oribinal costs at the time it does connect; it
should not be allowed to connect at no cost to a system that others have paid for.
In the case of a new development, where the developer builds a sewer system to serve new
homes, the developer surely adds a portion of the cost of that sewer construction to the price
of each lot. Should those lot buyers be subsidizing the sewer provided to properties not part
of that subdivision? Probably not - outside properties connecting to that system should be
charged a fair and equitable connection fee. However, the City as recipient of such
connection fee has historically not redistributed it among the original subdivision lot owners.
Dunn & McCuskey S&W Charges Analysis
April 13,2009
Page 4
Possible Dunn Ezpectations. There is potentiall}� an eapectation by Dunn that no City of
Orono connection fee will be due for her connections. Remember that Lazniarz had to
purchase an easement from Dunn for access to the Creekside Development over a portion of
Dunn's property (Tract G, RLS 352). In correspondence between MPG and Dunn's attorney
Jeremy Steiner in 2004, Steiner asked that the Developers Agreement include language
stating that 1) two sewer and water stubs will be installed along Dunn's lot line and that 2)
Dunn will not be assessed for City water and sewer. My response was:
L The preliminary plat approval resolution acknowiedges WDD's (FIenry Lazniarz's)
intent to provide sewer and water service to the Dunn property, but does not require
that WDD provide such service. Assuming that WDD agrees to `the installation of two
water and rivo sewer service stubs to serve the Dunn property' becoming a requirement,
the Citv will not object to this being added as a condition of the Developer's Agreement.
2. In terms of assessment for the installation, the City of Orono will require that WDD
bears the entire cost of construction of all improvements including sewer, water, road
and utilities. WDD will upon acceptance by the Cit��, turn over the sewer and water
facilities to the City of Orono, and they will become part of the Orono utility system, to
be operated by Orono.
However, we are assuming that the City of Long Lake will charge WDD (or will etcarge
Orono) some form of `per unit connection charge' for the privilege of connecting into
the Long Lake sewer and water systems. Our expectation, pending completion of a
formal agreement between the two cities, is that WDD will pay Long Lake directly for
the connection charges for his seven units, but I have no knowledge of whether he will
pay the connection charge(s) for Dunn. I dou't know when Dunn will make use of the
two units. I don't know whether Long Lake will expect up-front payment of a
connection charge for all potential units (we think that there might be as many as ll
total units over the long term,including WDD's seven,Dunn's two,and one each for the
properties at 130 and 140 Brown Road), or whether Long Lake will only collect now for
the 7 initial units and collect for future units as thev are connected. And I don't know
whether Long Lake would bill those in the future to the individual users or would
expect that Orono pay whatever connection charge is due (in which case Orono would
bill or assess this to the individual property being connected at that time).
It is clear that all the connection charge issues must be understood and conclusions
reached before the Developer's Agreement is finalized. Greg Gappa, Orono's Director
of Public Services, is working with Long Lake to finalize a sewer and water agreement.
tintil the connection charge issue is resolved, I do not believe Orono can commit that
"the Dunn property will not be assessed for the City water and sanitary sewer
improvements for the Creekside in Orono development". However, if you conclude
that `installation of the improvements' is a separate issue from `assessment for any
connection charges that Long Lake may impose on Dunn or the City of Orono', then I
believe we can craft language that gives you the desired confirmation.
Language clarifying the assessment issues ultimately was not included in the Developers
Agreement. The Final Plat Resolution conditions as well as the Developers Agreement
contain only the following with regard to sewer and water s��stems:
, ' ,
Dunn & McCuskey S&W Charges Analysis
April l3,2009
Page�
6. Sanitan� Sewer and Water Svstems. All applicable Cit3� 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.
Upon completion by the Developer and acceptance by the CiTy of Orono, the sanitary
sewer and water faci►ities within Outlot B and within the 30' utility easement of Lot 7,
shall become part of the City of Orono utility system, to be operated and maintained by
the City of Orono.
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 propertp and 1 sewer and 1 water stub for future service to the McCuskey
property.
No discussion was included about what fees Dunn or McCuskey might be charged by Orono.
Williamson Analysis. There is one recent instance where staff did determine a connection
fee for an existing house that was part of the new subdivision by virtue of having sold part of
its land to create the subdivision. That property is the Williamson house at 190 N. Willow,
which became part of the Glendale Cove subdivision.
