HomeMy WebLinkAboutCreekside Sewer Water Serv Agreement � �
• Revision 12-1411 �30 I� ��W� (z� S
CREEKSIDE SEWER & WATER SERVICE AGREEMENT
THIS AGREEMENT is entered into effective retroactively to the 1 st day of J'uiy, 2011 by
and between the CYTI' OF ORONO, a Minnesota�municipal corporation ("Orono''}, and the CITY
OF LONG LAKE, a Minnes�ta municipal corporation("Long Lake"},hereinafter collectively ;
zeferred to as the"Cities."
RECITALS
A. The Cities desire to enter into agreements for 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. 10, the Cities are empowered to enter into
agreements for the joint exercise of powers with other governmental 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,maintenance and extension of water and sanitary sewer service frorri Long
Lake to Orono for the properties listed in Exhibit"A" (`.`Creekside Service Area") as shown on
Exhibit"B."
2. IMPROVEMENTS. The following subparagraphs (a)through and including (c)
apply only to the"Improvements" (defined below) constructed in the Creekside Servioe Area:
a. Existin�5vstem. 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$xtensions. Orono will oversee and shall be solely responsible for the
costs associated with the construction of any future extensions to the Improvements (as further
discussed in subsection `c.' below). The existing Improvements are located substantially as shown
on Exhibit "C," attached hereto, and will be available for use anly by the properties depicted in
Exhibits "A" and"B." No further use or extension of the Improvements may be made without
express written approva� of Long Lake, to be given in its sole discretion. Long Lake shall not be
charged 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 benefit of Orono
properties will be the sole responsibi�ity of Orono which rnay, in i#s sole discretion, charge said
costs to the developer of the benefitted land or owners of the benefited properties, as determined in
Orono's sole discretion. Long Lake will not be responsible for any costs related to the construction
of such extensions to the Imgrovements whether said extensions are located within the boundaries
of the Ciry 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
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and operable to allow such service. Orono agrees to maintain, at its sole cost,that portion of the ;
water/sewer system that is located within tiie�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 Long Lake.
4. USAGE CHARGES. �
�
a. Pro,perties 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 murucipal water,the use of water billing flows for sanitary sewer billing purposes is not
feasibie ("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 standazd flat rate sanitary sewer charge based upon the average calendar first quarter
municipal water usage for properties in the Creekside Service Area for each property�connected to
Long Laice's sanitary sewer system. Orano 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: Properties with Water and Sewer. For water and sewer billing pwposes,
Orono will read the water meters for those properties connected to Long Lake's water system in the
Creekside Service Area on a quarterly basis and forward the water usage information to Long Lake.
Long Lake will quarterly invoioe 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
receipf of the invoice.
•� LONG LAKE SEWER CONNECTTON CHARGES. Long Lake will bi110rono
a sarutary sewer connection charge far each property designated as a Categvey 2 or Category 3
property in Exhibit A that connects to sanitary sewer in the Creekside Service Area. .Connection to
the sanitary sewer for Category 2 and Category 3 properties is on a voluntary basis for each
property and is not rnandated by the City of Orono. At any time upon request of Long Lake, Orono
wil] provide Long Lake with the totai number of properties conriected to the sanitary sewer system,
and will also notify Long Lake at the time each new connection occurs, The sewef connectio�
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 hookup fee. The haokup fee shall be the same rate as that
charged to Long Lake residents. Qrono shall 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 of
homes within the Creekside Service Area that have sewer connections. Note that the Long Lake •
connection charges for all Category 1 properties were paid in full at the time the subdivision was
developed.
6. MCE5 CHARGES.
a. MCES Sewer Availabilit�Charges. Orono will issue connection permits for each
new connection and will collect the MCES Sewer Availability Charge (SAC) and forward same to
MCES.
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b. MCES Wastewater Char�es. Long Lake will be responsible for paying the ongoing
MCES Wastewater Charges.
