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WS – Item #3 WORK SESSION STAFF REPORT Work Session Item No. 3 Date: December 5, 2016 To: City Council From: Diane Hankee and Erin Heydinger, City Engineering Re: Water Connection Fee Study Background The City of Lino Lakes established utility fees in 1988 to fund sanitary sewer and water system trunk improvements. Sanitary sewer trunk improvements include: lift stations, forcemains, oversized sewer mains, and highway crossing casing pipes. Water system trunk improvements include: wells, pump houses, storage tanks, oversized water mains, and highway crossing casing pipes. The utility fees are charged to new users. This method of financing trunk system improvements is a common practice for cities. The current fee for sanitary sewer connection is $3,073 per residential unit, and for water connection is $4,069 per residential unit. Commercial and Industrial properties are determined based on a residential equivalency. Fees are collected at the time of development, connection or building permit. With the current fee structure there is a concern regarding fees applied when a building use changes. Staff completed a preliminary evaluation and recommends the City consider breaking the fee into two components: a Water and Sewer Availability Charge (WAC and SAC, respectively) and a Water and Sewer Trunk Utility Fee. The trunk fee would be charged at the time of development approvals and the SAC/WAC at the time of connection. This would reduce the burden on the end user. It is also incorporates updated costs based on the City’s system and planned development. The two types of fees are summarized below. • Trunk Utility Fees: o Based on the cost of expanding the system to accommodate growth. o Collected at the time of plat. o Recommended fee:  Sewer: $1,096 per unit  Water: $1,205 per unit • SAC and WAC Fees: o Based on the value received by the customer in connecting to the utility. o Collected at the time of connection. o Recommended fee: