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02-28-13 CCMP
Our Mission is to Provide Quality Public Services in a Fiscally Responsible Manner While Preserving the City's Open Space Character City of Lake E 380 Laverne Avenue orth City Council eeting Thursday, February 2 2 13 6: A. CALL TO ORDER B. PLEDGE OF ALLEGIANCE C. APPROVAL OF AGENDA D. AGENDA Security -based Developer Agreements - Jack Griffin, City Engineer II. Cash Flowing Utility Fees & Charges - Tammy Omdahl, Northland Securities III. Fair, Equitable Parkland Dedication Fees - Dean Zuleger, City Administrator IV. Extraneous Cost of Growth - Utility Easements - Dean Zuleger, City Administrator V. Public Comment E. ADJOURN 8:30 P.M. (reserved for recordwg iqiivinufion) DEVELSP E TC. TRACT AGREEMENT dated (Public sewer and water) PLAT NAME , 2 , by and between the CITY OF LAKE ELMO a Minnesota municipal corporation ("City"), and (the "Developer"). 1 REQUEST FOR PLAT APPROVAL. The Developer has asked the City to approve a plat for (referred to in this Contract as the "plat"). The land is situated in the County of Washington, State of Minnesota, and is legally described as: 2. CONDITIONS OF PLAT APPROVAL. The City hereby approves the plat on condition that the Developer enter into this Contract, furnish the security required by it, and record the plat with the County Recorder or Registrar of Titles within (180) days after the City Council approves the final plat. 3. RIGHT TO PROCEED. Unless separate written approval has been given by the City, within the plat or land to be platted, the Developer may not grade or otherwise disturb the earth, remove trees, construct sewer lines, water lines, streets, utilities, public or private improvements, or any buildings until all the following conditions have been satisfied: 1) this agreement has been fully executed by both 13734301 RN K:03/ 10/2008 parties and filed with the City Clerk, 2) the necessary security has been received by the City, 3) the plat has been recorded with the Washington County Recorder's Office, and 4) the City's Planning Director has issued a letter that all conditions have been satisfied, a preconstruction conference has been held, and that the Developer may proceed. 4. PHASED DEVELOPMENT. If the plat is a phase of a multi -phased preliminary plat, the City may refuse to approve final plats of subsequent phases if the Developer has breached this Contract and the breach has not been remedied. Development of subsequent phases may not proceed until Development Contracts for such phases are approved by the City. Park charges and area charges for sewer and water referred to in this Contract are not being imposed on outlots, if any, in the plat that are designated in an approved preliminary plat for future subdivision into lots and blocks. Such charges will be calculated and imposed when the outlots are final platted into lots and blocks. 5. PRELIMINARY PLAT STATUS. If the plat is a phase of a multi -phased preliminary plat, the preliminary plat approval for all phases not final platted shall lapse and be void unless final platted into lots and blocks, not outlots, within two (2) years after preliminary plat approval. 6. CHANGES IN OFFICIAL CONTROLS. For two (2) years from the date of this Contract, no amendments to the City's Comprehensive Plan or official controls shall apply to or affect the use, development density, lot size, lot layout or dedications of the approved final plat unless required by state or federal law or agreed to in writing by the City and the Developer. Thereafter, notwithstanding anything in this Contract to the contrary, to the full extent permitted by state law, the City may require compliance with any amendments to the City's Comprehensive Plan, official controls, platting or dedication requirements enacted after the date of this Contract. 7. DEVELOPMENT PLANS. The plat shall be developed in accordance with the following plans and at the Developer's sole expense. The plans shall not be attached to this Contract. If the plans vary from the written terms of this Contract, the written terms shall controL The plans are: Plan A - Plat Plan B - Final Grading, Drainage, and Erosion Control Plan 13734301 RNK:03/1 0;2008 P|anC-TreePreoenxationmndReforeatmtionP|an Plan D-Plans and Specifications for Public Improvements Plan E - Street Lighting Plan P|anF-LandscapeP|gn 8. IMPROVEMENTS. The Developer shall install and pay for the following: A. Streets B. Sanitary Sewer C, VVatennain O. Surface Water Facilities (pipe, ponds, rain gardens, etc,) E. Grading and Erosion Control F. Sidewalks/Trails G. Street Lighting H. Underground Utilities |� Street Signs and Traffic Control Signs J. Landscaping P{� Tree Preservation and Reforestation L. Wetland Mitigation and Buffers M. Monuments Required byMinnesota Statutes N. Miscellaneous Facilities The improvements shall be installed in accordance with the City subdivision ordinance and the Chv'y Engineering Design and Construction Standards Manual and pursuant to the direction of the City Engineer, The Developer shall submit plans and specifications which have been prepared by a competent registered professional engineer to the City for approval by the City Engineer. The Developer shall instruct its engineer to provide adequate field inspection personnel to assure an acceptable level of quality control to the extent that the Developer's engineer will be able to certify that the construction work meets the approved City standards as o condition of City acceptance. In addition, the City may, at the City's discretion and at the Developer's expense, have one or more City inspectors and o soil engineer inspect the work on a full or part-time basis. The Developer's engineer ahe|| provide for on -site project management. The Developer's engineer is responsible for design changes and contract administration between the Developer G7?4;vo| and the Developer's oordoactor. The Developer nrhis engineer shall schedule a pre -construction meeting skamutually agreeable time atthe City Hall with all parties concerned, including the City staff, toreview the program for the construction work. All labor and work shall be done and performed in the bent and most workmanlike manner and in strict conformance with the approved plans and specifications. Nodeviations from the approved plans and specifications will be permitted unless approved in writing by the City Engineer. The Developer agrees to furnish to the City a list of contractors being considered for retention by the Developer for the performance of the work required by the Contract. The Developer shall not do any work or furnish any materials not covered by the plans and specifications and special conditions of this ConLrac1, for which reimbursement is expected from the City, unless such work is first ordered in writing by the City Engineer as provided in the specifications, 9. CITY ENGINEERING ADMINISTRATION AND CONSTRUCTION OBSERVATION. At the time of Final Plat, the Developer shall submit an escrow for City Engineering Administration and Construction Observation in on amount provided under paragraph 33. 8urnrnory of Cosh Requirements. Thereafter, the Developer shall reimburse the City each month, within 30 days of receiving an invoice, for all engineering administration and construction observation performed during the construction of the plat After 30 days of the invoice, the City may draw upon the escrow and stop the work on site until said escrow has been replenished in its full amount. City engineering administration will include monitoring of construction progress and construction obmervabon, consultation with Developer and his engineer on status or problems regarding the project, coordination for teeting, final inspection and acceptance, project monitoring during the warranty period, and processing of requests for reduction in security. Construction observation may be performed by the Ciiy'o in-house staff or consulting engineer. Construction observation shall ino|ude, at the discretion of the city, part or full time inspection of proposed public utilities and street construction, Services will be billed 0nan hourly basis. O7343v0) 4 KMK:031r2009 The direction and review provided through the inspection of the improvements should not be considered substitute for the Developer required management ofthe development. Developer will cause the oontnactor(a)tofurnish the City with a schedule ofproposed operations at least five (5)days prior tothe commencement of construction of each type of Improvement. City shall inspect all Developer Installed Improvements during and after construction for compliance with approved plans and specifications. Developer will notify the City Engineer at such times during construction as the City Engineer requires for inspection purposes. Such inspection is pursuant tothe City'a governmental authority, and no agency or joint venture relationship between the City and Developer iathereby created. 10, CONTRACTORS/SUBCONTRACTORS' City Council members, City employees, and City Planning Commission rnannbens, and corpormdons, partnershipo, and other entities in which such individuals have greater than a 2596 ownership interest or in which they are an officer or director may not act as contractors or subcontractors for the public improvements identified in Paragraph 8 above. 11' PERMITS. The Developer shall obtain or require its contractors and subcontractors to obtain all necessary pernoito, including but not limited to: /k Riqht-of-VVaYExcavations and Obstructions: • City ofLake Bnno. Right -of -Way Utility Installation(s) * City ofLake Elmo, Right-of-WoyDbstnuction(s) * Washington County, Ud|h«|nstaUationS(s) w Washington County, Street orDriveway Acceoa(s) * Minnesota Department of Transportation, Ud|hv Installation w Minnesota Department ofTransportation, Right -of -Way Permit B. \NatemnainExtensions. 0 Minnesota Department of Health C� SanitarySewer Extensions: ° Minnesota Pollution Control Agency w Metropolitan Council Environmental Services D. Stomnxveter&4onagennent: 0 Valley Branch, Brown's Creek or South Washington Watershed District Permit E. Erosion, Sedimentation Control: w Minnesota Pollution Control Agency, General NF,DE8 8tornnwaterPennb * 8VVF'PP(8to[nlvvaterPollution Prevention Plan) |37343w/ F. Wetland Mitigation: • Board of Water and Soil Resources, WCA G. Construction Dewatering: • Minnesota Department of Natural Resources 12. TIME OF PERFORMANCE. The Developer shall install all required public improvements by October 31, 2 , with the exception of the final wear course of asphalt on streets. The Developer shall have the option of installing the wearing course of streets within one (1) year following initial commencement of work on the required basic improvements or installing it after the first course has weathered a winter season, consistent with warranty requirements, however final acceptance of the improvements will not be granted until all work is completed included the final wear course. The Developer may, however, request an extension of time from the City. If an extension is granted, it shall be conditioned upon updating the security posted by the Developer to reflect cost increases and amending this agreement to reflect the extended completion date. Final wear course placement outside of this time frame must have the written approval of the City Engineer. 13. LICENSE. The Developer hereby grants the City, its agents, employees, officers and contractors a license to enter the plat to perform all work and inspections deemed appropriate by the City in conjunction with plat development. 14. CONSTRUCTION ACCESS. Construction traffic access and egress for grading, public utility construction, and street construction is restricted to access the subdivision via No construction traffic is permitted on other adjacent local streets. 15. CONSTRUCTION SEQUENCE AND COMPLIANCE. The City will require the developer to construct the improvements in a sequence which will allow progress and compliance points to be measured and evaluated. The Developer and/or their representatives are required to supervise and coordinate all construction activities for all improvements and must notify the City in writing stating 137343v01 6 RNK:03! I 0/2008 when the work is ready for the inspection at each of the measurable points defined in the following pan8graphs1O.. 17.and 18. 16. EROSION CONTROL. Prior to initiating site grading, the erosion control plan, Plan B. shall be implemented by the Developer and inspected and approved by the City. Erosion control practices must comply with the approved plans and specifications for the p|et, with all watershed district permits and with Minnesota Pollution Control Agency's Best Management Practices. The City may impose additional erosion control requirements as deemed necessary. The parties recognize that time is of the essence in controlling erosion. If the Developer does not comply with the erosion control plan and schedule or supplementary instructions received from the City, the City may take such action as it deems appropriate to control erosion. The City will endeavor to notify the Developer in advance of any proposed aotinn, but failure of the City to do so will not affect the Developer's and City'e rights or obligations hereunder, If the Developer does not reimburse the City for any cost the City incurred for such work within ten (10) days, the City may draw down the security to pay any coots. No deve|oprnent, utility or street construction will be a||0vved and no building permits will be issued unless the plat is in fU|| compliance with the approved erosion control plan, If building permits are issued prior to the acceptance of public irnprovennents, the developer assumes all responsibility for erosion control compliance throughout the plat and the City may take such action as allowed by this agreement against the Developer for any noncompliant issue as stated above. Erosion control plans for individual lots will be required in accordance with the City's building permit requinannento, or as required by the City or City Engineer. 17' GRADING PLAN' The plat shall be graded in accordance with the approved grading drainage and erosion control plan, Plan "B''. The plan shall conform to Engineering Design and Construction Standards Manual. All grading shall be completed within the Subdivision prior to the preparation and submittal of the as -constructed grading plan. 1J73*301 7 Within thirty (30)days after completion of the grading, the Developer shall provide the City with a "record" grading plan certified by a registered land surveyor orengineer that all oonds, svva|ea, and ditches hmvebeenoonstrucbsdonpub|iceosernentsor|andovvnedbvtheChv.The'reconj"p|anshaUcontainoite grades and field verified elevations of the following: a) cross sections of ponds; b) location and elevations along all svva|ea, emergency overf|ows, vvet|ands, wetland mitigation areas if any, ditches. locations and dimensions ofborrow anaoa/stookpi|ea; c) lot corner elevations and house pads; and d\ top and bottom of retaining walls. The City will not issue any building permits until the approved certified record goading plan is on file with the City, 18. STREET AND UTILITY IMPROVEMENTS. All storm aewera, sanitary sevvers, vvo1ennain, and streets shall be installed in accordance with the approved Plans and Specifications for Public Improvements, Plan "D" The plan shall conform tnthe City's Engineering Design and Construction Standards Manual. Curb and gutter and the first lift of the bituminous streeto, sidevva|ks, the boulevards gnaded, street signs inata||ed, and all restoration work onthe site oho|| be completed in accordance with the approved plans. Once the work is co[np|eted, the developer or its representative shall submit o written request to the City asking for an inspection of the initial improvements. The City will then schedule a walk- through to create a punch list of outstanding items to be completed. Upon receipt of the written punch list provided by the City, the punch list bonna must be completed by the Oeve|opWand the City notified to re- inspect the improvements. The final bituminous wear course may be installed in accordance with paragraph 12,above. 19. STREET MAINTENANCE DURING CONSTRUCTION' The Developer shall be responsible for all street maintenance until the streets are accepted by the City. Warning signs shall be placed when hazards develop in streets to prevent the public from traveling on same and to direct attention to detours. If and when streets become irnpasaab|e, such streets oho|| be barricaded and closed. In the event residences are occupied prior to completing streets, the Developer shall maintain o smooth surface and provide proper surface drainage to insure that the streets are passable totraffic and emergency vehicles. The Developer shall be responsible for keeping streets within and without the |]7J4]ro| subdivision clean of dirt and debris that may spill, track, or wash onto the street from Developer's operation. The Developer may request, in writing, that the City keep the streets open during the winter months by plowing snow from the streets prior to final acceptance of said streets, The City shall not be responsible for repairing the streets because of snow plowing operations. Providing snow plowing service does not constitute final acceptance of the streets by the City. The Developer shall contract for street cleaning within and immediately adjacent to the development. At a minimum, scraping and sweeping shall take place on a weekly basis. A copy of this contract shall be approved by the City before grading is started. The contract shall provide that the City may direct the contractor to clean the streets and the contractor will bill the Developer. 20. OWNERSHIP OF IMPROVEMENTS. Upon completion of the work and construction required by this Contract, the improvements lying within public easements shall become City property. Prior to acceptance of the improvements by the City, the Developer must furnish the City with a complete set of reproducible "record" plans, an electronic file of the "record" plans in accordance with the City's Engineering Design and Construction Standards Manual together with the following affidavits: - Developer/Developer Engineer's Certificate - Land Surveyor's Certificate certifying that all construction has been completed in accordance with the terms of this Contract. All necessary forms will be furnished by the City. Upon receipt of ''record plans" and affidavits, and upon review and verification by the City Engineer, the City Engineer will accept the completed public improvements. 21. PARK DEDICATION. The Developer shall pay a cash contribution of $ in satisfaction of the City's park dedication requirements. The charge was calculated as follows: lots at per lot. 22. SANITARY SEWER AND WATER UTILITY AVAILABILITY CHARGES (SAC AND WAC). The Developer shall be responsible for the payment of all sewer availability charges (SAC) 137343011 9 RN F::03 '10/2008 and all water availability charges (WAC) with respect to the Improvements required by the City and any state or metropolitan government agency. The sewer availability charge (SAC) in the amount of $3,000.00 per REU shall be paid by the Developer prior to the City recording the final plat. The total amount to be paid by the Developer is $XXX,XXX.00. The water availability charge (WAC) in the amount of $3,000.00 per REU shall be paid by the Developer prior to the City recording the final plat. The total amount to be paid by the Developer is SXXX,XXX.00. In addition, a sewer connection charge in the amount of $1,000,00 per REU, a Met Council sewer availability charge in the amount of $2,435,00 per REU, and a water connection charge in the amount of $1,000.00 per REU will be collected by the City at the time the building permit is issued for each lot. 23. TRAFFIC CONTROL SIGNS. The Developer shall pay to the City $ for installation of traffic control signs. 24. STREET LIGHTS. The Developer is responsible for the cost of street light installation consistent with a street lighting plan approved by the City. Before the City signs the final plat, the Developer shall post a security for street light installation consistent with the approved plan. The required security is $ and consists of ) decorative lights at each, and ) mast arm lights at $ each. The Developer shall also pay in payment of the first year operating costs for street lights, 25. WETLAND MITIGATION. The Developer shall complete wetland mitigation/restoration in accordance with the approved Plans and Specifications and in accordance with any applicable Watershed or agency Permits. If the mitigation work is found to be incomplete or restoration is unsuccessful the City may draw down the security at any time during the warranty period if the Developer fails to take corrective measures to be used by the City to perform the work. 26. BUILDING PERMITS/CERTIFICATES OF OCCUPANCY. 13734301 10 RN K:03/10/2008 A. Public sewer and water, curbing, and one |Ut of asphalt shall be installed on all public and private streets prior to issuance of any building pemnbo, except one model home on m lot acceptable tothe Planning Director. B. Prior to issuance of building pernnita, wetland buffer monuments shall be placed in accordance with the {}ity's zoning ordinance. The monument design shall be approved by the Community Development Department. C� Written certification ofthe as -constructed grading must beonfile at the City for the block where the building is to be located, D. Breach of the terms of this Contract by the Devu|oper, including nonpayment of billings from the City, shall be grounds for denial of building permits and/or withholding of other pernnitS, inspection or actions, including |cda sold to third partiea, and the halting of all work in the plat. E, If building permits are issued prior to the acceptance of public improvements, the Developer assumes all liability and costs nyou|dng in delays in completion of public improvements and damage to public improvements caused by the City. Deve|oper, their contractors, subcontmactons, nnoterio|nnen, ennp|oyeen, aBents, or third parties. F. No sewer and water connection permits may be issued until the streets needed for access have been paved with a bituminous surface and the utilities are tested and approved by the City Engineer. & The City will not issue a certificate ofoccupancy for any building constructed on any lot or parcel in the Plat until Public sewer and vva0er, ourbing, and one |Ut of asphalt is installed on all public and private streets; all utilities are tested and approved by the City Engineer; and the as - constructed grading must be on file at the City for the block where the building is to be located. 27. RESPONSIBILITY FOR COSTS. /\. In the event that the City receives c|oinno from |abor, rnoteha|nnen, or others that work required by this Contract has been pmrfonned, the sums due them have not been poid, and the |aborern, moteria|man, or others are seeking payment from the City. the Developer hereby authorizes the 1373470o1 |] City to commence an |nterp|eader action pursuant to Rule 22, Minnesota Rules of Civil Procedure for the District Courts, todraw upon the letters ofcredit inanamount Wpto125percent ofthe dmirn(s)and deposit the funds in compliance with the Ru|e, and upon such deposit, the Developer shall re|ease, diacharge, and dismiss the City from any further proceedings as it pertains to the letters of credit deposited with the District Court, except that the Court shall retain jurisdiction todetermine attorneys' fees pursuant tothis Contract. B. Except as otherwise specified herein, the Developer shall pay all costs incurred by it or the City in conjunction with the development of the p|at, including but not limited to |eg8|, p|anniDg, engineering and inspection expenses incurred in connection with approval and acceptance of the p|a1, the preparation of this Controct, review of construction plans and docunlents, and all costs and expenses incurred by the City in monitoring and inspecting development of the plat. All anlVuO1S incurred and due at the tinne, must be fully paid prior to execution and release of the final plat for recording. C. The Developer shall hold the City and its officers, emp|oyeeo, and agents harmless from doinls made by itself and third parties for damages sustained or costs incurred resulting from plat approval and development. The Developer shall indemnify the City and its officars, ennp|oyees, and agents for all costs, damages, or expenses which the City may pay or incur in consequence of such c|ainna. including attorneys' fees. D, The Developer shall reimburse the City for costs incurred in the enforcement of this Contract, including reasonable engineering and attorneys'fees, E. The Developer shall pgy, or cause to be paid when due, and in any event before any penalty is attaoheU, all special assessments referred to in this Contract. This is g personal obligation of the Developer and shall continue infull force and effect even ifthe Developer sells one ormore lots, the entire plat, orany part Ofit. F. The Developer shall pay in fV|| all bills submitted to it by the City for obligations incurred under this Contract within thirty (30) days after receipt, 8i||S not paid within thirty (30) days shall be assessed a late fee per the City of Lake Elmo adopted Fee Schedule. Upon request. the City will provide copies ofdetailed invoices ofthe work performed, G7343m| KNKl3/10!2008 28. SPECIAL PROVISIONS. The following special provisions shall apply to plat development: A. Implementation of the recommendations listed in the Engineering memorandum. B. Before the City signs the final plat, the Developer shall convey Outlot to the City by warranty deed, free and clear of any and all encumbrances. C. The Developer shall install a temporary turnaround on the end of until it is extended to the with the second phase of the development. D. E. The Developer must obtain a sign permit from the City Building Official prior to installation of any subdivision identification signs. F. (Other requirements). 29. MISCELLANEOUS. A. The Developer may not assign this Contract without the written permission of the City Council. The Developer's obligation hereunder shall continue in full force and effect even if the Developer sells one or more lots, the entire plat, or any part of it. B. Retaining walls that require a building permit shall be constructed in accordance with plans and specifications prepared by a structural or geotechnical engineer licensed by the State of Minnesota. Following construction, a certification signed by the design engineer shall be filed with the City Engineer evidencing that the retaining wall was constructed in accordance with the approved plans and specifications. All retaining walls identified on the development plans or by special conditions referred to in this Contract shall be constructed before any other building permit is issued for a lot on which a retaining wall is required to be built. C. Appropriate legal documents regarding Homeowner Association documents, covenants and restrictions, as approved by the City Attorney, shall be filed with the final plat. No third - party beneficiary is hereby conferred. 