The Williamsons initially requested a sewer connection to the Hackberry sewer in 2004, prior
to the Glendale Cove application. At that time the City advised them that their actual costs of
connection would likely be reduced by waiting until the adjoining property on the east side of
Willow Drive was developed. This would avoid a long connection route and�crossinb of
Willow with an individual service. Shortly thereafter they sold a portion of their property to
Steve Bohl who as part of the development of Glendale Cove in 2006-2007 installed sewer
and water lines as well as a road, stormwater facilities and other improvements to serve 8
new homes. Those sewer and water lines became the property of the City, and the City
maintains them as part of its system. As part of that project, Bohl installed municipal sewer
and water stubs to serve the Williamson property.
In 2004 we had advised the Williamsons that a sewer connection fee based on the 1973-1
Hackberry project would be due. Because the Glendale Cove project subsequently included
extension of sewer laterals and water mains that the City would then own. staff determined it
would be most consistent with City policy to establish sewer and water connection charges
for the Williamson property (and any other existing homes that would connect to the
Glendale Cove lateral system) based solely on the costs of the Glendale Cove project,
disregarding the Hackberry project. The 8 new lots in the subdivision would not be subject to
the Orono connection charge because their developer paid the entire costs of installation of
that system.
Per discussio�s with City Engineer Tom Kellogg and City Administrator Ron Moorse in late
2007, a formula was established in for assigning connection fees for the Glendale Cove
sewer and water system, based on the prorated line item costs of sewer or water facilities
installation plus 1/2 the cost of providing basic access for utility maintenance. Cost figures
Dunn & McCuskey S&W Charges Analysis ,
April 13,2009
Page 6
were based on the City Engineer's Cost Estimate for Financial Guarantee dated June 12,
2006. The formulas for sewer and water connection charges were as follows:
Williamson - Sewer Connection Fee Formula:
l) Sanitary Sewer Improvements: $�5,450 $35,450
2) 1/2 of Base maintenance roadway costs
$10.000 common excavation
2,3�0 subgrade excavation
11,440 Class V Base
5,000 fabric
$28J90 x 0.5 14,395
3) Restoration 4,000 c.y. @ $2.50/c.y.a 0.5 5.000
$54,845
Sewer Connection Fee= $54,845 /9 base dwelling units = �6,094/unit
Williamson - Water Connection Fee Formula:
1) Water Main Improvements: $47,?55 �47,255
2) 1/2 of Base maintenance roadway costs:
$]0,000 common excavation
2,3�0 subgrade excavation
11.440 Gass V Base
�.000 fabric
$28,790 x 0.5 14,395
3) Restaration 4,000 c.y. @$2.50/cy.x 0.5 5.000
$66.6�0
Water Connection Fee= $66,650/ 9 base dwelling units= �7,406/unit
It was concluded that these fees should be included in the 2008 Fee Schedule far the
Glendale Cove sewer project. While we did not anticipate that there would be other
connections coming into this system, it would be appropriate that the connection fee be
established now rather than later. These would then follow the standard annual inflationary
increase program. Note that in addition to these connection charges, Williamson also paid a
$1,600 Long Lake Sewer Connection Charge, a $1,�00 Long Lake Water Connection
Charge, and the MCES SAC Charge of$1,675; but not Long Lake hookup fees.
Creekside Analysis. For Dunn and McCuskey to connect into the Creekside sewer system,
the same basis and formula as used to calculate the Williamson fees would seem to be
applicable. Based on the Engineer's Estimated Costs dated �-11-0�:
Dunn & McCuske�� - Sewer Connectio�� Fee Formula:
1) Sanitary Sewer Improvements: �49,164 $49,164
2) 1/2 of Base maintenance roadway costs
$ 2.000 mobilization
$14,000 common excavation
16,800 Class IV and V Base
�,�50 fabric
$35,0�0 35,050
3) Restoration $10,000 5.000
$94,214
Sewer Connection Fee= $94,214/ 10 base dwelling units = �9,421 /unit
(Base units=7 in subdiv. Plus 1 McCuskey and 2 Dunn)
• Dunn& McCuskey S&W Charges Analysis
April 13,2009
Page 7
Dunn & McCuskey - Water Connection Fee Formula:
1) Water Main Improvements: $38,906 $38,906
2) 1/2 of Base maintenance roadway costs:
$ 2,000 Mobilization
14,000 common excavation
16,800 Class IV and V Base
2,250 fabric
$35,050 35,050
3) Restoration $10,000 10,000
$83,956
Water Connection Fee = $83,956 / 10 base dwelling units = $8,396 / unit
(Base units=7 in subdiv. Plus i McCuskey and 2 Dunn)
Note: It is unclear whether the old Long Lake S&W fees (paid for the seven Creekside lots
in 2005) apply, or some yet-to-be-agreed-upon new fees apply per the "Sewer and Water
Hook-up and Connection Charge" established in the (still pending) "Municipal Utility
Service Agreement by and between the Cities of Long Lake and Orono". Those fees are
$1,600 per unit for each SAC-equivalent sewer connection and $1,500 for each water
connection (and will there also be "tap fees" of$1100 for water and $1200 for sewer as there
�aa�re in 2005?). Orono would collect these at the time of connection permit issuance along
with the standard Met Council SAC charge for sewer connection. The Long Lake connection
fees collected by Orono will be a pass-through to Long Lake. The MCES SAC charge will
continue to be a pass-through to Met Council.
To summarize, the connection charges for each of the Dunn & McCuskey properties for 2009
would be:
Sewer: Water.
$ 9,421 Orono Sewer Connection Charge $ 8,396 Orono Water Connection Charge
1,600 L. L. Sewer Conn. Charge 1,500 L. L. Water Conn. Charge
2,000 MCES SAC (2009) $ 9,896 (???Plus $1100 LL Hookup?)
$ 13,021 (???Plus $1200 LL Hookup?)
(Due with application for sewer or water connection permit)
Questions for Discussion
1. What connection fees will Long Lake will be charging for these connections? Given
the lack of a joint S&W Agreement with Long Lake after 5 years of negotiations,
what is the best way to approach this without causing an undesirable outcome?
2. Does Council concur with staff regarding the method being used to determine a fair
connection charge, or the applicability of the charge in this or similar situations?
3. What are the expectations of Dunn regarding these fees?
. , .
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MEMORANDUM
To: Scott Oberaigner
Ron Olson
Tom Kellogg
Bill Wells
From: Mike Gaffron, Asst. City Administrator
Date: April 15, 2008 /April 7, 2009
Subject: Sewer and Water Connection Charges:
Dunn, 20 Brown Road South
McCuskey, 130 Brown Road South
, BACKGROUND
Fox Ridge Sewer Project Cor�nection Potential Absent Creekside Development As part of
the Fox Ridge sewer project in 2000, a pressure sewer line was installed along the west side
of Brown Road from Fox Ridge Road to Watertown Road. Property owners along the west
side of Brown Road were asked if they wanted to participate in the project. A few did, most
did not. Some of those who did not were provided with a stub access point along that
pressure line for future connection, with the idea that they would pay the "going rate"
connection charge at the time they connected. That rate has climbed to $21,140 per unit for
2009 for any new connections not previously assessed. This is the rate that Dunn or
McCuskey would pay for a sewer coruiection if the Creekside subdivision had not happened.
Properties on the east side of Brown Road were not provided with connection stubs; although
thev were offered the opportunity to connect to the Fox Ridge project, they were also advised
that a gravity line serving the property east of them may be in the offing, which would allow
for future gravity connection. To serve either the Dunn property or the McCuskey property
from the Brown Road pressure line would require boring service lines under Brown Road
and installation of individual "E-1" pump stations for each property. The total cost to the
homeowner far connection charges, SAC charge, permits, and actual pump station
installation and connection to the sewer, would potentially exceed $30,000.
Creekside Connection. The Dunn and McCuskey properties were subsequently each
provided connection stubs to the gravity sewer system installed by the developer of
"Creekside in Orono". That gravity system was completely paid for by the developer, and it
discharges directly to the Long Lake sewer system at the south end of Apple Glen Road.
Municipal water is also provided by a parallel line from Long Lake.
The Development Agreement between the City of Orono and Creekside in Orono LLC
establishes that "upon completion by the developer and acceptance by the City of Orono, the
sanitary sewer and water facilities within Outlot B and within the 30' utility easement of Lot
7, shall become the property of the City of Orono and become part of the City of Orono
utility system, to be operated and maintained by the City of Orono."
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
Dunn & McCuskey S&W Charges Analysis
April 15,2008/April 7,2009
Page 3
a connection fee is largely an issue of fairness and equity. No property should be afforded
the privilege of connecting to the sewer system without paying its reasonable share of the
costs to build and maintain that system. In the typical case where the cost of a `retrofit"
sewer project is assessed equally to all benefiting properties, a nearby property not originally
assessed should pay its share of those original costs at the time it does connect; it should not
be allowed to connect at no cost to a system that others have paid for. In the case of a new
development, where the developer builds a sewer system to serve new homes, the developer
surely adds a portion of the cost of that sewer construction to the price of each lot. Should
those lot buyers be subsidizing the sewer for properties not part of that subdivision?
Probably not - outside properties connecting to that system should be charged a fair and
equitable connection fee. However, the City as recipient of that fee has historically not
redistributed it among the original subdivision lot owners.