7, WATER CONNECTION CHARGES. Long Lake will bill Orono a water �
connec n charge for each property designated as a Category 2 property in Exhibit A that connects
to municipal water in the Creekside Service Area. Cannection to the water system for Category 2 '
properties is on a voluntary basis for each property and is nat mandated by Orono. At any time
upon request of Long Lake, Orono wi13 provide Long Lake with the total number of properties
connected to the water system, and will also notify Long Lake at the tizne each new connection
occurs. The water connection cha.rges will be as indicated in Long Lake's fee schedule 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 following
applies to the properties within each category:
Category 1 Properties: The Long Lake water conneotion charges for all Category 1 properties,
consisting of hookup fees and tap fees,were paid in full at the time the subdivision was developed.
Category 2 Properties: These developed properties have not been connected to the sewer or water
systern and no Long Lake fees have been paid.
Category 3 Properti.es: The Category 3 property has been directly cannected to the Long Lake
water system since approxunately 1962. It has not been connected to sewer and no Long Lake fees
have been paid for sewer. •
8. METERS. Orono,at its sole cost, will install, maintain, service, and read all water
meters in the Creekside Service Area but Long Lake will have access to meters for-inspection and
verification purposes. An Orono employee will be present duzing such inspections.
9. REGULATION OF USE. Orono agrees to regulate and control the use of the
. sanitary sewer system within Orono so as to prevent the discharge of waste or any storm water.,
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 vioiations of such ordinances after reasonable notioe, Long Lake shall have the
option to terminate this Agreement per the pr+ovisions of Paragraph 1�5 of this Agreement.
10. LIABILII'Y; INDENIl�TIFICATION. Each party to this Agreement sha11 be liable
for the acts of their own off'icers, employees and agents and the results thereof to the extent
authorized by law and shalS not be responsible for the acts of the other party, its o�cers; ennployees
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 466,the Minnesota
Tort Claims Act, Section 471.59, and other applicable law. Each party waxrants that they have an
insurance or self insrzrance program and that each has minunum 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 will
not be construed to bar any legal remedies that each party may have far the other party's failure to
fulfill its obligations under tius Agreement. Each party shall defend, indemnify and hold the other
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• Revision 12-14-11
party harmless from any and all liabiiity, 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 negiigence or intentional acts. �
�
11. AMENDMENTS. This Agreement may be amended to provide for additional .
connections to Long La1ce's water and sanitary sewer systems by written agreement between the �
Cities.
12. NOTICES. Ariy notice required hereunder sha11 be hand deli�ered or mailed as
follows:
AS TO ORONO: City of Orono
Attn.; City Administrator
2750 Kelley Parkway '
� P.O. Box 66
Crystal Bay, MN S5323
. AS TO LONG LAKE; City of Long Lake
Attn.: City Administrator . •
450 Virguua Avenue
P.O. Box 606 �
Long Lake, MN 5535b
13. DATA PRACTiCES ACT. This Agreement is subject to Che 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 sha11
immediately no�ify 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 refleet a11 expenses
and receipts relevant to the subject matter of this Agreement, Long Lake agrees that its books will
reflec#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 xecords of the other
P�Y•
15. DURATION/DISPUTES/TERMINATION. This Agreement begins on the day it
was approved and-signed by the Cities and is effective retroactively to July 1, 2011 a.nd shall be
perpetuaJ in duration unless terminated by the written agreement of both parties. Either party may
terminate this Agreement upon 24 months advance written notice to the other party. However,
Long La1ce may not terminate this Agreement unless alternative services are available to Orono on a
reasonable basis. Any dispute under this Agreement shall be determined by binding arbitration in
accordance with the Rules of the American Arbitration Association (or similar Assoeiation
reasona.bly accegtable to the Cities) and judgment resulting frQm such arbitration may be entered
i�to any Court having jurisdiction.
16. TERMINATION OF PRIOR AGREEMENTS. This Agreement shall supersede
ali prior agreements between the Cities regarding sewer and water issues pertaining to the
Creekside 5ervice Area.