137343v01 13 RNK:03/10,2008 U Developer shall take out and maintain orcause bzbetaken out and maintained until six (]) months after the City has accepted the public improvements, public liability and property damage insurance covering personal injury, including deadh, and claims for property damage which may ohae out of Developer's work or the work of its subcontractors or by one directly or indirectly employed by any of them. Limits for bodily injury and death shall be not less than $500,000 for one person and $1.00Q'OOOfor each occurrence-, limits for property damage shall be not |eoe than $200.000 for each 000urnanoe� o, o combination single limit policy of $1,000,000 or more. The City shall be named as an additional insured on the po|ioy, and the Developer shall file with the City o certificate evidencing coverage prior to the City signing the plat. The certificate shall provide that the City must be given thirty (30) days advance written notice ofthe cancellation ofthe insurance. E. Third parties shall have norecourse against the City under this Contract. F If any portion, seu1ion, eubsection, sentenoe, dauae, paragraph, or phrase of this Contract is for any [e@SoO held iOva|id, such decision 8h8|| not affect the validity of the remaining portion of this Contract. G, The action or inaction of the City shall not constitute a waiver or amendment to the provisions of this Contract. To be bindin8, amendments or waivers ohoU be in vvriting, signed by the parties and approved by written [eSo|UUQn of the City Council. The City's failure to promptly take legal action to enforce this Contract shall not be owaiver orrelease. R This Contract shall run with the land and may be recorded against the title to the property. The Developer covenants with the Qtv, its successors and assigns, that the Developer has fee title tothe property being final platted and/or has obtained consents to this Contrant, inthe form attached heretn, from all parties who have an interest in the property; that there are no unrecorded interests in the property being final platted: and that the Developer will indemnify and hold the City hmrnn|euS for any breach ofthe foregoing covenants, |� Each right, power or remedy herein conferred upon the City is CUnlU|gtiVe and in addition to every other right, power or remedy, express or implied, now orhereafter arising, available to 13734101 14 xwK/3.'10'2008 City, atlaw orinequity, urunder any other agreement, and each and every right,powerondremedyhenein set forth or otherwise so existing may be exercised from time totime as often and in such order as may be deemed expedient by the City and ahoU not be e waiver ofthe right to exercise at any time thereafter any other right, power 0rremedy. J. The Developer represents to the City that the plat complies with all city, county. [net[Opo|itan, state, and federal |aVvS and regulations, including but not limited to: subdivision ord\DanCeS, zoning ordinancea, and environmental regulations. If the City determines that the plat does not oonnp|y. the City may, at its optiOO, refuse to g||ovv construction ordevelopment work in the plat until the Developer does comply. Upon the City'sdemand, the Developer shall cease work until there is compliance. 30. EVENTS OF DEFAULT' The following ohm|| be ''Events of Default" under this Agreement and the term "Event of Defau|t" shall nnemn, whenever it is used in this AQraennent, any one or more of the following events: A� Subject to unavoidable de|aya, failure by Developers to commence and complete construction of the Public Improvements pursuant to the ternna, conditions and limitations of this Agreement, B. Failure by Developers to substantially observe or perform any material oovenmnt, condition, obligation oragreement ontheir part tobeobserved orperformed under this Agreement. 31' REMEDIES ON DEFAULT. Whenever any Event ofDefault occurs, the City, subject to any rights of third parties agreed to by the City pursuant to this Agneennent, or otherwise by vvritten, executed instrument of the City, may take any one or more of the following: A, The City may suspend its performance under the Agreement until it receives assurances from Oeve|opers, deemed adequate by the City. that Developers will cure their default and continue their performance under the Agreement. Suspension of performance includes the right of the City to withhold permits including, but not limited to, building permits. B� The City may initiate such action, including |8g8| or administrative @[tiUD, as is necessary for the City to secure performance of any provision of this agreement or recover any amounts 13734301 |� KNKx3/10/2008 due under this Agreement from Developers, or immediately draw on the Letter of Credit, as set forth in this Agreement. 32. ENFORCEMENT BY CITY; DAMAGES. The Developers acknowledge the right of the City to enforce the terms of this Agreement against the Developers, by action for specific performance or damages, or both, or by any other legally authorized means. The Developers also acknowledge that their failure to perform any or all of their obligations under this Agreement may result in substantial damages to the City; that in the event of default by the Developers, the City may commence legal action to recover all damages, losses and expenses sustained by the City; and that such expenses may include, but are not limited to, the reasonable fees of legal counsel employed with respect to the enforcement of this Agreement. 33. WARRANTY. The Developer warrants all improvements required to be constructed by it pursuant to this Contract against poor material and faulty workmanship. The Developer shall submit either a letter of credit for twenty-five percent (25%) of the amount of the original cost of the improvements. A. The required warranty period for materials and workmanship for the utility contractor installing public sewer and water mains shall be two (2) years from the date of final written City acceptance of the work. B. The required warranty period for all work relating to street construction, including concrete curb and gutter, sidewalks and trails, materials and equipment shall be subject to one (1) year from the date of final written acceptance, unless the wearing course is placed during the same construction season as the bituminous base course. In those instances, the Developer shall guarantee all work, including street construction, concrete curb and gutter, sidewalks and trails, material and equipment for a period of two (2) years from the date of final written City acceptance of the work. C. The required warranty period for sod, trees, and landscaping is two growing seasons following installation 34. SUMMARY OF SECURITY REQUIREMENTS. To guarantee compliance with the terms of this agreement, payment of special assessments, payment of the costs of all public improvements, 13734301 RN K.:03/10/2008 16 and construction of all public improvements, the Developer shall furnish the City with an irrevocable letter of credit, in the form attached hereto, from a bank, cash escrow or a combination cash escrow and Letter of Credit ("security") for $ . The amount of the security was calculated as follows: CONSTRUCTION COSTS: Streets $ Sanitary Sewer Watermain Surface Water Facilities (pipe, ponds, rain gardens, etc.) Grading Erosion Control Sidewalks/Trails Street Lighting Street Signs and Traffic Control Signs Landscaping Tree Preservation and Reforestation Wetland Mitigation and Buffers (a separate letter of credit is required) Monuments Miscellaneous Facilities Developer's Record Drawings CONSTRUCTION SUB -TOTAL TOTAL PROJECT SECURITIES (at 125% Construction Costs): $ This breakdown is for historical reference; it is not a restriction on the use of the security. The bank shall be subject to the approval of the City Administrator, The City may draw down the security, without notice, for any violation of the terms of this Contract or if the security is allowed to lapse prior to the end of the 13734301 17 RNK:03/10/2008 required term. If the required public improvements are not completed at least thirty (30) days prior to the expiration of the security, the City may also draw it down. If the security is drawn down, the proceeds shall be used to cure the default. 35. REDUCTION OF SECURITY. Upon written request by the Developer and upon receipt of proof satisfactory to the City Engineer that work has been completed and financial obligations to the City have been satisfied, with City Engineer approval the security may be reduced as follows: A. Up to 50%, or $ of the security provided in accordance with paragraph 32. above may be released when: (1) Developer's obligations under this Agreement have been completed and the Public Improvements have been found to be complete to the satisfaction of the City including all corrective work for any identified punch list items, but not including the final wear course; and (2) completion of the Improvements is done to the satisfaction of the City and evidence of such is provided by the City in writing and satisfactory evidence of payment, such as lien waivers are provided. B. Up to an additional 25%, or $ of the security provided in accordance with paragraph 32. above may be released when: (1) Developer's obligations under this Agreement have been completed and the Improvements have been found to be complete to the satisfaction of the City including all corrective work for any identified punch list items and including the final wear course; and (2) Improvements are accepted by the City in writing and satisfactory evidence of payment, such as lien waivers, are provided. C. Twenty percent (25%) of the amounts certified by the Developer's engineer shall be retained as security until; (1) all improvements have been completed, (2) iron monuments for lot corners have been installed, (3) all financial obligations to the City satisfied, (4) the required "record" plans have been received and approved by the City, (5) a warranty security is provided, and (6) the public improvements are accepted by the City. 36. SUMMARY OF CASH REQUIREMENTS. The following is a summary of the cash requirements under this Contract which must be furnished to the City at the time of final plat approval: Sewer Availability Charge (SAC) 137343011 RN K:03! I 012008 18 Water Availability Charge (WAC) Erosion Control Park Dedication Street Light Operating Fee City Base Map Upgrading City Engineering Administration Escrow TOTAL CASH REQUIREMENTS 37. NOTICES. Required notices to the Developer shall be in writing, and shall be either hand delivered to the Developer, its employees or agents, or mailed to the Developer by certified mail at the following address: . Notices to the City shall be in writing and shall be either hand delivered to the City Administrator, or mailed to the City by certified mail in care of the City Administrator at the following address: Lake Elmo City Hall, 3800 Laverne Avenue N. Lake Elmo, Minnesota 55042. 38. EVIDENCE OF TITLE. Developer shall furnish the City with evidence of fee ownership of the property being platted by way of an attorney's title opinion or title insurance policy dated not earlier than thirty (30) days prior to the execution of the plat. (SEAL) CITY OF LAKE ELMO BY: AND DEVELOPER: BY: Its , Mayor , City Clerk 13734301 RN K:031 I 0/2008 1 9 STATE OF[N|NNESOTA COUNTY OFVVASH|N6TON The foregoing instrument was acknowledged before me this day of . 2 . by and by .Ule Mayor and City Clerk of the City of Lake Bnoo. a Minnesota municipal oorporation, on behalf ofthe corporation and pursuant to the authority granted byits City Council. NOTARY PUBLIC STATE OFyN|NNE8OTA COUNTY OF The foregoing instrument was acknowledged before me this day of 2 . by the of NOTARY PUBLIC DRAFTED BY: City ofLake Elmo 38UOLaverne Avenue North Lake Elmo, MN 55042 137343v01 20 FEE OWNER CONSENT TO DEVELOPMENT CONTRACT fee owners of all or part of the subject property, the development of which is governed by the foregoing Development Contract, affirm and consent to the provisions thereof and agree to be bound by the provisions as the same may apply to that portion of the subject property owned by them. Dated this day of , 2 STATE OF MINNESOTA (ss. COUNTY OF The foregoing instrument was acknowledged before me this day of 2 by DRAFTED BY: City of Lake Elmo 3800 Laverne Avenue North Lake Elmo, MN 55042 (651) 747-3901 NOTARY PUBLIC 1373-1301 RNK:03/1012008 21 MORTGAGE CONSENT TO DEVELOPMENT CONTRACT , which holds a mortgage on the subject property, the development of which is governed by the foregoing Development Contract, agrees that the Development Contract shall remain in full force and effect even if it forecloses on its mortgage. Dated this day of , 2 STATE OF MINNESOTA COUNTY OF (ss. The foregoing instrument was acknowledged before me this day of , by NOTARY PUBLIC DRAFTED BY: City of Lake Elmo 3800 Laverne Avenue North Lake Elmo, MN 55042 (651) 747-3901 13734301 fiNK:03/ 102008 CONT CT PURCHASER CONSENT TO DEVELOPMENT CONTRACT , which/who has a contract purchaser's interest in all or part of the subject property, the development of which is governed by the foregoing Development Contract, hereby affirms and consents to the provisions thereof and agrees to be bound by the provisions as the same may apply to that portion of the subject property in which there is a contract purchaser's interest. Dated this day of , 2 STATE OF MINNESOTA (ss. COUNTY OF The foregoing instrument was acknowledged before me this day of 2 , by NOTARY PUBLIC DRAFTED BY: City of Lake Elmo 3800 Laverne Avenue North Lake Elmo, MN 55042 (651) 747-3901 137343v01 RN K:03/ 1 0/2008 EXHIBIT "A" TO DEVELOPMENT CONTRACT Legal Description of Property Being Final Platted as 13734301 24 RIN&:(13110/2008 IRREVOCABLE E LETTER OF CREDIT TO: City of Lake Elmo Dear Sir orMadam, VVehereby issue, for the account of (Name cfDeveloper) and inyour favor, our Irrevocable Letter of Credit in the amount of $ , available to you by your draft drawn on sight on the undersigned bank, The draft must: a) Bear the clause, "Drawn under Letter of Credit No. . dated 2 . of b) Be signed by the Mayor or City Administrator of the City of Lake Elmo. c) Be presented for payment et 2 (Address of