Possible Dunn Expectations. There is potentially an eapectation by Dunn that no City of
Orono connection fee will be due for her connections. Remember that Lazniarz had to
purchase an easement from Dunn for access to the Creekside Development over a portion of
Dunn's property (Tract G, RLS 352). In correspondence between MPG and Dunn's attorney
Jeremy Steiner in 2004, Steiner asked that the Developers Agreement include language
stating that 1) two sewer and water stubs will be installed along Dunn's lot line and that 2)
Dunn will not be assessed for City water and sewer. My response was:
1. The preliminary plat approval resolution acknowledges WDD's (Henry Lazniarz's)
intent to provide sewer and water service to the Dunn property, but does not require
that WDD provide such service. Assuming that WDD agrees to `the installation of two
water and two sewer service stubs to serve the Dunn property' becoming a requirement,
the City will not object to this being added as a condition of the Developer's Agreement.
2. In terms of assessment for the installation, the Cit�� of Orono will require that WDD
bears the entire cost of construction of all improvements including sewer, water, road
and utilities. WDD will upon acceptance by the Cit3�, turn over the sewer and water
facilities to the City of Orono, and they will become part of the Orono utility system, to
be operated by Orono.
However, we are assuming that the City of Long Lake will charge WDD (or will charge
Orono) some form of `per unit connection charge' for the privilege of connecting into
the Long Lake sewer and water systems. Our expectation, pending completion of a
formal agreement between the two cities, is that WDD will pa,y Long Lake directly for
the connection charges for his seven units, but I have no knowledge of whether he will
pay the connection charge(s) for Dunn. I don't l�now when Dunn will make use of the
two units. I don't know whether Long Lake will expect up-front payment of a
connection charge for all potential units (we think that there might be as many as ll
total units over the long term,induding WDD's seven, Dunn's two,and one each for the
properties at 130 and 140 Brown Road),or whether Long Lake will only collect now for
the 7 initial units and collect for future units as they are connected. And I don't know
whether Long Lake would bill those in the future to the individual users or would
expect that Orono pay whatever connection charge is due (in which case Orono would
bill or assess this to the individual proPerty being connected at that time).
Dunn & McCuskey S&W Charges Analysis
April 15,2008/April 7,2009
Page 4
It is clear that all the connection charge issues must be understood and conclusions
reached before the Developer's Agreement is finalized. Greg Gappa, Orono's Director
of Public Services, is working with Long Lake to finalize a sewer and water agreement.
Until the counection charge issue is resolved, I do not believe Orono can commit that
"the Dunn property will not be assessed for the City water and sanitary sewer
improvements for the Creekside in Orono development". However, if you conclude
that `installation of the improvements' is a separate issue from `assessment for any
connection charges that Long Lake may impose on Dunn or the City of Orono', then I
believe we can craft language that gives you the desired confirmation.
Language clarifying the assessment issues ultimately was not included in the Developers
Agreement. The Final Plat Resolution conditions as well as the Developers Agreement
contain only the following with regard to S&W:
6. Sanitarv Sewer and Water Svstems. 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.
Upon completion by the Developer and acceptance by the City of Orono, the sanitary
sewer and water facilities within Outlot B and within the 30' utility easement of Lot 7,
shall become part of the City of Orono utility system, to be operated and maintained by
the City of Orono.
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 1 sewer and 1 water stub for future service to the McCuskey
property.
No discussion about what fees Dunn or McCuskey might be charged by Orono.
Williamson Analysis. There is one recent instance where staff did determine a connection
fee for an existing house that was part of the new subdivision by virtue of having sold part of
its land to create the subdivision. That property is the Williamson house at 190 N. Willow,
which became part of Glendale Cove.
The Williamsons initially requested a sewer connection to the Hackberry sewer in 2004, prior
to the Glendale Cove application. At that time the City advised them that their actual costs of
connection would likely be reduced by waiting until the adjoining property on the east side of
Willow Drive was developed. This would avoid a long connection route and crossing of
Willow with an individual service. Shortly thereafter they sold a portion of their property to
Steve Bohl who as part of the development of Glendale Cove in 2006-2007 installed sewer
and water lines as well as a road, stormwater facilities and other improvements to serve 8
new homes. Those sewer and water lines became the property of the City, and the City
maintains them as part of its system. As part of that project, Bohl installed municipal sewer
and water stubs to serve the Williamson property.
Dunn & McCuskey S&W Charges Analysis
April 15,2008/April 7,2009
Page�
In 2004 we had advised the Williamsons that a sewer connection fee based on the 1973-1
Hackberry project would be due. Because the Glendale Cove project subsequently included
extension of sewer laterals and water mains that the City would then own, staff determined it
would be most consistent with City policy to establish sewer and water connection charges
for the Williamson property (and any other existing homes that would connect to the
Glendale Cove lateral system) based solel�� on the costs of the Glendale Cove project,
disregarding the Hackberry project. The 8 new lots in the subdivision would not be subject to
the Orono connection charge because their developer paid the entire costs of installation of
that system.