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Revision 12-14-11 �
i
" I
Dated: _�Z CITY OF ORONO
_�,: �.e t�.���.._ '
BY: j
Lili Tod McMillan,Mayor '
ATTEST:
� �� ��
Linda S. Vee, City Clerk
i
I
Dated; � 2.. CITY OF LONG LAKE
Tim Hultman or
AND � � ��
(Jeanette Moeller, City Clerk or
Terrance Post, City Admirxistrator) �
b
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• Reviaion 12-14-11 �
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"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 R.idge Pass) PINS #03-117-23 12 0012
Lot 2, Block 1,Creekside In Orono (115 Creek R.idge Pass) PINS#03-117-23 12 0013
Lot 3,Block 1, Creekside In Orono (120 Creek Ridge Pass) PIN� #03-117-23 12 0014
Lot 4, Block 1, Creekside In Orono (110 Creek Ridge Pass) PINS #03-117-23 12 U015
Lot 5, Block 1, Creekside In Qrono (100 Creek Ridge Pass} P1NS #03-117-23 l2 0016
Lot 6, Block 1,Creekside In Orono (90 Creek Ridge Pass) . PTNS #03-117-23 12 0017
Lot 7, Block 1,Cxeekside In Orono (80 Creek Ridge Pass) PINS #03-117-23 12 Q018
Category 2 properties:
Lot 1, Block 1, Kallestad Acres {I30 Brown Road South) PINS #03-117-23 12 0014
Lot 2, Block 1,Kallestad Acres (140 Brawn Road South) PINS #03-117-23 12 0011 �
Category 3 properties:
Tracts A, B & C, R.L.S. 1022 (24 Brown Road South) PINS #Q3-117-23 12 0006/7/8�
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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, li0 Brown Road South
, BACKGROUND
Fox Ridge Sewer Project Connection Potential Absent Creekside Development As part of
the Fox Ridge 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 alona 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 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 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 borin� 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. 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 Lon� Lake sewer system at the south end of Apple Glen Road.
Municipal water is also provided by a parallel line from Lon� Lake.
The Development Agreement between the City of Orono and Creekside in Orono LLC
establishes that"upon completion by the developer and acceptance b�� 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 Citv of Orono
utility system, to be operated and maintained by the City of Orono."
Dunn & McCuskey S�W Charbes 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 s��stem 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. 200� Tom Goodrum on behalf of Creekside in Orono LLC paid the City of
Long Lake via check #1085� 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 following rates:
Water: Tap fee per unit $1600.
Hookup fee per unit $1100.
Sewer: Tap fee per hookup $1�00.
Hookup fee per unit $1200.
Total S&W Fees per unit $5800.
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 neibhborhoods 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.
For Citv-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 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
$19,7�0 as a connection charge if it had never been assessed.
For developer-driven projects, the City has not formallv 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 I5,2008/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 s5�stem 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 oribinally
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 ]ot buyers be subsidizing the sewer for properties not part of that subdivision?
Probably no� - outside properties connectin� 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 expectation 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 A�reement 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 acknowledges WDD's (Henry Lazniarz's)
intent to provide sewer and water service to the Dunn propert��, 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 VVDD
bears the entire cost of construction of all improvements including sewer, water, road
and utilities. WDD will upon acceptance by the City, turn over the sewer and water
facilities to the City of Orono, and they will become part of the Orono utiIity 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 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 don't know when Dunn will make use of the
two units. I don't know whether Long Lake will expect up-front pa��ment of a
connection charge for all potential units (we think that there might be as many as 11
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 no�� 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 & McCuske��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 w�ater agreement.
Until the connection charge issue is resolved, I do not believe Oroao can commit that
"the Dunn properTy will not be assessed for the City water and sanitar-y 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 ma�� 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 followin�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 Lonb 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 utilit�� s3�stem, 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
propert3>.
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 waitin�until the adjoining property on the east side of
Willow Drive was developed. This would avoid a lonb 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 5
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 e�isting 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 discussions with City Engineer Tom Kello;g and City Administratoi- Ron Moorse, a
formula was established for assi�ning 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 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:
]) Sanitary Sewer Improvements: $35,450 $�5,450
2) l/2 of Base maimenance roadwav costs
$10,000 common excavation
2,350 subgrade excavation
11,440 Class V Base
5.000 fabric
� $28,790 a 0.5 14,39�
3) Restoration 4,000 c.y. @ $2.50/c.y. a 0.5 5.000
$54.845
Sewer Connection Fee= $54.84� / 9 base dwellin� units= $6,094/unit
Williamson - Water Connection Fee Formula:
l) Water Main Iinprovements: $47,255 $47,255
2) 1/2 of Base maintenance roadway costs:
$10.000 common excavation
2,350 subgrade excavation
11,440 Class V Base
5.000 fabric
$28,790 x 0.5 14,395
3) Restoration 4.000 c.y. @ $2.50/c.y. 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 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 inflationarv
increase pro�ram. Note that in addition to these connection char�es, Williamson also paid a
, � _.
