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LAKE ELMO CITY COUNCIL MINUTES JUNE 3, 2014 <br />Page 4 of 7 <br /> <br />Ms. Smith asked about the funding itself and if there is a cost to the taxpayers. Mr. Griffin explained that water and sewer are self-sustaining so they are not on the backs of the taxpayers, subject to the financial <br />assumptions being realized. The global system needs to fund itself as some projects will not work as well as others at all times. <br />Finance Director Bendel explained the cash flow analysis. The Lake Elmo Avenue watermain project is <br />$1.074 million short, but the global water system will cashflow for next 20 years. It was explained that the commitments were more solid than the timeline. Delaying the development will have a greater impact than <br />specific development failures. <br />Mr. Reeves reiterated that judging this project on its own is not most accurate way to look at it because the global water system will cashflow with or without this project. <br />Mayor Pearson asked about commercial development and asked about the future water projects. Mr. Griffin said the future projects will happen with the growth. <br />Mr. Bloyer asked about how much development would have to not happen to maintain cashflow. Mr. Nelson <br />calculated that 75% build out maintains cashflow for 12-14 years and 70% cashflows for about 11 years. <br />It was noted that the area between Lake Elmo Ave and Keats Ave have not been considered at all in <br />commercial projections. There are also no commercial projections included in the Village either. <br />Mr. Zuleger explained that at some point need to develop that area and balance the growth between residential and commercial. Mr. Reeves asked about status of bonding bill at the time the previous email. It <br />was explained that the City was not in the bill at the time. <br />Mayor Pearson asked why we cannot bring water from west. It was explained that the City would have to pay <br />for the whole thing if done now and future development will pay for it when that eventually happens. Mr. <br />Zuleger reiterated that the $3.5 Million in bonding will free up Section 34 WACs for entire system. Holistically, the global system works. <br />Council Member Nelson read letter from Lake Elmo Avenue resident Dan Raleigh, who supports the project. <br />Dan Regan with Launch Properties spoke in support of project. He recently proposed commercial development on property that would receive water from this project. He explained that development requires <br />infrastructure. He noted that the projections are only based on what is known now. In order to get return on investment, the investment needs to be made. There is already sewer there, but area now needs water to <br />develop. <br />Council Member Bloyer asked if Mr. Regan could install a well near the contaminated area. Mr. Griffin said that a well would be a risk and may work, but not a good option for multiple reasons. Mr. Regan explained <br />that due to fire suppression needs, a well would not be feasible and would limit the commercial opportunities. His family has owned parcel for decades. Multiple plans have been brought to city to no avail. He recently bought a lot and is building a house in the city, so he also wants to be a neighbor and partner with the city. <br />Council Member Smith expressed her desire that the land be developed differently than what has been proposed. Mr. Regan explained that demand has to drive development based on comp plan and zoning. At <br />this time, there is not a demand for what Ms. Smith desires. She is concerned that Lake Elmo will miss out on <br />something better. Mr. Reeves asked if business will come without water. The probability is low. <br />MOTION: Council Member Reeves moved TO APPROVE RESOLUTION NO. 2014-38, ACCEPTING <br />BIDS AND AWARDING A CONTRACT TO GM CONTRACTING INC., IN THE AMOUNT OF <br />$2,015,687.39 FOR THE LAKE ELMO AVENUE TRUNK WATERMAIN IMPROVEMENTS. Council Member Nelson seconded the motion. <br />Council Member Nelson noted that the City lost out on Cabela’s recently because there was no infrastructure <br />in place. The finance team has spent lots of time developing the pro forma, and it is very conservative. In a year or two, the whole system may be healthy enough to lower water rates. There are 10 years of positive cash <br />flow. State bonding funding of $3.5 million was a game changer. Property owners have been waiting for years for water. City has obtained commitments to reduce risk. Nothing more that we can do to eliminate risk. He <br />wants to let the land owners do what they do best and develop as best they can.