Per discussions with City Engineer Tom Kellogg and City Administrator Ron Moorse, a
formula was established for assigning conriection fees for the Glendale Cove sewer and water
system, based on the prorated line item costs of sewer or water facilities installation plus 1/2
the cost of providing basic access for utility maintenance. Cost figures were based on the
City Engineer's Cost Estimate for Financial Guarantee dated June 12, 2006. The formulas
for sewer and water connection charges were as follows:
Williamson - Sewer Connection Fee Formula:
1) Sanitary Sewer Improvements: $35,450 $35,450
2) ]/2 of Base maintenance roadway costs
$]0,000 common excavation
2,350 subgrade excavation
11,440 Class V Base
5.000 fabric
$28,790 a 0.5 14,395
3) Restoration 4,000 c.y. @ $2.50/c.y. a 0.5 5.000
$54,84�
Sewer Connection Fee=$54,845/9 base dwelling units= �6,094/unit
Williamson - Water Connection Fee Formula:
l) Water Main Improvements: $47,255 $47,255
2) 1/2 of Base maintenance roadway costs:
$10,000 common excavation
2,350 subgrade e�cavation
l 1,440 Class V Base
5,000 fabric
$28,790 x 0.5 14,395
3) Restoration 4,000 cy. @$2.50 /c.y. x 0.5 5,000
$66,650 �
Water Connection Fee=$66.650/9 base dwelling units =$7,406/unit
It was concluded that these fees should be included in the 2008 Fee Schedule for the
Glendale Cove sewer project. While we did not anticipate that there would be other
connections coming into this system, it would be appropriate that the connection fee be
established now rather than later. These would then follow the standard annual inflationary
increase program. Note that in addition to these connection charges, Williamson also paid a
Dunn& McCuskey S&W Charges Analysis
April 15,2008/April 7,2009
Page 6
$1,600 Long Lake Sewer Connection Charge, a $1,500 Long Lake Water Connection
Charge, and the MCES SAC Charge of$1,67�; but not Long Lake hookup fees.
Creekside Analysis. For Dunn and McCuskey to connect into the Creekside sewer system,
the same basis and formula as used to calculate the Williamson fees would seem to be
applicable. Based on the Enbineer's Estimated Costs dated 2-11-05:
Dunn & McCuskev - Sewer Connection Fee Formula:
1) Sanitary Sewer Improvements: $49,l 64 $49,164
2) 1/2 of Base maintenance roadway costs
$ 2,000 mobilization
$14,000 common excavation
16,800 Class IV and V Base
2,250 fabric
$35,050 35,050
3) Restaration $]0,000 5,000
$94,214
Sewer Connection Fee= $94,214/ ]0 base dwelling units= $9,421 /unit
(Base units=7 in subdiv.Plus 1 McCuskey and 2 Dunn)
Dunn & McCuskey - Water Connection Fee Formula:
1) Water Main Improvements: $38,906 $38,906
2) 1/2 of Base maintenance roadway costs:
� $ 2,000 Mobilization
14,000 common excavation
16,800 Class IV and V Base
2,250 fabric
$35,050 35.050
3) Restoration $10,000 10,000
$83,956
Water Connection Fee = $83,956 / 10 base dwelling units = $8,396 /unit
(Base units=7 in subdiv. Plus 1 McCuskey and 2 Dunn)
Note: It is unclear whether the old Long Lake S&W fees (paid for the seven Creekside lots
in 2005) apply, or some yet-to-be-agreed-upon new fees apply per the "Sewer and Water
Hook-up and Connection Charge" established in the (still pending) "Municipal Utility
Service Agreement by and between the Cities of Long Lake and Orono". Those fees are
$1,600 per unit for each SAC-equivalent sewer connection and $1,500 for each water
connection (and will there also be "tap fees" of$1100 for water and $1200 for sewer as there
were in 2005?). Orono would collect these at the time of connection permit issuance along
with the standard Met Council SAC charge for sewer connection. The Long Lake connection
fees collected by Orono will be a pass-through to Long Lake. The MCES SAC charge will
continue to be a pass-through to Met Council.
Dunn & McCuskey S&W Charges Analysis
April l5,2008/April 7,2009
Page 7
To summarize, the connection charges for each of the Dunn & McCuskey properties for 2009
would be:
Sewer: Water:
$ 9,421 Orono Sewer Connection Charge $ 8,396 Orono Water Connection Charge
1,600 L. L. Sewer Conn. Charge 1,500 L. L. Water Conn. Charge
2.000 MCES SAC (2009) � 9,896 (??? Plus $1100 LL Hookup?)
$ 13,021 (??? Plus $1200 LL Hookup?)