Dunn & McCuskey S&W Charges Analysis
April 15,2008/April 7,2009
Page 6
$1,600 Long Lake Sewer Connection Charbe, a $1,500 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 2-11-05:
Dunn &McCuskev - Sewer Connection Fee Formula:
l) Sanitary Sewer Improvements: $49,l 64 $49.l 64
2) 1/2 of Base maintenance roadway costs
$ 2,000 mobilization
$l 4,000 common excavation �
16,800 Class IV and V Base
2,250 fabric
$35,0�0 35,050
3) Restoration $10,000 5.000
$94,214
Sewer Connection Fee=$94,Z l4/ 10 base dwellinQ units= $9,421 /unit
(Base units=7 in subdiv. Plus 1 McCuskey and 2 Dunn)
Dunn & McCuskev - 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�0 fabric
$�5,050 35,0�0
3) Restoration $10,000 10.000
$83,956
Water Connection Fee = $83,9�6 / 10 base dwellin� units = �8,396 /unit
(Base units=7 in subdiv. Plus I McCuskey and 2 Dunn)
Note: It is unclear whether the old Lonb Lake S&W fees (paid for the seven Creekside ]ots
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 A��reement 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 comzection 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 15,2008/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 Char�e
1,600 L. L. Sewer Conn. Charge 1.�00 L. L. Wa�er Conn. Charge
2,000 MCES SAC (2009) � 9,896 (??? Plus $1100 LL Hookup?)
� 13,021 (??? Plus $1200 LL Hookup?)
(Due with application for sewer or water connection permit)
Questions for Discussion
1. We need to find out what current fees Long Lake will be charging for these
connections. Given the lack of a joint S&W Agreement with Long Lake after 5 years
of negotiations, what is the best way to approach this?
2. Is there any disagreement among Staff& Council regarding the reasonableness of the
method being used to determine a fair connection charae, or the applicability of the
charge in this or similar situations? �
3. VJhat are the expectations of Dunn regarding these fees?
MEMORANDIJM C. Worl:Session 4-14-09
To: Mavor& Council
Bill Wells, City Administrator
From: Mike Gaffron, Asst. City Administrator
Date: April li, ?009
Subject: Sewer and Water Connection Charaes:
Dunn, 20 Brown Road South& McCuskey, 130 Brown Road South
SYNOPSIS
As part of the municipal sanitary sewer constructed by the developer of the Creekside In
Orono residential subdivision, sewer stubs were installed to serve the properties of Mary
Durm (20 Brown South, 2 stubs) and David McCuskey (130 Brown Road South, 1 stub) at
their individual requests. To our knowledge, neither Dunn nor McCuskey paid the developer
(Henry Lazniarz) for these future connection points. However, Dunn may have concluded
that her stubs were at no cost, in partial payment for the road easement she granted Lazniarz.
We don't know the specifics of her agreement with Lazniarz.
The sewer system serving Creekside (7 lots) as well as Dunn & McCuskey, discharges to the
Lona Lake sewer system at Apple Glen Road. Lazniarz paid Lon� Lake the LonQ Lake
sewer and water connection char�es of$�800 per unit for each of his 7 lots, but did not pay
such connection char�es for the Dunn &: McCuskey stubs.
Althouah the Creekside development is not yet complete or ready for construction of new
homes�Mrs. Dunn is requestiny that Orono provide her with the dollar amount of the
connection char�es she must pay to connect to the sewer and ���ater. In order to establish an
appropriate amount for such charaes, 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 cost to the developer of installin� the sewer and w�ater sy�stems and access to them; 2) the
additional costs of connection fees that Lona Lake �vill expect to collect from Orono for
these additional connections. �
There are a number of questions that need to be ans�vered in relation to this issue:
l. What connection fees will Lona Lake will be charaina for these connections? Given
the lack of a joint S&W Agreement with Lon� Lake after � vears of negotiations,
what is the best wa5� to approach this without causin� an undesirable outcome?