Bank) .onmbefore 4:00p,m, onNovember 30. This Letter nfCredit shall automatically renew for successive one-year terms unless, at least forty-five (45) days prior to the next annual renewal date (which xhoU be November3O of each year). the Bonk delivers written notice to the Lake Elmo City Administrator that it intends to modify the terms of, or cancel, this Letter of Credit, Written notice is effective if sent by certified mai|, postage prepaid, and deposited in the U.S, 0oi|. at least forty-five (45) days prior 0othe next annual renewal date addressed as follows: City Administrator, City Ha||, 3800 Laverne Ave, N Lake Elmo Minnesota 55042 and in actually received by the City Administrator at least thirty (30) days prior to the renewal This Letter ofCredit sets forth in full our understanding which nhoU not in any way be modified. amended. amplified, or limited by reference to any document, instrument, or agreement, whether or not referred to herein. This Letter ofCredit is not assignable. This is not Notation Letter of Credit More than one draw may be made under this Letter ofCredit. This Letter of Credit shall be governed by the most recent revision of the Undbnn Customs and Practice for Documentary Credits, International Chamber of Commerce Publication No, 500. We hereby agree that a draft drawn under and in compliance with this Lotter of Credit shall be duly honored upon presentation. BY: Its |37347w`| nwK:03//02008 2/28/2013 City of Lake E o 2 13 ate to tility e ort Conclusions and Recommendations Noram AN Member FINA4 and SIPC S The ovfotrtlottvn pre..ntedot rhn-anerttnp,mferatedsoietyjurfirlonekgptortramvpwk,,, NorthiondServitgre“, not owdormodwrgan tht tern, rtft, km, or wrolar tnaltera related fro speof.bonerism, • Study overview and approach • Conclusions • Recommendations • Projected Growth • Capital Improvement Plans • Debt Service • Utility Rates/Fee Schedule • Financial Plans 2/28/2013 • Collect connection charge at time of permit — Adopt new charge for connecting to sewer and increase amount for connection to water • Collect trunk line availability charge at time of development — Lateral lines will be 100% assessed to benefiting property • Structure debt service around anticipated timing of development Adopt a formal fund balance policy 600 500 400 300 200 100 Projected New Residential Equivalent Units Added Per Year As Prepared by the City of Lake Elmo 2013 2014 2015 2016 2017 2018 2019 2020 2021 Residential Commercial 2/28/2013 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 S1,000,000 $0 $5,000,000 $4,500,000 $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1, 000, 000 $500,000 So Water Projects Total Planned Spending by Year and Funding Source Grants, Intergovt, Other Bond Proceeds Cash from Utility Fund 2013 2014 2015 2016 2017 Sewer Projects Total Planned Spending by Year and Funding Source 2013 2014 2015 2016 2017 2018 Grants, Intergovt, Other Bond Proceeds Cash from Utility Fund 5 2/28/2013 $16,000,000 $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $0 2013 2014 2015 2016 2017 2018 2019 2020 2021 Total Est Outstanding Debt (Current and New) Est Cash Balance Utility fees and charges will need to cover both operating and non -operating (capital and debt service) Fees based on service and volume activity are shown to increase by 3% per year — Actual fee increases will depend on operating performance and amount of actual revenue collected from SAC/WAC (development) 7 2/28/2013 Amount, timing, and types of fees (i.e., areawide, special assessments, trunk line availability, etc.) varies by city Comparison of Connections Fees (Only): — Connection fee for water: • Woodbury charges from $790 to $1,025 for residential • Oakdale charges $550 • Stillwater charges is $3,549 — Connection fee for sanitary sewer: • Woodbury charges from $390 to $1,430 for residential • Oakdale charges $550 • Stillwater charges is $3,549 Estimated Total Water Bill for Example Single Family Residential Property with Total 20,000 Gal of Water Usage in 3 Month Period $90 $80 $70 $60 $ 50 $40 $ 30 $ 29 $10 so Woodbury Oakdale Stillwater Maplewood White Bear Mahtornedi Lake Elmo Cottage Roseville Lake Grove 9 2/28/2013 Multi -year financial plans prepared for water, sanitary sewer, and storm water funds Goal of having minimum cash balance equivalent to 50% of operating expenditure Projections show cash balances in excess of minimum based on assumptions for rates, projected growth, operating expenses, capital spending and debt service $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 52,000,000 $1,000,000 $0 Water Fund Source and Use of Funds 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Budget Source of funds Use of funds 11 2/28/2013 $5,500,000 $4, 500, 000 $ 3, 500,000 $2,500,000 $1,500,000 $500,000 ($500,000) $350,000 $300,000 $250,000 $200,000 $150, 000 $100, 000 $50,000 $0 Sanitary Sewer Fund Projected Cash Balance at Year End 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Storm Sewer Fund Source and Use of Funds 2010 2011 2012 2013 Budget 2014 2015 2016 2017 2018 2019 2020 2021 Source of funds Use of funds 13 2013 EP RT As of February 28, 2013 NORTHLAND STRATEGIES Special Projects Group )10Pfliplp0S6, Nolhlod Satifies iSPOiptOgil Oatike OPt (611115, structure Of en lo o spe*bolld issue, Letter mfTransmittal Executive Summary Study Approach— ............ ............ —....... .............. ........ ........... ____ .......... -----'_-----1 Conclusions from Study ... ... ... ... ...... ........... ... —............... —�~---_'----.~�l Recommendations 2 Organization nfthe Report ...... .............. ....... '... —......... .......... ---'_—'-----'—'--Z Using the Roport] Background Water--....---............... —....... ......... —................... ------.—....... ---------..4 SanitarySewer .............. ---...... —........ —........ ............... .............. ...... ---~_----.~—.4 StormSewec_........ ...... ............... ...... ....... ...... ................... ---'_.--..''~_~-4 Capital Improvement Plan Capital Improvement Puojects--_............. ............................. --'—.--...... ---.—'5 SourceofFunding ..... '—'........ --- ................. '—.--- ........ ............. —_-----...... —'5 Capital Improvement Plan VVave 7 Capital Improvement Plan Sanitary Sewer— .... '—.... .... ---....... ,......... ........... '---'—g Debt Service Summary Years l0l2no2O21.—.—...... —.'--_—'................. ........ --'-9 Water Fund Future Debt Serv|ce.......... ----.------_...... --._-----........ l0 Sanitary Sewer Fund Future Debt Serv|ce.................... '....... ...... ..... ....... —........ —'--'ll Combined Water and Sanitary Sewer Debt Service Years 20l2to 2055—............. .......... l2 Outstanding Debt Obligations Estimated for Future Years .—...... -----......... --.......... l3 Utility Rates KeyFactors ..... ..... --............ ....... ---... .... ....... ....... '--_—..—_--...... '_.... l4 Annual Operating Expenditures 14 Metropolitan Council Environmental Services ... ...................... ------'---... .... ...... l4 Annual Capital Expenditures— ........ --....... .—l4 DebtSenioe—_—........ _-------_'---...... .--..~.—....... ...... ..... --- .... ...... .lS Growth inCustomers —........ _---_'--_'---........ ............. ..... '..... --- ............. .......... l5 Available Other Revenue Sources_—~_ ...... _—_----.—....... ............ —._—.............. l5 Future Utility Rates— ... —...... —..--_--'---~----_----.......... .... ........... --- ... lb Projected Volumes of Water Sold and Sanitary Sewer Billed ........ ........ _............ ...... 6 Table ofPrior Years Utility Rates (2007'2011) 18 Table ofProjected Future Utility Rates ..... ............ ...... --_------.......... ......... --- l9 Table of Projected Volumes of Water Sold and Sanitary Sewer Billed -- ........... ............... -20 Chart ofProjected Volumes ofWater Sold .... -------'—.......... —...... ---........ —~Zl Financial Plans Key Assumpzions—..... --------............ —.... —..... -----------------.—.--22 WaterFund ... ...... —.—.—__.—'----'__.......... --.__—'~....... .'--'----... '2] 4 14 22 Contents i m Sanitary Sewer Fund ... ---- ..... ---------_........ ............ .......... ....... ... ---'-24 Storm Sewer Fund ............................----'Z5 Appendix Water Fund Projected Cash 8a|an 25 Sanitary Sewer Fund Projected Cash 8a|ances—... —........ —....... ----_--_—_--27 Storm Sewer Fund Projected Cash Balances ........ ........ .... ... --- ............. ........ ... ......... —28 Water Fund Sources and U�es 29 Sanitary Sewer Fund Sources and Uses ........ ....... —......... ..... --- ._''—..... _'--... ]D Storm Sewer Fund Sources and Uses ... —'---_---........................... _'—.................. }l Example Residential Water and Sanitary Sewer Bill —..... --- ........ ........ -------...... ..... 32 Example Commercial Water and Sanitary Sewer Bill ........... ...... ........ ------... ...... 3] Comparison ofEstimated Utility Bill nuOther Cities .... ... ...... .......... ......... --............ ...... .... ]4 26 NORTHLAND February 28, 2013 Dean Zuleger City Administrator Lake Elmo City Hall 3800 Laverne Avenue North Lake Elmo, MN 55042 RE: Updated Financial Management Plan for City Utility Funds Dear Dean: SECURITIES Northland Securities, Inc. is pleased to present you with an update to the 2012 Financial Management Plan for City Utility Funds. Northland was hired for financial planning services for utility system user charges and rates. Services include performing a utility rate analysis for the Water, Sanitary Sewer, and Storm Water Utility Systems of the City of Lake Elmo, The analysis and report includes a review of the past financial performance, projected growth in residential equivalent connections, determines the adequacy of current revenues, and provides recommendation on future rates which reflect projected future expense and capital outlay. We appreciate the opportunity to work with the City of Lake Elmo, Sincerely, Tammy Omdal Manager of Northland Strategies/Senior Vice President 15 South 71, Street. quite 2000, Minneapolis. MN 554112 Main: (612) 851-5900 / Direct; (612) 851-1992./ Email: rfifielAimorthlandsecurilies,com Member EINRA and SIPC 111 EXECUTIVE SUMMARY The report iypresented aaall update k`the October 2, 2012 Financial Management Plan for Water, Sanitary Sewer, and Storm Water presented tothe Lake E|nno [ih' Council. The City requested an update to the 2012Bcpod to consider the financial impact ofrevised growth projections for the City. The report and financial management plan isintended ioserve oaxguide for the financial management o[the [iiy'outility services, The report contains information on capital improvement plans to increase capacity o/ the utility aysieons, estimated future utility rates need- ed to support operations and capital innprovement plans, and multi -year financial plans for each of the three uhUh/ funds that includes projected sources and uses uffunds and estimated cash balances hyyear� The financial plans included in the report are built around identified key assumptions, including growth projections, cost drivers, and projected utility rates. To the extent the assumptions inthe report change infile n000thsand years ahead, which they will, the City will need to continue Nadjust its financial piansaccord' Study Approach The report was prepared byNorthland Securities, The following steps were taken as part of the Study prn- Citypmvidndbmfonnotiomcmbishudca|spembrg and revenues, vn|unno of water sold by different tiers and cost000cr, capital improvement plans, and prior years budget information. [i(y ponviJ*j information on projected growth from future residential and commercial develop- ment, • lnk`onnhun provided hvthe City was organized, nna|vred,and used hnsupport the development of financial plans. w Once the initial financial plans were developed dif- ferent scenadosr/errconoidered and analyzed to deherrnioo impact oil ohUtY rates. • City staff offered input and feedback on the aa- son`phonsand desired outconocs. It inalso important tmnote aspects nf financial perfor- mance not reviewed as part of this study: w The validity n(ihc assumptions and figures pro- vided by the [||y on future growth vvas not re- viewed. � Analysis of the basis for the Cby's deterroinatiun of prior sewer and vvahcr availability charges xou not reviewed. The report does not include identification o[proj- ect costs for construction oflateral utility line build outx. The City anticipates that future lateral build outs will be financed 100 percent through special assessments iubenefiting property. The financial impact tothe City ofpotential chang- es tnibccxixbngcostonnerherot,uchureforcharg- ing for water and sanitary sewer services was not reviewed as part of this study. Executive Summary Conclusions from Study The following conclusions were identified as a rcook afthis study: l. To meet projected service demaiids, tile City will need hoexpand its capacity h`deliver water and sanitary sewer services. This isdriven hythe City's projections for future development; the addition of housing and commercial units. The City plans to pay for the improvements through o combination ofprojected available cash, issuance ofdebt, grants and other intergovernmental proceeds. 2. Rjghcr utility service hcca for existing customersvviUbcneedadifnrvvdeve|opnmcntdoesootuocur aiprojected rate ofgrowth. The issuance o(debt {o finance the identified bnprov*mentsfor water and oonitory o,^vcr will require increased revenue to cover annual debt service. The City anticipates an increase in revenue driven bynew development, I[development occurs at a|nv/er pace than pnn' 'echcd, it nnay require the City to ad'ox| the rates shown inthe report. Tobeconservative, the study and report assume 5Opercent o[the total estimated annual growth (development) of residential and commercial units is realized for the purpose o[ex' hnnatingfutuncnevcnur. 3. Projected futureyear-endcash balances in the util- ity funds is estimated to be at or greater than 50 percent of operating expenditures. The fees and charges included in the report, combined with the projected historical vo|unne of vvnhc, sold, plus the projected "nevv" revenue frnnn nevv residen- tial equivalent connections (REC) will provide the cpub needed hooperate and nnnbnLaio the utilities and Locover debt service. Recommendations The following recommendations arc offered based on the Conclusions |rnrnthe 5tndy. J. The City should adopt anew charge for the cost of connecting to municipal sanitary sewer and in- crease the amount itpresently charges for connec- tion ionnunidpa|vvater. This charge should reflect the Cih/scost o(infrastructure for providing ser- vice. This new and increased charge is included in the report and reflected in the revenue shown inthe financial p|ans. The charge will becollected with the building permi|. 2. The [i|v should implement a uniform trunk |b'e availability char�u for water and sanitary sewerscrvices. The chnrgcwill hecollected hnnnproper- ty nvvuro/deve{operpwheopropertyiadcve|oped| it will be collected with the deve|pornenicookxct for new development. The report does not include the cost of lateral build outu of utility lines. The study ond«ipotoa the City will assess 100 percent o[lateral lines h`benefiting property. 3. The City should plan to structure future debt in a conservative manner tuprovide the [itvwith hnoe (or future development inoccur and the flexibility to restructure debt i(necessary. This may include delaying certain moboideu and earlier call dates. An issuance of debt into the public market will re- quire an credit rating review. The Cih/'sgeneral obligation debt is Currently rated }\a2hyMoody'x Investors Service. The [ity'scurrent debt profile is viewed byuYoody'saa''/nmderahe''. Even though general obligation revenue bonds are planned to be Self Supporting horn enterprise revenues, the debt will hc fully accounted for in dheG.D. deb( Executive Summary ratio*. Mood?'s will eliminate that deb( from the debt ratios after few years o/demonstrated self supporting revenues, Based onprevious Moody'u reports, the City has the capacity to uhsnrh the increased debtrahoy so long as there is not de- terioration of the OLy's tax base nr weakening of the de/nograpbir profile and the City does not ex- perience o nnahcha| decline iufinancial reserves in comparison to similar rated cities. 4. The City Should adopt aformal fund balance poli' �:y, This policy will provide guidance for financial management and will inform future decisions oil adjoebnenLa to ohbiy her-, and charges. The re- port is based on direction from City staff to plan for achieving ucash balance aL5Opercent nfondci' pohedannua|mpernhn8expendib/n:a Organization of Report The report {norganized into five sections: l. Executive Summary provides information on the organization o(the report, study approach, using the report, and conclusions and reconnmend u6ons. 2. Background, discusses the historical context (i.e., � rowdh and development of the community) and financial status ofthe Citv's utility funds. 3. Capital Improvement Plan provides information on tbc[iiy'u plans for expanding the capacity of the water and sanitary sewer systems. This in - chides estimates on project costs and sources of funds Lopay for the imp,uvenneoin. The time hori- zon for tile capital plan isyears 2O13through 2Ol7. The City anticipates capital spending after year 2018bot the specific projects and estimated costs have not yet been identified. Information oil debt service isincluded inthe report for planned bond issuances, 4. Utility Rates provided inthe report include Nxhrd' caLcurrentandfuhurcproposcdrateaneucasaryhn maintain a positive financial condition for the utili- ty [undx. Information is provided in the Appendix of the report oil what proposed rate increases will mean to customers. Comparison (oother cities io 5. Financial Plans are provided for the Water Fund, Sanitary Sewer Fund, and Storm Sewer Fund. The financial plans provide both historical, current, and future projected sources and uses of funds. 9inancial plans take into account capital improve- ment plans and rate structure, (The capital im- provements plans included in the report are for yeans20l3'2Ol7; the City anticipates future capital projects after year 2O17but has not yet identified the specific projects orcost eshnnotey] 6. Appendix. provides charts of data from the finan- cial plans and information on projected growth in residential and commercial customers. Using the Report This report iyintended to be a practical guide for on- going management of the Cih/'e ud|ih/ funds. Much of the ink`rrnohoo in Lhe report has enduring value and will serve to continue to guide management deci- sions over o number ofyears. However, management of enterprise funds in a dynamic syatenn. Custonnr, base changes, statutes and rules change, cost oflabor and nnoteda|o and supplies will vary from assump- tions from year-to-year. The report should continue (o bothe foundation o[anannual review nnupdate. Executive Summary BACKGROUND The City of Lake Elmo is located on the eastern edge of the Twin Cities metropolitan area. The City's 2030 Comprehensive Plan forecasts and provides for ap- proximately eight times the growth in households and population during the 2000-2030 planning period than was experienced during the 1980-2000 period. The City reports an estimated 2010 population of 8,069 and 2,774 households (2010 Census). Population is es- timated to increase to 18,403 by 2020 and households to 6,324 (2030 Comprehensive Plan). The land area for the City encompasses approximately 15,250 acres. The City's 2030 Comprehensive Plan provides guid- ance on the City's plans for managing future demand for utility infrastructure. The City's 2011 financial statements were used as the basis for the report, along with the 2012 budget. The 2012 financial statements were not available for input for the report. Water Utility Lake Elrno owns, operates and maintains a municipal water supply and distribution system. The City has a goal to serve existing population desiring public water supply while preparing the system to allow people to connect as development occurs or existing areas re- quest service. This policy guides the City's capital im- provement planning and the need to maintain a flex- ible and responsive water system. Capital planning includes projects to correct existing deficiencies and to expand the system. The City uses an enterprise fund to account for its wa- ter operations. The unrestricted assets in the Water Fund totaled S1,072,022 and a cash balance of $752,658 at December 31, 2011. There were no significant trans- actions to report for the year ended December 31, 2011. (The 2012 financial statements are not yet available to include in this report.) Sanitary Sewer Utility Property owners in the City are served by individual sewer systems or in limited areas by municipal sewer. Capital plans will provide for an increase in the number of properties to be served by municipal sewer and connection to the Regional Sewer System, The Metropolitan Council Environmental Services (MCES) plans to extend regional sewer service to serve a greater area of the City. The City uses an enterprise fund to account for its sewer operations. The unrestricted assets in the Sewer Fund totaled $62,994 and a cash balance of $27,062 at December 31, 2011. There were no significant transac- tions to report for the year ended December 31, 2011. Storm Sewer Utility The City operates a storm sewer utility. The system of conveyances is owned and operated by the City and designed for collecting or conveying storm water, and that is not used for collecting or conveying sewer. The City collects an annual fee from property owners that is used to pay for the cost of constructing and main- taining the system. Background 4 CAPITAL IMPROVEMENT PLAN AND DEBT SERVICE Tile City has developed amulti-year (20l3-2V 7) capi- tal project plan for its utilities. The Capital Improve- ment Plan (CIP) provides details on project costs by year and proposed funding smurces. Identified fund- ing sources include the planned issuance of debt, The City aohcipahesadditional capital project spend- ing after year 2017but the specific projects and cost estimates have not been identified and are therefore not included inthe report. The [lP provides important input for the financial plans included in the report. The financial plans are inclusive of all sources and uses of funds, both oper- ating and non -operating, including capital spending plans. At this hrne the City does not anticipate any capital improvements for the storm ecnxr utility in the next five years. /\ [lPaurnmu,y is therefore not included in the report for storm aevvcr projects, Capital Projects The projects included inthe C[yinclude projects h`ex- pand Uhccapaci(yandco,n:ctdchcioncieaofdhevvnter and sanitary sewer systems. The City o[Lake Elmo is developing community with significant utility ex- puouinnoeedy. Projects include expansion of the City's water sup- ply capacity and diebibuhnn ayshern. Sanitary sewer services will beexpanded through tile construction of connections to the Regional Sewer System. As n developing cnnnroonit * � the [i|y's capital im- provement plans focus on rxponyion and does not presently include capital spending for maintenance o[ cxishngsyaienns. This will need future consideration by the Cityas dbccononnunity develops and io|ras|ru«- horrages and requires major maintenance and/or re- placement, Source of Funding for Capital Projects The source offunding for the planned capital projects includes either one n(the following sources oracom- bination thereof: cash balance from Water Fund and Sewer Fund; bond proceeds; levying o[special nsscse' nnenb,Hranb\ tax increment revenue collections, and intergovernmental revenue. Tothe extent future development expectations exceed or to|| shod of the City'x projections, the City nnoy want toadjust the announto/water project costs hnbe paid for with bond proceeds versus cash, Debt Service The cunontClP for water and sanitary sewer uh|hiem anticipates the use of bonds to undertake needed ion- prmveoneots while keeping fees aslow as possible. The projections assume that the City will issue gen- eral obligation bonds and use uhUty revenues to pay all principal and interest. This approach provides the lowest cost n/debt. The bonds will not count against the City'y debt |innit Debi management is an impor- tant factor in the [iiy'songoing capital improvements p|anning. The City has the authority boissue pure revenue bonds far these improvements. With general obligation bonds, the City pledges tnlevy property taxes h`cover any shortfall in utility revenues. Revenue bonds are Capital Improvement Plan and Debt Service backed au|e|y by uhUh/ revenues. The alternative use n[revenue bonds without ageneral obligation pledge would have several financial implications for the City: v }n(rves| rates will be higher. The difference will depend onthe terms o/the issue and the operation o[tile Uh|i|y. * The City will be required to set fees that will cre- ate revenueythat produce net inconnr in excess of debt service. Any scenarios with ongoing annual deficits w/nu|d not be viable. ° The bond issue would include u debt service re- serve fund. /\ portion uf the bond proceeds would be set aside to make payments in the event ofrev- enue sburttu|1s. Ap a result, higher fees will he required with the use uf revenue bonds k»finance planned improvoonorda. The finance plans and related fee schedules included in the report anticipate the issuance of general oh||8ohnn (G.().) revenue hoods to finance certain capital improvements. The estimates for debt service are based oobonds tobcpaid generally over 2Oyears or less. The estimated interest rates used to calculate anouel debt service were conservatively estimated based on tuday'y current rote environment (todny's rates for a/\o2rating plus 25basis points [oranhcipoted 2013bundio(Y and 5Obasis points for later yoars). The actual interest rates will depend oofinal structure and rnarkctcondihons at time ofissuance, Beginning on pogo 9, a oornrnary of estimated oonoa| debt service is provided for years 2Ol2 to2O2l which is the planning horizon for the financial plans. On pages lOand ll, detail on the annual estimated debt service for future water and manitarysewer bond issuances is shown. The chart on poge]2 provides a longer term vievv o/ projected nnnoo| debt service for year 20'12 through 2035, or over the life of the City's existing bonds and the life offuture estimated bond issuances included inthe report. The timing of principal payments obovvn in the re- port is structured to match *uhnnatpd future revenue. Dosed on the debt xkuch/xz and assumptions for the otudyand report, hyyxar2OZlthe City will have oonn' bioedcaoh balance in the water and sewer funds that is nearly equivalent ho9U%nfthe estimated outstanding debt obligations. Actual future growth (dcvr|oponcnH will gr,ady impact these estimates. The City will have options attime of bond issuance toconsider debt re- payment uchedo|eaUhx(arernore aggressive than what is included in this report, if future revenue and cash balances suggest a more aggressive schedule is fea- sible. The City will have the option tnstructure bond cp|| dates that will provide the City with the greatest amount of flexibility to manage its debt. These deci- sions cunhenoadeonou|aeuunoohyisouancrbomiuio tile future, Capital Improvement Plan and Debt Service 6 City of Lake Elmo Water Fund Summary of Capital Improvement Plan (CIP) Capital Improvement Plan and Debt Service City hos not identified but does anticipate there will be future projects in years 2018-2021. 2013 2014 2015 2016 2017 2018 2019 2020 2021 Total Water supply well No. 4 and pumphouse /connection 1,500,000 1,500,000 Keats Ave 16" trunk watermain extension 1,050,000 1,050,000 Phase I: Western 194 Corridor (Inwood to Keats) Segment 1: Water booster pump 610,000 610,000 Segment 2: Inwood Ave 16" trunk watermain extension 1,600,000 1,600,000 Segment 3: 10th St to EP Bus Park 16" trunk watermain ext 780,000 780,000 Alt Segment 3: Azur Prop 16" trunk watermain extension Alt Segment 5: 12" trunk watermain to non-contiguous East 400,000 400,000 Alt Segment 7: Ground storage tank 600,000 600,000 Phase II Eastern 194 Corridor (Lake Elmo Ave. to Manning) Segment 4: Lake Elmo Ave 12" trunk watermain extension 2,775,000 2,775,000 Phase Mb: Village Area (East to Village Parkway) Replace/upgrade watermains as streets disturbed 900,000 900,000 Village Parkway/39th Street 400,000 600,000 1,000,000 Total 5,540,000 400,000 1,500,000 3,175,000 600,000 - 11,215,000 funding Source for Water Coital Projects Cash from Water Fund 1,500,000 925,000 250,000 2,675,000 Bond proceeds 3,540,000 2,000,000 5,540,000 Grants 1,000,000 1,000,000 Intergovernmental 1,000,000 1,000,000 Tax Increment /Developer Contribution 400,000 250,000 350,000 1,000,000 Total 5,540,000 400,000 1,500,000 3,175,000 600,000 11,215,000 7 City of Lake Elmo Sanitary Sewer Fund Summary of Capital Improvement Plan (CIP) Capital Improvement Plan and Debt Service City has not identified but does anticipate there will be future projects in years 2018-2021. 2013 2014 2015 2016 2017 2018 2019 2020 2021 Total Segment 4: New lift station at Hudson & Keats, Connecting FM 900,000 Segment 6: Hudson Blvd lift station replacement, connecting FM to WONE Phase II: Easter 194 Corridor (Lake Elmo Ave, to Manning) Option A: 27/30" trunk sewer extension from MCES connectoin Option B: 18/27" trunk sewer extension from MCES connection 700,000 500,000 Option B: Future lift statoin west of Lake Elmo Ave, 200,000 Phase Mb: Village Area (East to Village Parkway) Village lift station and forcemain 3,800,000 Segment 1: Lake Elmo Ave & 30th St & 39th St Segment 2: Village Parkway to THS Total Fundina Source for Sanitary Sewer Capitol Projects Cash from Sewer Fund Bond proceeds Grants intergovernmental Tax Increment/Developer Contribution (future TIF districts and development) Total 900,000 - 300,000 300,000 1,100,000 600,000 600,000 4,500,000 1,600,000 1,100,000 600,000 600,000 300,000 3,500,000 1,200,000 1,100,000 1,000,000 400,000 4,500,000 1,600,000 180,000 420,000 ,000 600,000 300,000 180,000 420,000 - 600,000 300,000 1,200,000 200,000 3,800,000 1,100,000 1,200,000 - 8,700,000 300,000 5,800,000 1,000,000 360,000 1,240,000 8,700,000 City of Lake Elmo Water, Sanitary Sewer, Storm Sewer Funds Summary of Future Debt Service and General Obligation (G,O.) Revenue Bonds Outstanding Capital Improvement Plan and Debt Service Years 2022 2013 2014 2015 2016 2017 2018 2019 2020 2021 to 2035 Total DEBT SERVICE WATER UTILITY FUND GO Water Rev Bond 2005A 300,025 320,650 315,250 - 935,925 GO Ref Boncl 2009A (Refund 20028) 53,680 52,480 51,280 49,880 53,680 52,128 55,575 53,850 51,925 - 474,478 GO Ref Bond 2012A (Refund 2005A) - . - 281,043 272,143 293,313 284,043 279,843 270,643 3,139,756 4,820,814 EST GO Water Rev 2013 Bonds 95,958 125,958 125,778 125,568 125,313 124,998 164,623 163,573 167,383 4,121,230 5,340,378 EST GO Water Rcv 2016 Bonds 41,250 341,250 337,350 232,850 229,350 225,450 931,100 2,338,600 Total 449,663 499,088 492,308 497,741 792,386 807,818 737,091 726,616 715,401 8,192,086 13,910,194 SANITARY SEWER UTILITY FUND EST GO Sewer Rev 2013 Bonds EST GO Sewer Rev 2014 Bonds EST GO Sewer Rev 2015 Bonds Total 86,285 86,285 186,285 185,685 184,985 184,135 183,085 181,835 180,335 228,635 3,434,280 5,035,545 25,625 75,625 75,150 74,600 73,950 123,200 121,450 119,500 759,775 1,148,875 - 74,950 74,475 73,925 73,275 72,525 121,650 119,700 765,975 1,376,475 211,910 336,260 334,610 332,660 330,310 377,560 423,435 467,835 4,960,030 7,860,895 STORM SEWER UTILITY FUND No existing or anticipated oustanding debt TOTAL ANNUAL COMBINED DEBT SERVICE Combined Total 535,948 710,998 828,568 832,351 1,125,046 1,135,128 1,114,651 1,150,051 1,183,236 1 DEBT OUTSTANDING WATER OUTSTANDING DEBT As of 12/31/2012 4,695,000 4,505,000 4,315,000 4,080,000 3,845,000 3.585,000 3,325,000 3,065,000 2,810,000 Estimated Future Debt 3,630,000 3,600,000 3,570,000 5,600,000 5,270,000 4,940,000 4,670,000 4,400,000 4,125,000 Total 8,325,000 8,105,000 7,885,000 9,680,000 9,115,000 8,525,000 7,995,000 7,465,000 6,935,000 0 0 0 SANITARY SEWER OUTSTANDING DEBT As of 12/31/2012 0 0 0 0 0 0 0 0 0 0 Estimated Future Debt 3,605,000 4,755,000 5,705,000 5,505,000 5,305,000 5,105,000 4,855,000 4,555,000 4,205,000 - 9 Total 3,605,000 4,755,000 5.705,000 5,505,000 5,305,000 5,105,000 4,855,000 4,555,000 4,205,000 0 STORM SEWER UTILITY FUND No existing or anticipated oustanding debt TOTAL DEBT OUTSTANDING Combined Total 11,030,000 12,160,000 13,590,000 15,185,000 14,420,000 13,630,000 12,850,000 12,020,000 11,140,000 Notes: EST (estimated) amounts are shown for bonds with dates after 2012. Estimates are based on the capital improvement plan included in the report. Annual debt service figures are preliminary. Actual structure may vary depending on financial management decisions made by the City. Interest rates and terms will vary, Detail on estimated interest rates and terms are provided on pages 10 and 11. Year Beg 2013 1 2014 2 2015 3 2016 4 2017 5 2018 6 2019 7 2020 8 2021 9 2022 10 2023 11 2024 12 2025 13 2026 14 2027 15 2028 16 2029 17 2030 18 2031 19 2032 20 2033 21 2034 22 2035 23 Total City of Lake Elmo Estimated Future G.O. Water Revenue Bonds Analysis of Possible Future Estimated Debt Service Based on Capital Improvement Plan (CIP) (Terms shown including maturites and rates are for preliminary planning purposes only) 2013 G.O. Water Revenue Bonds Est Interest Principal Rates Interest Service Total Debt Outstanding Balance $3,630,000 $0 0.55% $95,958 $95,958 $3,630,000 $30,000 0.60% $95,958 $125,958 $3,600,000 $30,000 0,70% $95,778 $125,778 $3,570,000 $30,000 0,85% $95,568 $125,568 $3,540,000 $30,000 L05% $95,313 $125,313 $3,510,000 $30,000 1.25% $94,998 $124,998 $3,480,000 $70,000 1,50% $94,623 $164,623 $3,410,000 $70,000 1.70% $93,573 $163,573 $3,340,000 $75,000 1,85% $92,383 $167,383 $3,265,000 $150,000 2.00% $90,995 $240,995 $3,115,000 $150,000 2.10% $87,995 $237,995 $2,965,000 $150,000 2.20% $84,845 $234,845 $2,815,000 $150,000 2.30% $81,545 $231,545 $2,665,000 $150,000 2.40% $78,095 $228,095 $2,515,000 $150,000 2.50% $74,495 $224,495 $2,365,000 $200,000 2.60% $70,745 $270,745 $2,165,000 $200,000 2,70% $65,545 $265,545 $1,965,000 $200,000 2.80% $60,145 $260,145 $1,765,000 $375,000 2,90% $54,545 $429,545 $1,390,000 $375,000 3.00% $43,670 $418,670 $1,015,000 $375,000 3.10% $32,420 $407,420 $640,000 $325,000 3.20% $20,795 $345,795 $315,000 $315,000 3,30% $10,395 $325,395 $0 $3,630,000 $1,710,378 $5,340,378 Application of Funds: Construction Other Costs/Rounding Total $3,540,000 $90,000 $3,630,000 Year Beg 2013 2014 2015 2016 1 2017 2 2018 3 2019 4 2020 5 2021 6 2022 7 2023 8 2024 9 2025 10 2026 11 2027 12 2028 13 2029 14 2030 15 2031 16 2032 17 2033 18 2034 19 2035 20 Total Principal $0 $0 $0 $0 $300,000 $300,000 $200,000 $200,000 $200,000 $200,000 $200,000 $100,000 $100,000 $100,000 $160,000 $2,060,000 Capital Improvement Plan and Debt Service 2016 G.O. Water Revenue Bonds Est Interest Rates 0.80% 0,85`Yo 0.95% 110% 1.30% 1.50% L75% 1.95% 2.10% 2.25% 2.35% 2.45% 2.55% 2.65% 2.75% 2.85% 2.95% 3.05% 3.15% 3.25% 3,35% 3.45% 3.55% Application of Funds: Construction Other Costs/Rounding Total Total Debt Outstanding Interest Service Balance $2,060,000 $41,250 $41,250 $37,350 $32,850 $29,350 $25,450 $21,250 $16,750 $12,050 $9,600 $7,050 $4,400 $0 $0 $0 $0 $0 $0 $0 $0 $278,600 $0 $0 $0 $41,250 $341,250 $337,350 $232,850 $229,350 $225,450 $221,250 $216,750 $112,050 $109,600 $107,050 $164,400 $0 $0 $0 $0 $0 $0 $0 $0 $2,338,600 $2,000,000 $60,000 $2,060,000 10 $2,060,000 $1,760,000 $1,460,000 $1,260,000 $1,060,000 $860,000 $660,000 $460,000 $360,000 $260,000 $160,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 City of Lake Elmo Estimated Future G.O. Sewer Revenue Bonds Analysis of Possible Future Estimated Debt Service Based on Capital Improvement Plan (CIP) (Terms shown including maturites and rates are for preliminary planning purposes only) Capital Improvement Plan and Debt Service Projected Future 2013 G.O. Sewer Revenue Bonds Projected Future 2014 G.O. Sewer Revenue Bonds YEAR Projected Future 2015 G.O. Sewer Revenue Bonds Est Est Est Interest Total Debi Outstanding Interest Total Debt Outstanding Interest Total Debt Outstanding Year Principal Rates Interest Service Balance Year Principal Rates Interest Service Balance Principal Rates Interest Service Balance Beg $3,605,000 Beg S1,250,000 Beg $1,150,000 2013 1 SO 0.5550 $86,285 586,285 S3,605,000 2013 $0 0.80°/0 SO 2013 $0 0.80% SO 2014 2 $100,000 0.60% $86,285 5186,285 S3,505,000 2014 1 SO 0.85% S25,625 $25,625 $1,250,000 2014 SO 0.85% $0 2015 3 $100.000 0.70% $85,685 5185,685 53,405,000 2015 2 5.50,000 0.95% $25,625 $75,625 $1,200,000 2015 1 $50,000 0.95% $24,950 $74,950 51,100,000 2016 4 5100,000 0,85% 584,985 0184,985 53,305,000 2016 3 550,000 1.10% $25,150 $75,150 $1,150,000 2016 2 550,000 1.10°7' 524,475 $74,475 51,050,000 2017 5 S100,000 1.05°,10 $84.135 5184,135 $3,205,000 2017 4 550,000 1.30% $24,600 $74,600 $1,100,000 2017 3 550,000 1,30% $23,925 573,925 51,000,000 2018 6 S100.000 1.25% $83,085 5183,085 03,105,000 2018 5 550,000 1.50% $23,950 $73,950 $1,050,000 2018 4 $50,000 1.50% $23,275 573,275 $950,000 2019 7 5100,000 1.50% 581,835 5181,835 03,005,000 2019 6 5100,000 1.75% 023,200 5123,200 5950,000 2019 5 050,000 1.75% 022,525 $72,525 $900,000 2020 8 5100,000 1.70% S80,335 $180,335 S2,905,000 2020 7 $100,000 1.95% $21,450 5121,450 5850,000 2020 6 $100,000 1.95% $21,650 $121,650 $800,000 2021 9 5150,000 1,85% $78,635 $228,635 S2,755,000 2021 8 $100,000 2.10% $19,500 5119,500 S750,000 7$100,000 2.10% 519,700 $119,700 0700,000 2022 1D 0100,000 2.00°/0 $75,860 $175,860 $2,655,000 2022 9 $100,000 2,25% $17,400 $117,400 5650,000 202222°0228$100,000 2.25% S17,600 $117,600 $600,000 2023 11 5100.000 2.10% 573,860 0173,860 $2,555,000 2023 10 $100,000 2.35% $15,150 5115,150 S550,000 9 5100,000 2.35% $15,350 5115,350 5500,000 2024 12 5100,000 2.20% $71,760 5171,760 52,455,000 2024 11 $150,000 2.45% $12,800 0162,800 $400,000 2024 10 5100,000 2.45% $13,000 $113,000 $400,000 2025 13 5100,00D 2.30% $69,560 5169,560 02,355,000 2025 12 $150,000 2.55% S9,125 S159.125 5250,000 2025 11 S150,000 2.55% $10,550 $160,550 5250,000 2026 14 5100,000 2.40% 567,260 5167,260 $2,255,000 2026 13 $200,000 2.65% 05,300 $205,300 $50,000 2026 12 5150,000 2.65% 56,725 $156,725 $100,000 2027 15 5250,000 2.50% 564,860 0314,860 52,005,000 2027 14 2.75% 50 $0 $50,000 2027 13 5100,000 2.75% 52,750 5102,750 $0 2028 16 3250,000 2_60% $58,610 0308,610 9,755,000 2028 15 2.85% $0 SO $50,000 20282.85% SO $0 $0 2029 17 5250,000 2.70% $52,110 5302,110 S1,505,000 2029 16 22029 14 15 .95% SO SO $50,0002.95%© 50 $0 SO 2030 18 5250,000 2 809'0 $45,360 $295,360 51,255,000 2030 17 3.05% 50 SO $50,000 2030 16 3.05% SO 50 $0 2031 19 $300,000 2.90% $38,360 $338,360 5955,000 2031 18 3.15% SD SO $50,000 2031 17 3.15% SO $0 SO 2032 20 $300,000 3.00% $29,660 5329,660 5655,000 2032 19 3.25% SO SO $50,000 2032 18 32530 SO $0 $0 2033 21 5300,000 3.1030 $20,660 5320,660 5355,000 2033 20 3.35% 50 SO $50,000 2033 19 3.35% SO $0 SO 2034 22 $355,000 3.20% $11,360 5366,360 $0 2034 21 3.45% $0 SO $50,000 2034 20 3.45% SO $0 SO Total $3,605,000 01,430,545 $5,035,545 Total 31,200,000 5248,875 $1,448,875 Total 01,150,000 5226,475 51,376,475 Application of Funds: Application of Funds: +.A_pplication of Funds: Construction $3,500.000 Construction 51,200,000 Construction $1,100,000 Other Costs/Rounding $105,000 Other Costs/Rounding 550,000 Other Costs/Rounding 050.000 Total 63,605,000 Total $1,250,000 Total 51,150.000 11 1,400,000 1,200,000 $1,000,000 City of Lake Elmo Annual Estimated Debt Service Based on Future Bonding Plans in CIP and Estimated Structure and Future Rates (Includes Debt Supported by Water and Sewer Revenue Only) $800,000 ----- : - $600,000 - _ __ Capital Improvement Plan and Debt Service The annual estimated debt service amounts shown in this chart include general obligation water revenue bonds and general obliga- tion sewer revenue bonds. The annual amounts in- clude both existing debt service (on outstanding bonds) and future estimat- ed debt service on bonds anticipated to be issued in future years and paid from utilitv revenues. Future J=_ bond issuance estimates are $400,000 based on the Cityapital improvement plan. This chart includes general $ 200,000 obligation debt supported by utility revenue only and does not include existing or future estimated general $0 obligation debt that is paid N rn Lt Dr, co a) 0 Lfl .0 r•-• 00 61 0 1-1 N rn LA from property tax levy. H H H H H H H r-INN• NNNNNNNNM M O 00000000000000000000000 N CNN CNN CNN CNN N CNN CNN N N N N N CNN N N N 1 2 16,000,000 14,000,000 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 City of Lake Elmo Est. Combined Outstanding G.O. (Water and Sewer) Current and New Revenue Bonds Compared to Estimated Future Combined Cash Balances for Water and Sewer Funds 2013 2014 2015 2016 2017 2018 2019 Total Est Outstanding Debt (Current and New) Est Cash Balance 2020 2021 Capital Improvement Plan and Debt Service Over the next four years (from 2013 to 2016) the out- standing general obligation debt supported by water and sewer revenues is pro- jected to increase each year. The City anticipates the is- suance of debt to support planned infrastructure ex- pansion projects. During this same period, based on assumptions and informa- tion included in the study, the estimated annual cash balance for the water and sewer funds combined is estimated to increase each year, This is driven by the estimate that annual reve- nue from new development will exceed the growth in annual expense (including debt service expense) Current financial plan esti- mates project that by year 2021 the City will have combined cash balance in the water and sewer funds that is nearly equivalent to 90% of the estimated out- standing debt obligations. Actual future growth (de- velopment) will greatly im- pact these estimates. 