(Due with application for sewer or water connection permit)
Questions for Discussion
1. We need to find out what current fees Long Lake will be charging for these
connections. Given the lack of a joint S&W Agreement with Long Lake after 5 years
of negotiations, what is the best way to approach this?
2. Is there any disagreement among Staff& Council regarding the reasonableness of the
method being used to determine a fair connection charge, or the applicability of the
charge in this or similar situations?
3. What are the expectations of Dunn regarding these fees?
< Revision 12-14]] �7r7��n �� �
�� �
CREEKSIDE SEWER & WATER SERVICE AGREEMENT
THIS AGREEMENT is entered into effective retroactively to the 1 st day of July,2011 by
and between the CTTY OF ORONO, a Minnesota munioipa7 corporation ("Orono''), and the CITY
OF LONG LAKE, a Minnesota municipal corporation("Lang Lake"),hereinaflter collectively ;
referred to as th�"Cities."
RECITALS
A. The Cities desire to enter into agreements fQr the extension of water and/or sanitary
sewer service to certain properties located within the City of(?rono; and
� B, Under Minn. Stat. § 471.59,subd. lU, the Cities are empowered to enter into
agreements for#he joint exercise of powers with other govexnmenta.t units for public
purposes, such as the providing of water and/or sanitary sewer service;
NOW,THEREFORE,the Cities agree as follows: �
1. PURPOSES. This Agreement shall establish the responsibilities of the Cities
regarding the operation,maiintenance and exfension of water and sanitary sewer service from Long
Lake to Orono for the praperkies listed in Exhibit"A" (`.`Creekside Service Area") as shown on
Exhibit"B."
2. IMPROVEMENTS. The foilowing subparagaphs (a)through and including(c)
apply on}y to the"Improvements" (defined below) constructed in the Creekside Service Area;
a. Existin�SYstem. Orono has inspected and approved construction of the
existing water and sanitary sewer service to the Creekside�ervice Area("Improvements"), and
Long Lake has inspected and approved construction of the connections of the Improvements to the
Long Lake sanitary sewer and water systems.
b. Future Extensions. Orono will oversee and sha.11 be solely responsible for the
costs associated with the construction of any future extensions to the Improvernents (as furthar
discussed in subsection `c.' below). The existing Improvements are located substantially as shown
on Exhibit "C," attached hereto, and will be available for use only by the properties depicted in
Exhibits "A" and"B." �No further use or extension of the Improvem�nts may be made without
express written approval of Long Lake, to be given in its sole discretion. Long Lake shall not be
chazged for any costs associated with future extensions to the Improvements nor shall Lang Lake
residents be assessed for costs associated with such extensions.
c. Costs. Any extensions to the Improvements for the benef t of Orono
properties will be the sole responsibility of Orono which may, in its sole discretion, chazge said
costs to the developer of the benefitted land or owners of the benefited properties, as determined in
Oronv's sole discretion. Long Lake will not be responsible for any costs related to the construction
of such e�ensions to the Improvements whether said extensions are located within the boundariEs
of the Cit�� of Orono or the boundaries of the City of Long Lake.
3. OPERATION AND MAINTENANCE. Long Lake agrees to continually supply
water to and accept sewer flow from the Creekside Service Area so long as systems are maintained
1
� Revision 12-141] '
�
and operable to ailow such service. Orono agrees to maintain, at its sole cost,that portion of the
water/sewer system that is located within the boundaries of City of Orono. Long Lake agrees to
� maintain, at its sole cost, that portion of the water/sewer system that is located within the .
boundaries of the City of L�ng Lake.
4. USAGE CHARGES.
�
a. Properties with Sewer Onlv. Because one or more properties in the
Creekside Service Area do not have access to municipal water or have not yet connected to
available municipal water,the use of water billing flows for sanitary sewer billing purposes is not
feasible ("Sewer Only Properties"). Also,the use of sanitary sewer flow metering is not practical or
feasible based on the limited number of residences which are Sewer Only Properties. Therefore, for
sanitary sewer billing purposes for the Sewer Only Properties, Long Lake will quarterly invoice
Orono a standard flat rate sanitary sewer charge based upon the average calendar first quarter
municipa.l water usage for properties in the Creekside Service Area for each property�connected to
Long Lake's sanitary sewer system. Orono will provide notification to Long Lake with the number _
of Sewer Only Properties and shall pay the flat rate for each such Sewer Only Property�within thirty
(30) days of receipt of the invoice. ..
b: Properkies with Water and Sewer. For water and sewer billing purposes,
Orono will read the water meters for those properties connected to Long Lake's water system in the
Czeekside Service Area on a quarterly basis and forward the water usage information to Long Lake.
Long Lake will quarterly invoice Orono for such usage at the same billing rate for both water and
sewer that is charged Long Lake customers. Orono shall pay the invoice within thirty(30)days of
receipt of the invoice.
•� LONG LAKE SEWER CONNECTYON CHARGES. Long Lake wilI hill Orono
a sanitary sewer connection charge for each property designated as a Category 2 or Category 3
property in Exhibit A that connects ta sanitary sewer in the Creekside Service Area. .Connection to
the,sanitary sewer far Category 2 and Category 3 properties is on a voluntary basis for each .
property and is not mandated by the City of Orono. At any tiine upon request of Long Lake, Orona
will provide Long Lake with the totai number of properties connected to the sanitary sewer system,
and will also notify Long Lake at the time each new connection occurs. The sewef cannection
charges for Category 2 and 3 properties will be as indicated in Long Lake's fee schedule for the
current year, and shall consist only of a hoolcup fee. The haokup fee shall be the same rate as that
chaxged to Long Lake residents. Qrono shail pay the invoice within thirty (30) days of receipt of
the invoice. Long Lake, with assistance from Orono, shall have the right to audit the number af
homes within the Creekside Service Area that have sewer connections. Note that the Long Lake �
connection charges for all Category 1 properties were paad in full at the time the subdivision was
developed.
6. MCE5 CI3ARGES.
a. MCES Sewer Availabilitv Char es. Orano will issue connection permits for each
new conneciion and will collect the MCES Sewer Availability Charge (SAC) and forward same to
MCES.
2
, Revision 12-14-11
b. MCES Wastewater Char�es. Long Lake will be responsible for paying the ongoing
MCES Wastewater Charges.
7. WATER CONNECTTON CHARGES. Long Lake will bill Orono a water �
connec n charge for each property designated as a Category 2 property in Exhibit A that conciects
to municipal water in the Creekside Service Area. Connection to the water system for Categozy 2
properties is on a voluntary basis for each property and is not mandated by Orvno. At any time
upon request of Long Lake, Orono will provide Long Lake with the total number of properties
connected to the water system, and will aiso notify Long Lake at the time each new connection
occurs. The water connection charges will be as indicated in Long Lake's fee sc�hedule for the
current year and shall consist only of a hookup fee. Orono shall pay the invoice within 30 days of
receipt of the invoice, Long Lake, with assistance from Orono, shall have the right to audit the
number of homes within the Creekside Service Area that have water connectior�s. The follawing
applies to the propenies within each category:
Category 1 Properties: The Long Lake water connection chaxges for all Category I properties,
cortsi�ting of hookup fees and tap fees,were paid in full at the time the subdivision was developed.
Categary 2 Properties: These developed properties have not been connected to the sewer or water
system and no Long Lake fees have been paid.
Category 3 Properties: The Category 3 property has been dixectly cannected to the Long Lake
water system since approxunately 1962, It has not been cannected to sewer and no Long Lake fees
have been paid for sewez. -
8. METERS. Orono,at its sole cost, will install, maintain, service, and read a11 water
meters in the Creekside Service Area btzt Long Lake will have access to meters for-inspection and
vezification purposes. An Orono employee will be present duzing such inspections.
9. REGULATION OF USE. Orono a.grees to regulate.and control the use of the
sanitaty sewer system within Orono so as to prevent the discharge of waste or any storm watex,
surface water, ground water, roof runoff, or subsurface drainage into the sewer system that is in
violation of Long Lake City Ordinances, as such may be amended from time-to-time. In case of
any continuing violations of such ordinances after reasonable notice, Long Lake shall have the
option to terminate this Agreement per the prflvisions of Paragraph 1�5 of this Agreement.
10. LIABILI'TY; INDENIlVIFICATION. Each pariy to this Agreement shall be liable
for the acts of their own off'icers, employees and agents ar�d the results thereof to the extent
authorized by law and shall not be responsible for the acts of the other party, its officers; employees
and/or agents. Liability and damages arising from the Cities' acts and omissions are governed by
the provisions of the Minnesota Tort Claims Act, Minnesota Statutes, Chapter 465,the Minnesota
Tort Claims Act, Section 471.59, and other applicab3e law. Each party warrants that they have an.
insurance or self-insurance program and that each has minimurn coverage consistent with the
liability limits contained in Chapter 466, This Agreement does not constitute a waiver by either
party of linaita.tions on liability provided by Chapter 466 or other applicable law, This clause wil]
not be construed to bar any Iegal remedies that each party may have for the other party's failure to
fulfill its obligations under this Agreement. Each party shall defend, indemnify and hold the other
3
, Aevision 12-]4-Il
party harmless from any and all liability, on account of injury to persons or damage to property +
occasioned by the alleged negligent or intentional acts of the indemnifying party. Neither party !
shall be indemnified for losses or claims occasioned by its own negligence or intentional acts. �
�
11. AMENDMENTS. This Agreement may be amended to provide for additional
connecrions to Long Lake's water and sanitary sewer systems by written agreement between the �
Cities.