2. Does Council concur with staff reaarding the method bein� used to determine a fair
connection char�e, or the applicabilit� of the charge iii this or similar situations?
3. What are the expectations of Durul reQardin�these fees?
Additional back�round on the followin� pages may provide some insight as to why this is not
as simple as we'd like it to be.
Dunn & McCuske�• ScCW Charges Analysis
April 13,2009
Page?
BACKGROtiND
Fox Rirlge Sewer Connection Option. As part of the Fo� Rid�e sewer project in ?000, a
pressure sewer line �vas installed alon;the west side of Brown Road from Foa Rid�e Road to
W atertow�n Road. Property owners alon� 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 alon�� that pressure line for future connection, with the idea
that the�- would pay the "�oin� rate" connection char�e 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 pa�� for a sewer connection to the Fox Rid�e
svstem if the Creekside subdivision had not happened.
Properties on the east side of Bro�rn Road were not pro��ided ���ith connection stubs; althou�h
they were offered the opportunity to connect to the Fox Ridge project, they were also advised
that a bravity line servin� the property east of them may be in the offin�, which would allow
for future �ravity 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 charQes, SAC charae, permits, and actual pump station
installation and connection to the sewer, would potentially exceed $30,000.
Creekside Connection Option. The Dunn and iVlcCuske�- properties were subsequently� each
provided connection stubs to the Creekside aravity sewer system. That �ravit�� system was
completely paid for b�� the developer, and it dischar�es directly� to the Lona Lake sewer
� s}�stem at the south end of Apple Glen Road at the north end of the subdivision. Municipal
water is also provided b�- a parallel line from Long Lake.
The Development Agreement between the City of Orono and Creekside in Orono LLC
establishes that "upon completion b� the developer and acceptance b� the Cit�� of Orono, the
sanitary se��er and water facilities within Outlot B and w�ithin the 30' utilit�r easement of Lot
7, shall become the propert� of the Cit�� of Orono and become part of the Cit� of Orono
utilit�� svstem. to be operated and maintained b��the Cit�� of Orono."
The Development A�reement also stated that "all applicable Cit}� of Lon� Lal:e connection
fees and charges associated with the sewer and water s}�stem servina the development shall
be paid to Lon� Lake by the Developer. Developer shall be responsible for an�� charges to the
City� of Orono from the City of Lon� Lake in relation to the pro�isioil of municipal sewer and
water from Lon� Lake." �
On Februar�� 14, 200� Tom Goodrum on behalf of Creekside in Orono LLC paid the City of
Lon� Lake ��ia check r108�� the amount of $37,800 for the seven sew�er R. w�ater units for
the seven new lots within the Plat of Creekside in Orono, based on the follo��-inR rates:
Water: Tap fee per unit �1600. �
Hookup fee per unit $1100.
Sewer: Tap fee per hookup $1�00.
Hookup fee per unit $1200.
Total S&:�' Fees per unit ��800.
Dunn & McCuskey S&W Charges Analysis
April 13,2009
Page 3
The Development A�reement also stated `'As part of the installation of sanitarv 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 LonR 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 svstems are the result of the City retrofitting existin� neighborhoods with sewer and
water lines, assessin� the costs of construction back to the benefitin� property owners,
sometimes partially stibsidized by the general tax levy. It is a relatively recent phenomenon
in Orono that sewer and w�ater 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 directiv serve adjacent properties without an intervening City project. Examples
include Glendale Cove and Creekside.
For City-constructed projects, Orono has normally established connection fees for ne��-
connections to an existinb Cit}� project equivalent to the origina!per-irnit cost of the given
project,p[us an annual inflation factor. For instance, a propertv connecting in 2008 to the
1992 Stubbs Bav NE project that was originally assessed $12,6�0 per unit now would pay
$19,7�0 as a connection charae if it 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. How�ever, the basis for the
City char�ina a connection fee is largely an issue of fairness and equity. No property should
be afforded the privileQe of connecting to the sewer system without paying its reasonable
share of the costs to build and maintain that s��stem. In the typical case where the cost of a
"retrofit" sewer project is assessed equally to all benefitin, properties, a nearby property not
ori�inallv assessed should pay its share of those ori�inal 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 subsidizin� the sewer provided to properties not pai-t
of that subdivision? Probably not - outside properties corulectin� to that system should be
char�ed a fair and equitable connection fee. However. the Cit�- as recipient of such
connection fee has historically not redistributed it amona the original subdivision lot owners.
Dunn & McCuskey S�C W Charges Analysis
April 13, 2009
Page 4
Possible Dirnn Ezpectations. There is potentiall�° an expectation 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 propertv (Tract G, RLS 3�2). In correspondence betw•een MPG and Dunn's attornev
Jeremy Steiner in 2004, Steiner asked that the Developers Agreement include language
stating that 1) two sewer and water stubs will be installed alon� Dunn's lot line and that 2)
Dunn will not be assessed for City w°ater and sewer. My response was:
l. The preliminary plat approval resolution acknowledges N'DD's (Henry Lazniarz's)
intent to provide sewer and water service to the Dunn properh�, 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 pro�ert��' 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 Cit3� 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 b�� 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 b3�Orono.
However, we are assumin; that the City of Long Lake will charge WDD (or wil} 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 pay Long Lake directh� for
the connection charges for his seven units, but I have no knowledge of whether he «�ill
�ay the connection charge(s) for Dunn. I don't kno��� when Dunn will make use of the
two units. I don't know whether Long Lake will expect up-front payment of a
connection char;e for all potential units (we think that there might be as man�� as 11
total units over the long term, including WDD's seven, Dunn's ri��o, and one each for the
properties at 130 and 140 Brown Road), or whether Lone Lake will onl�� collect no�� for
the 7 initial units and collect for future units as the�� are connected. And I don't know
whether Long Lake would bill those in the future to the individual users or would
eapect that Orono pa�� whatever connection charge is due (in w�hich case Orono would
bill or assess this to the individual property beine 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 finalizecl. Greg Gappa, Orono's Director
of Pubiic Se��ices, is workinb ���ith Lonb Lake to finafize a sewer and water agreement.
Until the connection charge issue is resolved, I do not believe Orono can commit that
"the Dunn property- will not be assessed for the Cit�- ��ater and sanitary sewer
improvements for the Creel:side in Orono development". Ho�ve��er, 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 Cit�- of Orono', then I
believe�ti�e can craft fanguage that aives�-ou the desired confirmation.
Langua�e clarifyin� the assessment issues ultimately was not included in the Developers
A�reement The Final Plat Resolution conditions as well as the Developers A�reement
contain only� the followin�� writh reQard to sewer and water s��stems:
Dunn & McCuskey S&W Charges Analysis
April l3,2009
Page�
6. Sanitar-�� 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 b�� 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.
tipon completion by the Developer and acceptance by the City� of Orono, the sanitary
sewer and H�ater 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 aod maintained bv
the City of Orono.
As part of the installation of sanitary sewer and ��ater improvements per the approved
plans, Developer shall install two sewer and two �vater stubs for future service to the
Dunn property and 1 sewer and 1 ��•ater stub for future service to the McCuske��
property�.
No discussion was included about what fees Dunn or McCuskey miyht be char�ed by Orono.
Williamson Analy�sis. There is one recent instance where staff did determine a connection
fee for an existin� house that was part of the new subdivision bv virtue of havina sold part of
its land to create the subdivision. That property is the Williamson house at 190 N. �'illow,
which became part of the Glendale Cove subdivision.
The Williamsons initiallv requested a sewer connection to the Hackberr}' sewer in 2004. prior
to the Glendale Cove application. At that�ime the City advised them that their actual costs of
connection would likely be reduced b5� waiting until the adjoining property on the east side of
w�illo�� Drive was developed. This would avoid a lon� connection route and�crossin� 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
ne�- homes. Those sewer and water lines became the property of the Cit`�, and the City
maintains them as part of its s�rstem. As part of that project, Bohl installed municipal sewer
and water stubs to serve the Williamson property.
