07/25/1969 Council Minutes - Laserfiche WebLink

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908 Mr. Springsted advised against granting the proposed franchises to a private operator if it could possibly be avoided. He stated that it is an intriguing proposition new,but can lead to difficulties in the future. Difficulties can best be avoided by the Village never having any part of the proposed systems. Mr. L'Allier asked him if this would be true if Jandric 'gave' the systems to the Village. Mr. Springsted doubled that this would ever be the situation and thought the Village would be faced with acquiring the systems more quickly than anticipated. If this were the case the Village would be better off owning the systems from the start. Mr. L'Allier stated that if the franchises were granted they would have to protect future Councils with a buy -back of a give -back feature so there mould not be a private system in the center of a municipal system. Mr. Springsted thought the Council would be held responsible even if it were a private system, because the homebuyers would automatically come to the Council with their problems. He was not aware of this contractor ever turning over a system 'free' and could not name any companies that had done so. Concerning obtaining monfey for the buy - back Mr. Springsted stated people not serviced are disinclined to make a con- tribution and the people who are served will feel they have paid for the system in spite of any written agreement. They will insist that they are paying for the system twice, which could be reality. Mr. $pringsted declared again that unless the system is turned over completely it could be an unhappy experience for the Village. The Developer could turn over the systems 'free' after he has assessed each homebuyer, the same as the Village would assess the homebuyers. Mr. L'Allier felt it would be difficult to obtain money for municipal systems as our assessed Village valuation is only one million dollars and a cost of $350- 450,000 for water and $1,300,000 for sewer would be a burden on the community. Mr. Springsted thought it would be possible to work out a principal retirement program that the area benefitted could support. The ideal situation would be for Jandric to assess each house its share for the facilities, bury the debt and turn over the systems to the Village. Mr. L'Allier mentioned that Jandric had told the Council this was not possible because the initial investment would have to include a plant to handle the entire area and the few homes at the be- ginning could not be assessed for this complete system. The Clerk read a letter from Drovers State Bank of South ST. Paul, stating it was their opinion Jandric could not obtain financing for a utilities system unless the company had unencumbered title to the Utility properties involved and if its franchise arrangements required that it convey title to the utilities to the community for less than the fair value at a future date. Mr. L'Allier questioned if we could grant the franchise as proposed, giving them perhaps ten years to obtain financing and after ten years they turn over the system without cost. Mr. Springsted answered no, as this would impose too large a rate for the customers at the beginning of the development and would be too Much of a burden on them. From previous experience banks know that the fact that the Village would take over the systems is a 'pretty safe bet' under the proposed franchises and in essence they are 'betting on the community' or extending credit to the Village. Mr. Springsted thought it was better to accept a development with some kind of sewer and water which was 'less than desireable' than to accept a development with no sewer and water. He recommended trying to get municipal sewer and water from the beginning, that this probably would be cheaper in the long run.