13 UTILITY RATES Key Factors To project future utility rates necessary to maintain the financial stability of the City's utility operations re- quires development and analysis of the following key factors: Estimates for future annual operating expendi-: tures, including personnel, materials and supplies, cost of electricity, and other operating expenses, Metropolitan Council Environmental Service fMCES' sewer fee charged to the City by the Met- ropolitan Council for regional collection and treat- ment of waste water. This is an operating expense that the City does not have direct control over. Annual capital expenditure to maintain and im- prove the existing systems. Annual debt service on bonds issued to finance capital improvements. Growth in customers using and paying for the systems. Future growth will provide additional revenue but will also create additional demand for services. * Available other revenue sources other than fees and charges to users of the water and sanitary sewer services. Annual Operating Expenditures Costs incurred in operating the water and sewer systems, which are used up in the period in which acquired, are recorded as operating expenditures. Annual growth in operating expenditures, not including the MCES charge, has been modest. It is anticipated that growth in future years will be about 2 percent per year. Approximately a third of the operating expense (not including depreciation) is for personnel costs (labor) and the balance for materials, supplies, and other operating expense. Depreciation is shown under operating expenditures and is the process of allocating the costs of an asset over its useful life in a systematic and rational manner. Depreciation is shown to remain constant over the fi- nancial planning horizon for the study. Estimate for future depreciation was not part of the study. It will be important for future updates to the financial plans to consider funding of depreciation and replacement of infrastructure. Metropolitan Council Environmental Services (MCES) The MCES charge to cities for regional collection and treatment has been volatile in recent years. MCES has experienced revenue loss from the significant drop in regional development which has caused a corre- sponding decline in revenue collected by the Council for Sewer Availability Charges (a one time fee for new connections). For projection purposes, the study as- sumes that future charges paid to MCES for collection and treatment will increase by 2 percent annually. This is shown as an annual operating expense to the City's Sewer Fund which is paid from revenue collected from the City's utility customers. Utility Rates 14 Annual Capital Expenditures The City anticipates paying for future capital improve - merit project costs with o combination of revenue sounes. The City anticipates future development will provide revenue to pay for utility expansion through the collection o[trunk line availability fees and connec- tion fees. The City may reduce the amount o/planned bonding b`pay for capital improvements to the extent cash from collection o(these charges ieavailable inthe utility funds hodoso. Paying for annoa|planned capital improvement proj- ects n/i(h cash may be e sound strategy depending on the details of the project. It avoids incurring costs of issuance and annual interest expense. However, this strategy requires advance planning and irnp]ennentn' hono/uH\ity fees and charges that provide adequate cash flow. For large (nnn,rouhne)capita| expenditures o«noan' hdpohed capital expenditures, the use of bonding to fund capital minimizes annual rate increases that oth- erwise would be necessary. It also aUnvvu the City to charge future customers the cost ofinfrastructure with o longer uxphd life, versus putting the entire burden on todny'acustomcrs. The [ity's[lPdoes anticipate bonding for certain project costs. The resulting annual debt service on the bonds is included in the financial plans. Debt Service Debt service in the Water and Sanitary Sewer Funds is paid from revenue collected from utility fees and availability and connection charges. Pnaoeody the City has debt outstanding iothe Water Fund but does not report debt outstanding io the Sanitary Sewer or Storm Water Funds. The CLPonhdpahsthe City will issue debt inthe next five years Lbatvv0bosupported by revenue collected in the Water Fund and Sanitary Sewer Fund. All Current and future debt baccounted for iuthe fi- nancial plans that are included in this report. The e- hnnahcd debt service is based on generally 20 years or less for bonds payable aiestimated interest rates. Fu- ture estimated utility fees and cbux@¥p naUeci the cost o[the estimated increase for debt service. Growth ^nCustomers Growth incustomers from future land development ia a major factor in determining the projections for future utility rates. New development will bring unincrease in revenue to the [ity'autility funds through the col- lection ofavailability and connection charges and fees «o|\ncLcd for service, Availability charges and con- nection charges are one time charges collected at the time of development and building permit. Estimat- ing the biorease in future ruotonnera from growth in residential and commercial development is the most volatile factor in developing financial projections for the utility funds. The last page ofthe report, page 35, in the Appendix Section, includes information on the omoorned growth inresidential equivalent connections ("RE[") from future development. The projected an- nual 8row'dh inKE['xp/auestablished hy City staff and provided to Northland for the study and report. Growth incustomers will a\|ovv the City to spread ex- isting fixed costs, including overhead, over more units and volume. Growth incustomers will allow the City tmminimize future increases in utility fees that other_ wise will hcnecessary. Utility Rates 15 Available Other Revenues There is limited other revenues that provide a source of funding for utility services. The majority of the cost to operate and maintain the system is paid from fees and charges collected from those using the system. Other revenue includes interest income on cash bal- ances, special assessments, grants, and rents. Historical Utility Rates Information on historical rates is provided on page 18. This includes a summary of prior years approved util- itv rates for years 2007 - 2012. Rates shown are billed quarterly, with the exception of the storm water fee which is billed to customers receiving this charge on an annual basis. The City charges a basic service fee for water only. Future Utility Rates Information on future projected utility rates for years 2013 to 2021 is provided on page 19. The projected future rates reflect the rates necessary to maintain ad- equate cash balances in the utility funds. These rates (applied against the estimated volumes on page 19) were used to calculate the annual estimated operating revenue that is shown in the financial plans for each fund. The tier structure the City uses for charging custom- ers for water, based on volume of water sold, was not reviewed as part of this study and report. Connection and Trunk Line Availability Charges Water and Sewer connection charges are estimated to be collected at time of building permit. The charges are to cover the cost of constructing and maintaining the utility systems. The City presently does not have a connection charge for sanitary sewer, A charge is included for future years beginning with a rate of $1,000 in year 2013 and inflated annually at 3-percent; this rate is necessary to maintain sufficient revenue to pay for debt service on capital projects. This is reflected in the revenue shown in the financial plans for the Sanitary Sewer Fund. In addition, the report and financial plans are based on the City increasing the amount it charges for connec- tion to municipal water to a level needed to fund infra- structure expansion. The amount is shown at $1,000 for year 2013,-which is an increase from the $140 pres- ently charged. This amount is shown to increase an- nually by 3-percent. Water and Sewer Trunk Line Availability Charges are estimated to be collected at time of development of property (with the development contract). The charge is necessary to pay for the cost of constructing and maintaing the trunk lines and related infrastructure of the systems. Beginning with year 2013, the following is estimated for develpoment related charges for one residential equivalent connection (REC) unit: City Sanitary Sewer Connection $1,000 City Water Connecction $1,000 City Sanitary Sewer Trunk Line Availability $3,000 City Water Trunk Line Availability $3,000 Met Council Sewer Availability Charge $2.435 Total $10,435 Projected Volume of Water Sold and Sanitary Sewer Billed Annual estimated volume of water sold by tier and es- timated sanitary sewer billed by year is included on Utility Rates 16 page2O. The chart uopage 2l provides break -down of the increase in Volume n(water sold comparing the estimated amount sold by year to existing custom- ers, which is based on 2011 vu|unnca.tothe estimated amount that is attributed to grovvtb in the cusionner base from future projected dcvp|npnnoo(. bnh/rrnahnn nnthe projected increase inresidential equivalent cnn' nechono(KEQbyyeuriap,ovidcdonpage35,Nhc|asi page ofthe report, Utility Rates 17 WATER AND SEWER SERVICE Residential Water Basic Service fee (per meter or per unit/qtr) Sewer Basic Service fee (per meter or per unit/qtr) Water (per meter or per unit per 1,000 gallons): Tier 1: Water usage per first 15,000 gallons Tier 2: Water usage +15,000 gallons to 30,000 gallons Tier 3: Water usage +30,000 gallons to 50,000 gallons Tier 4: Water usage +50,000 gallons to 80,000 gallons Tier 5: Water usage +80,000 gallons Sewer (per 1,000 gallons) Commercial and Industrial Water Basic Service fee (per meter or per unit/qtr) Sewer Basic Service fee (per meter or per unit/qtr) Water (per meter or per unit per 1,000 gallons): Tier 1: Water usage per first 10,000 gallons Tier 2: Water usage +10,000 gallons to 25,000 gallons Tier 3: Water usage +25,000 gallons Tier 4: Water usage +29.000 gallons to next Tier Tier 5: Water usage +36,000 gallons to next Tier Sewer (per 1,000 gallons) SURFACE WATER Residential (flat fee charged annually) Non -Residential (flat fee charged annually based on equivalent res. unit) Utility Rates City of Lake Elmo Fee Schedule for Prior Years 2007 2008 2009 2010 2011 2012 Budget $23.50 $23.75 $25.00 525,00 $25.00 $25.00 $0.00 10,00 $0.00 $0.00 $0.00 50,00 $1.80 $2.05 $2.15 $2,10 52.14 $2.14 51,80 12,05 $2.15 52.80 52,86 $2.86 $1.80 $2.05 $2.15 $3.70 $3.77 $3.77 $1.80 12,05 $2.15 $4.90 $5.00 55,00 $1.80 $2.05 $2.15 $6.50 $6.63 $6.63 52,75 53,71 14,08 54,35 $4.50 54,50 $23.50 523,75 $25.00 $25.00 125,00 $25.00 10,00 $0.00 $0.00 $0.00 $0.00 $0.00 52,75 $3.00 $3.10 $3.05 $3.11 $3.11 $2.75 $3.00 $3.10 13,20 $3.26 $3.26 $2.75 $3.00 53,10 $3.70 $3.77 $3.77 $2.75 $3.00 $3.10 $4.90 $5.00 $5.00 $2.75 13,00 13,10 $6.50 $6.63 $6.63 $2.75 $3.71 54,08 $4.35 $4.50 $4.50 $30.00 $30.00 535,00 540.00 $50.00 $50.00 $30.00 530,00 535,00 $40.00 $50.00 $50.00 SEWER CONNECTION CHARGES (collected with permit) Single family, duplex, townhouse, mobile home (per unit) $0 $0 $0 $0 $0 $0 Comm/industrial, churches, schools, hospitals, nursing homes (per unit) $0 $0 $0 $0 $0 SO WATER CONNECTION CHARGES (collected with permit) Meter $275 $275 $285 $300 $300 $300 Single family, duplex, townhouse, mobile home (per unit) $140 $175 $130 $140 $140 $140 Comm/industrial, churches, schools, hospitals, nursing homes (per unit) $140 $175 $130 $140 $140 $140 TRUNK LINE AVAILABILITY CHARGES (collected at time of development) Sewer availability charge per unit $3,500 $3,500 $3,500 $3,300 $3,500 $3,500 MCES connection charge (per unit) $2,150 $2,150 $2,150 $2,150 $2,230 $2,230 Water availability charge for new development per unit $3,675 $3,675 $3,675 $3,900 $3,900 $3,900 Water availability charge for existing structures within Old Village $800 $800 $800 $800 $800 $800 1 8 WATER AND SEWER SERVICE Residential Water Basic Service fee (per meter or per unit/qtr) Sewer Basic Service fee (per meter or per unit/qtr) Water (per meter or per unit per 1,000 gallons): Tier 1: Water usage per first 15,000 gallons Tier 2: Water usage +15,000 gallons to 30,000 gallons Tier 3: Water usage +30,000 gallons to 50.000 gallons Tier 4: Water usage +50,000 gallons to 80,000 gallons Tier 5: Water usage +80,000 gallons Sewer (per 1,000 gallons) Commercial and Industrial Water Basic Service fee (per meter or per unit/qtr) Sewer Basic Service fee (per meter or per unit/qtr) Water (per meter or per unit per 1,000 gallons): Tier 1: Water usage per first 10,000 gallons Tier 2: Water usage +10,000 gallons to 25,000 gallons Tier 3: Water usage +25,000 gallons Tier 4: Water usage +29,000 gallons to next Tier Tier 5: Water usage +36,000 gallons to next Tier Sewer (per 1,000 gallons) SURFACE WATER, Residential (flat fee charged annually) Non -Residential ((lat fee charged annually based on equivalent res. unit) SEWER CONNECTION CHARGES (collected with permit) Single family, duplex, townhouse, mobile