In 2004 we had advised the Vvilliamsons that a sewer connection fee based on the 1973-1
Hackberr�� project would be due. Because the Glendale Cove project subsequently included
extension of sewer laterals and �ti�ater 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 Willian�son property� (and any other existin� homes that would connect to the
Glendale Cove lateral system) based solely on the costs of the Glendale Cove project,
disre�ardin� the Hackberry� project. The 8 ne�� lots in the subdivision would not be subject to
the Orono connection charae because their developer paid the entire costs of installation of
that s�stem.
Per discussions with City En�ineer Tom Kelloga and City� Administrator Ron Moorse in late
2007, a forn7ula was established in for assiQnina cormection fees for the Glendale Cove
sewer and water system. based on the prorated line item costs of sewer or w�ater facilities
installation plus 1/2 the cost of providing basic access for utility maintenance. Cost figures
Dunn S McCuskey S&W Charges Analysis
April 13,2009
Pabe 6
were based on the City� En;ineer's Cost Estimate for Financial Guarantee dated June 12.
2006. The formulas for sewer and vvater connection charaes were as follows:
Williamson - Sewer Connection Fee Formula:
1) Sanitary Sewer Improvements: �3�,4�0 $3�,4�0
?) li3 of Base maintenance roadway costs
�10.000 common excavation
2,3�0 suberade excavation
11.440 Class V Base
�.000 fabric
�28.790 x 0.� 1�.395
3) Restoration 4,000 cy. @ $�.50/c.y.x 0.5 5.000
��4.84�
Sewer Connection Fee= $�4,84� / 9 base dweltin� units=$6,094/unit
Vl�'illiamson - Water Connection Fee Formula:
1) Water Main Improvements: $47,255 $47,2��
2) 1/?of Base maintenance roadway costs:
�]0,000 common excavation
?3�0 sub�_rade excavation
]1.4�0 Class V Base
�.000 fabric
�28,790 x 0.� 14.39�
3) Restoration 4.000 c.y. rd;�2.50!c.��.x 0.� 5.000
�66.6�0
Water Connection Fee= $66,6�0/9 base dwellina 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 follo�� the standard annual inflationary
increase program. Note that in addition to these connection charges, Willian7son also paid a
�1.600 Lon�T Lake Sewer Connection Char�e, a $1,�00 Long Lake Water Connection
Charge, and the MCES SAC Charae of$1,67�; but not Lon; Lake hookup fees.
Creekside Anall�sis. For Dunn and McCuske`� to connect into the Creekside sewer svstem.
the same basis and formula as used to calculate the Williamson fees would seem to be
applicable. Based on the En�ineer's Estimated Costs dated �-11-0�:
Dunn � MeCuske�� - Sewei-Coi�nection Fee Formula:
1) Sanitar� Sewer Improvements: S49.16-1 �49.164
2) I!2 of Base maintenance roadway costs
� ?.000 mobilization
�14.000 common excavation
16.800 Class IV and V Base
''.'�0 fabric
�3�.0�0 3�,0�0
3) Restoration 510,000 �.000
$9�1.214
Sew-er Connection Fee= �94,?]4; 10 base dwellin�, 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& McCuskev - Water Connection Fee Formula:
1) WaterMain 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
�,250 fabric
$3�,050 35,0�0
3) Restoration $10,000 10,000
$83,956
Water Connection Fee= $83,956/ 10 base dwellin�units = �8,396 /unit
(Base units=7 in subdiv. Plus l McCuskey and 2 Dunn)
Note: It is unclear whether the old Long Lake S&W fees (paid for the seven Creekside lots
in 200�) 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,�00 for each water
connection (and will there also be "tap fees" o:f$1 100 for w�ter and $1200 for se�ver as there
were in 200�?). 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. Sew•er Conn. Charge 1,�00 L. L. Water Conn. Charge
2,000 MCES SAC (2009) � 9,896 (???Plus �1100 LL Hool.-up?)
� 13,021 (`'?`?Plus �1200 LL Hool.-�rp?)
(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?
;. What are the expectations of Dunn regarding these fees?
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