Sewer/Water connect - park fee analysis

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REQUEST FOR COUNCIL ACTION Date: March 6, 2001 Item No.: 4 Department Approval: Administrator Approval: Agenda Section: Zoning Name: Michael P.Gaffron Title: Planning Director Item Description: Dunbar Project: I. Sewer and Water Connection Charges Analysis 264ny`r j 1 -Z, II. Park Fee Analysis Since my February 7 memo (attached), the Council has considered the option of deferring certain up-front charges and development fees for the Dunbar senior housing project. Such deferral would be in exchange for guarantees that the use of the site and building would remain as senior housing for as long a term as possible. The deferred amounts plus interest would have to be paid back to the City if the use becomes other than senior housing. A brief summary of this plan is as follows: 1) The developer buys the land, conveys it to the City for$1,-----e71/ 2) City approves TIF funding plan with controls on rental price of 20% of units for 20 years; 3) City leases land back to the developer for 40 years(the life of the HUD bond guarantee)with a covenant in effect that requires that it remain in use as senior housing for that period; 4) City defers the up-front costs of park fees and sewer and water connection charges. City proceeds with street lighting,sidewalk and power line burial projects,paying itself back via TIF dollars over the 20-year TIF period; 5) At the end of 20-year TIF period, City loses its control over the low-income requirement; 6) At end of 40 year bond life, City sells the land back to the developer/owner for $1; at that time, the deferred amount plus 40 years interest becomes due unless the owner agrees to maintain the senior housing status for a specified renewable contractual period. In the February 7 memo, an option for revising the park fee ordi e is discussetras are options for interpretation ofthe original S&W agreements with Rebers.With the proposed incentive program in place,the City has no strong motivation to revise its Park Dedication ordinance nor to reduce the sewer and water connection charges below the amounts established by ordinance and per the original S&W agreement with Rebers. Deferral of the entire S&W connection charge and perhaps a portion of the park dedication fees would be appropriate. Since Orono's per-unit park fee is relatively high compared to that charged in some other cities for similar types of multi-family housing, staff would recommend that a park fee equivalent to $500 per unit ($31,000 for 62 units) be collected up front, with the remainder ($2600 per unit) deferred.