12. NOTICES. Any notice required hereunder shall be hand delivered or mailed as
follows:
AS TO ORONO: City of Orono
Attn.: City Administrator
2750 Kelley Parkway . '
� P.O. Box 66
Crysta] Bay, MN 55323
. AS TO LONG LAKE; City of Long Lake
Attn.: City Administrator . �
450 Virgin�a Avenue
P.O. Box 606 �
Long Lake, MN 55356
13. DATA PRACTICES ACT. This Agreement is subject to the Minnesota
Government Data Practices Act, Minnesota Statutes,Chapter 13. If either party receives a data
request affecting data or property of the other party, the party receiving the request shall
immediately notify the other party of the request and of the scope of intended disclosure. Each party
xetains its full rights under the Act.
14. RECORDS. Each party will keep proper books and records to reflect all expenses .
and receipts relevant to the subject matter of this Agreement. Long Lake agrees that its books wi11
reflect the:application of receipts to capital and operating accounts in accordance with sound �
accounting practice. Each party will have access to alI relevant books and records af the other
P�Y•
15. DURATION/DISPUTES/TERMYNATION. This Agreement begii2s on the day it
was approved and-signed by the Cities and is effec�ive retroactively to July 1, 2011 and shall be
perpetual in duratian unless terminated by the written agreement of both parties. Either party may
terminate this Agreernent upon 24 months advance written notice to the other party. However,
Long La1ce may not terminate this Agreement unless altemative services are available to Orono on a
reasona.ble basis. Any dispute under this Agreement shall be determined by binding arbitration in
accordance with the Rules of the American Arbitration Association(or similar Association
reasonably acceptable to the Cities) and judgment resulting frQm such arbitration may be entered
into any Court having jurisdiction.
16. TERMINATI�N OF PRIOR AGREEMENTS. This Agreement shall supersede
ali prior agreemants between the Cities regarding sewer and water issues perta.ining to the
Creekside Service.Area.
4
� Revision 12-i 4l]
[NEXT PAGE IS 'THE SIGNATURE PAGEJ �
,
5
• Revision 12-14-11
i
- i
Dated; j x, CITY OF ORONO
BY: �� • ,�_� �
i
Lili Tod McMillan,Mayor '
ATTEST:
�� �� ��
Linda S. Vee, City Clerk
�
�
I
Dated: � 2.• CTTY 4F LONG LAKE �
--
3 .
Tim Hultman or
AND � � ��
(Jeanette Moeller, City Clerk or
Terrance Post, City Administrator) - �
b
i
Reviaion 12-14-11 �
I
"EXFIIBIT A"
CREEKSIDE SERVICE AREA
The Creekside Service Area consists of the following properties;
Category 1 properties:
Lot 1,Block 1, Creekside In Orono {105 Creek Ridge Pass) PINS #03-117-23 12 0012
Lot 2, Block 1, Creekside In Orono {115 Creek Ridge Pass) PINS #03-117-23 12 0013
Lot 3, Block 1, Cre.ekside In Orono (120 Creek Ridge Pass) PINS #03-117-23 12 0014
Lot 4, Block 1, Creekside In Orono (110 Creek R.idge Pass) PINS #03-117-23 12 4015 ,
Lot 5, Block l, Creekside In Orono {14� Creek Ridge Pass) PINS #03-117-23 12 0016
Lot 6,Block 1, Creekside in Orono (90 Creek Ridge Pass) PTNS #03-117-23 12 0017
Lot 7, Block 1, Creekside In Orono (80 Creek Ridge Pass) PTNS #03-117-23 12 4018
Category 2 properties:
Lot 1, Block 1, Kailestad Acres (130 Brown Road South) PINS #03-117-23 12 0010
Lot 2, Block 1,Kallestad Acres {144 Brown Road South} PINS #03-117-23 12 0011 ,�
Categary 3 properties:
Tracts A, B & C, R.L.S, 1022 (20 Brown Road South) PINS #Q3-117-23 12 0006/7/8�
� 7
� i
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