home (per unit) Comm/industrial, churches, schools, hospitals, nursing homes (per unit) Utility Rates City of Lake Elmo Fee Schedule Estimated for Future Years Annual Incr Beg Yr 2013 2013 2014 2015 2016 2017 2018 2019 2020 2021, 3.0% $25.75 826,52 $27.32 $28.14 $28.98 $29.85 $30.75 $31.67 $32.62 3.0% $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 50.00 $0.00 $0.00 3.0% $2.20 $2.27 $2.34 52,41 $2.48 $2.56 $2.63 52,71 $2.79 3.0% $2.95 $3.03 53.13 $3.22 $3.32 53 41 $3.52 53.62 53,73 3.0% $3.88 84,00 $4.12 $4,24 84.37 $4.50 54,64 $4.78 $4.92 3.0% $5.15 $5.30 85.46 $5.63 $5.80 $5.97 $6.15 56,33 $6.52 3.0% $6.83 $7.03 $7.24 $7.46 $7.69 $7.92 $8.15 $8.40 $8.65 3.0?',, $4.64 $4,77 $4.92 $5.06 $5.22 $5.37 $5,53 $5.70 $5.87 3.0% $25.75 826,52 $27.32 $28.14 $28.98 $29.85 $30.75 $31.67 $32.62 3,0% $0.00 50,00 $0.00 $0.00 $0.00 $0.00 50.00 50,00 $0.00 3.0% $3.20 83,30 $3.40 $3.50 $3.61 $3.71 $3.82 83,94 54,06 3.0% $3.36 53.46 $3.56 $3.67 $3.78 53.89 $4,01 $4.13 $4.25 3.0% $3.88 54,00 54.12 $4.24 $4.37 $4.50 $4.64 $4.78 $4.92 3.0% $5.15 $5.30 $5.46 55,63 $5.80 55.97 $6.15 $6.33 $6.52 3.0% $6.83 $7.03 57.24 $7,46 57,69 $7.92 $8.15 $8.40 88,65 3.0% $4.64 $4.77 $4.92 $5.06 $5.22 85,37 $5.53 $5.70 55,87 3.0% $51.50 553,05 $54.64 $56.28 $57.96 $59.70 $61.49 56334 S65.24 3.0% 851.50 553,05 $54,64 856,28 $57.96 $59.70 $61.49 $63.34 $65.24 3,0% $1,000 $1,030 $1,061 81,093 $1,126 $1,159 51,194 $1,230 S1,267 51,000 81.030 $1,061 $1.093 $1,126 $1,159 $1.194 $1,230 51,267 WATER CONNECTION CHARGES (collected with permit) Meter 10% $309 $318 $328 8338 $348 $358 5369 $380 $391 Single family, duplex, townhouse, mobile home (per unit) 3.0% $1,000 $1,030 $1,061 $1,093 $1,126 $1,159 51,194 51,230 $1,267 Comm/industrial, churches, schools, hospitals, nursing homes (per unit) 3.0% $1,000 51,030 $1,061 $1,093 $1,126 $1,159 81,194 51,230 51,267 TRUNK LINE AVAILABILITY CHARGES (collected at time of development) Sewer availability charge per unit 3.0% $3,000 $3,090 $3,183 $3,278 $3,377 53,478 $3,582 $3,690 $3,800 MCES connection charge (per unit) 2.0% $2,435 52,484 $2,533 52,584 $2,636 $2,688 $2,742 52,797 82,853 Water availability charge for new development per unit 3.0% 53,000 $3,090 $3,183 $3,278 $3,377 $3,473 $3,582 $3.690 $3,800 Water availability charge for existing structures within Old Village 3.0% $824 8849 5874 $900 $927 $955 $984 81,013 $1.044 1 9 City of Lake Elmo Customer Equivalent Units, Volume of Water and Sanitary Sewer Service Billed Volume figures below are annual amounts and shown in 1,000 of Gallons Utility Rates Future Estimates for Financial Plans 1 2 3 4 5 6 7 8 9 10 2011 2012 Budget 2013 2014 2015 2016 2017 2018 2019 2020 2021 Residential Water Basic Service fee (per meter or per unit/qtr) 874 874 881 910 948 1,012 1,058 1,109 1,260 1,311 1,369 Sevrer Basic Service fee (per meter or per unit/qtr) 874 874 881 910 948 1,012 1,058 1,109 1,260 1,311 1,369 Water (per meter or per unit): Tier 1: Water usage per first 15,000 gallons 52,440 52,440 52,860 54,580 56,905 60,715 63,490 66,565 75,610 78,655 82,150 Tier 2: Water usage +15,000 gallons to 30,000 gallons 7,500 7,500 7,560 7,806 8,139 8,683 9,080 9,520 10,814 11,249 11,749 Tier 3: Water usage +30,000 gallons to 50,000 gallons 5,000 5,000 5,040 5,204 5,426 5,789 6,054 6,347 7,209 7,500 7,833 Tier 4: Water usage +50,000 gallons to 80,000 gallons 6,841 6,841 6,896 7,120 7,423 7,921 8,283 8,684 9,864 10,261 10,717 Tier 5: Water usage +80,000 gallons 15,500 15,500 15,624 16,133 16,820 17,946 18,766 19,675 22,348 23,249 24,282 Total Water Volume Sold 87,281 87,281 87,980 90,843 94,713 101,054 105,673 110,791 125,845 130,913 136,730 Sewer (per 1,000 gallons) 2,337 2,337 2,356 2,432 2,536 2,706 2,829 2,966 3,369 3,505 3,661 Commercial and Industrial 7,890113322 Water Basic Service fee (per meter or per unitigtr) 109 109 109 109 112 114 120 124 135 143 Sewer Basic Service fee (per meter or per unit/gtr) 109 109 109 109 112 114 120 124 135 143 Water (per meter or per unit): 7,2158,565 Tier 1: Water usage per first 10,000 gallons 6,540 6,540 16:0540D0 6,540 6,840 1,103 7,4408,115 1,310 Tier 2: Water usage +10,000 gallons to 25,000 gallons 1,000 1,000 1,000 1,000 6,690 1,023 1,023 1,138 1,20612°6 1,241 Tier 3: Water usage +25,000 gallons 1,000 1,000 1,000 1,046 1,103 1,1381,310 3,000 3,069 1,0461,241 3,722 3,929 Tier 4: Water usage +29,000 gallons to next Tier 3,000 3,000 3,000 3,138 3,413 3,619 Tier 5: Water usage +36,000 gallons to next Tier 19,416 19,416 19,416 19,416 19,861 20,307 21,420331° 22,088 23,424 24,092 25,428 Total Water Volume Sold 30,956 30,956 30,956 30,956 31,666 32,376 34,151 35,216 37,346 38,411 40,541 Sewer (per 1,000 gallons) 10,000 10,000 10,000 10,000 10,229 10,459 11,032 11,376 12,064 12,408 13,096 TOTAL ESTIMATED WATER BILLED N 1,000 OF GALLONS) 118,237 118,237 118,936 121 799 126,379 133,430 139,824 146,007 163,191 169,324 177,271 20 200,000 180,000 v 160,000 140,000 © 120,000 41 100,000 80,000 2 60,000 40,000 20,000 Estimated Total Gallons o ate 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 - Existing Customers 'as of 2011) New Customers Utility Rates The chart includes water sold to both commercial and residential property. The increase in volume of water sold to new custom- ers is based on the projected new connections (from new development) that is esti- mated to occur in the future years. The analysis assumes the volume sold to existing customers (2011 is the base year) remains constant. 21 FINANCIAL PLANS Based onhistorical financial performance, current uW- ity rates and structure, and anticipated future capital projects, the following financial p|ans(pro (onna)buvc been prepared for the utility funds. Key Assumptions The financial plans for each of the utility funds was developed based on several key assumptions which are osfollows: Operating expenditures, including personnel costs and materials supplies and all other operating ex- pense will increase bv2percent per year. No change in existing tier s|,octure for fees and charges. Depreciation isheld constant inthe financial plans. Fu|vredepreciation expenaewill increase with the addition o/ infrastructure nonebs but for the pur- poses of this report the amount was held constant. Future updates ho the financial plans will need to consider funding ofdepreciation and replacement of infrastructure. Current capital improvement plan will be |mde- rnen(ed at estimated project costs and sources of 6uudhng. This includes an io«veoye in future debt service for payment onbonds hobeissoed. Dh|ky /epx for use of the system (i.e, nm|urne of p/ate,) are shown to increase at the rate of per- cent per year for years 2Ol3 tvIO2l. The percent increase isacross all elements ofthe City'scurrent rate sbuchune, including the base and her rates. Actual yonr*`year activity (ic' vn|uonenfwater en|d' oprrodo� expenditures, etc) and actual ex' pendihure on capital projects will determine what actual rates will need |obeset atin order to nnain' txin adequate cash in theudUty funds. • Connection and availability charges are shown to increase utthe rate of3percent per year. Revenue from these char -es will beneeded to pay for the expansion o[the system and the planned capital projects and related debt service. • Water connection charge is increased from $140 in 2012 to $3'000beginning in ycar2Ul3, The water connection charge is than adjusted onnua|)y at the rate of3percent. • Sewer connection charge is implemented begin- ning in year 2013. The City presently does not charge for sewer connection, Initially obop/n to he set at $3'000 than adjusted annually at the rate of 3penccnL w Metropolitan Council Environmental Services (K4CES)connection charge isshown toincrease hy anestimated 2percent per year. The actual annual om000to °/i]| bnset byMCES. * The proposed future utility fees and charges are shown to increase at a |cvd that is adequate to maintain n positive cash balance in the funds and to meet a goal of maintaining cosh balance at 60 percent ofoperating expenditures. Financial Plans 22 CITY OF LAKE ELMO WATER FUND FINANCIAL PLAN Financial Plans Protec led 1 2 3 4 5 6 7 8 9 10 tto;rs 2010 2011 2012 Budget 2013 2011 2015 2016 201/ 2018 20:12,2 2020 22121 SOURCE OF FUNDS: Operating: Customer Billing Revenue AD1 TOTAL 502.464 511,471 440,000 578,765 6092142 650.341 705,369 761,718 818,466 938,372 1,002,178 1.081,357 Bulk water sflit.FLAT 6,667 6,000 6000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 Special assessments SEE 41/011 3,774 1327) 2,500 4,000 1.000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 Water meter 6aler, SEE SCREP 11,121 9,165 5,000 8,657 31.615 43,272 73,946 52,167 53,732 55,344 57,005 58,715 Trunk Line Fees SEE 5011113 78,000 74,100 48,000 590,000 927,000 1,129.859 1,095,552 759,718 347,782 353,216 184,481 190016 Connection Tees SCE SCHEE) 28,000 118,107 1'75,049 288,48(3 236,357 255,041) 755,835 268,113 333,161 Investment earnings 0T, 10,580 9,903 1,000 7,199 11.596 20,174 16,956 20,982 25,230 28,436 38,626 12,981 Rents 11. 45.226 48,555 36,000 27,600 27,600 27,600 27,600 27,600 27,600 27,600 27,600 27,600 Total Opetataig Source.) 651,165 659,537 535,500 1.260.216 1,735,160 2,056,294 2,218.902 1,868,573 1,537,851 2,173 603 1,588,003 1.743,829 Non -Operating Rand Proceeds SEE CIP 23,928 56.224 3,540.000 2,000,00C Grants SEE CIF 1,000,000 Inteigovernmenral SCE CIO 1.000,000 Trsf In from Other/III/Developer SCE cr 400,000 250,000 350,000 Assessment/Litigation judgment Es-arnAti 'hist In frorn Other/Due From Oth Funds SEE AUDIT 50,000 50,000 25,000 Cnnoribirtion of capital assets SEF AUDIT 187,401 Total Non -Op Sources 261,329 106,226 25,000 5,540,000 400,000 2,250,000 350,000 Total Source of Funds 912,494 765,763 560,500 6,800,216 2.135,160 2.056,294 4,468,902 2,218.573 1,537,851 2,173,803 1,588,003 12713,829 USE OF FUNDS: Operating - Personnel 20 102,711 103,651 103,345 105,922 108.040 110,201 112,405 114,653 116,9/6 119,265 121,671 124,104 NooPersonnel 70 272,216 220,119 259,725 264,920 270,218 275,622 281,135 286,757 202,493 298.342 304,305 310,395 Depreciation' 23 324,818 321,192 340,000 340,000 340.000 340,000 3/0,000 340,000 340,000 390,000 310,000 340,000 Increase in O&M from future Improv Total Operatiny Uses lion -Operating: Capital imprevernentsrarquisiiinn SEE CIP 33,320 12.331 5.540,000 100,000 1,500,000 3,175,000 600,000 City hasn't identified but does anticipate there will he Surfarn Water Loan Payment SEE CIE 56,226 future capital spending in years 2018 to 2021 riot GO Water Rev Bona 2002B SEE CIP accounted for here GO Water Rfn` Bond 2005A SEE CIP GO Ref Bend 2009A (Refund 2002E9 SEE CIP GO Ref Bond 2012A (Refund 2005A) SEE CIP Future Debt Service on 8011[15 SEE DEBT Fond Discount Amortization° SEE C1P Other (Adjustruenrsi 8EC TO AUDIT 1 rsf out tn Other/Due in Oth Funds SEE AUDIT Total Non -Operating Total Use of Funds NET DIFFERENCE SOURCES AND USES 699,745 647,962 703,570 710,841 718,258 725,823 733,540 741,411 749,439 757,628 765,980 774,500 175,025 175,025 175,025 300,025 320,650 315,250 51,131 55,069 54,680 53,680 52,480 51,280 49.880 53,660 52,12.8 55,575 53,850 51,925 291,043 272.143 293.343 281,0.13 279,643 270,643 95,958 125,958 175,7'78 166,818 166,563 .162.318 397,473 392.923 392,834 7,418 7,418 7,418 6,277 6,277 6,277 6,277 5,277 6.277 6,277 5,277 6,277 2,102 11,818 .325,522 262,161 237,123 5,995,940 905,365 1,993,585 3.679,018 1,398,663 814,095 743,368 732,893 721,678 . 1.025,267 910,123 940,693 6,706,781 1,623,623 2,721,408 4,412,557 2,140,073 1,563.534 1,500,995 1,498,873 1,496,177 (112,773) (144,360) 1.380,1933 93,135 511,537 4668,114) 56344 PO i25,6833 672,808 89,130 247.651 CASH BALANCE Available Cash Balance Purposes Maintain 50BT ol operating expense as reserve 323,98/ 351,7E35 355,421 359.129 362.912 366,770 370,705 374.719. 37E3311 382.990 387,250 .393,867 6let available for capital 241,427 400,873 361,462 800,466 1,654,497 1,323,802 1,727,488 41113,250 2,464.750 3,479,658 3,910,805 4,493,116., Ending Cash Balance 565,408 752,658 719,883 1,159,595 2,017,109 1,695,572 2,098,193 2,522,970 2,843,563 3,862.646 4,298,055 4,891,964 23 Notes CITY OF LAKE ELMO SANITARY SEWER FINANCIAL PLAN Financial Plans Projected 1 2 3 4 5 6 7 8 9 10 2010 2011 2012 Budget 2013 2014 2015 2015 2017 2018 2019 2020 2021 SOURCE OF FUNDS: Operating: Customer Billing Revenue 48,508 53,012 50,000 57.268 59,352 62,770 66,674 72,311 77.065 85.415. 90,713 98,389 Interest income 1i. 631 417 100 (1661 4,865 12,863 22,311 32,689 39,333 39.171 46,704 47,271 Speoal assessments SEE AUDIT Tronk lire fees SEE SCHED 2,400 1,785 500,000 927,000 1,129,859 1,095,552 759,718 347,782 359,216 184.481 190,016 Connection fees SEE SCHEP 28,000 118,107 175.049 288,480 236,357 255.040 755,835 268,113 333,161 NICES fee collected 446,000 730,500 881,714 847,414 581.409 263,572 2.68,844 137,110 139,852 Total Operating Sources 51,539 55.214 50,100 1,131.101 1,839,823 2,252,253 2,321,430 1,582.485 982,797 1,507,481 727,121 808,688 Non -Operating - Bond Proceeds SEE CIF - 3,500.000 1,200,000 1,100,000 Grants SEE CIP 1,000.020 Intergovernmental SEE CIP 180.000 180,000 Trst In from Other/11F/Developer SEE CIF 400,000 .. 420,000 420,000 Total Non -Op Sources - 4,500,000 1,600,000 1.100,000 600,000 600,000 .. Total Source of Funds 51,539 55,214 50,100 5,531,101 3,439,823 3,362,253 2,921,430 2,282,485 982.,797 1,507,481 727.121 808,688 USE OF FUNDS'* Operating: Personnel 252 22,995 22,837 23,403 23,871 24,348 24,835 25,332 25,839 26,356 26,883 27,420 27,969 NonPersonnel 252 29,777 41,521 70,400 71,808 73,244 74,709 76,203 77.727 79,282 90,867 82,485 84,135 MCES Payment (offset by fee collected) 446,000 730,500 881.714 847,414 581,409 263,572 268,544 137,110 139,852 Depreciation 522 8,740 9,000 9,200 9,200 9,200 9.200 9,2E10 9,200 9,200 9,200 9,200 9,200 Increase in 0&M from future fmprov 254 Total Operating Uses 61.513 73,358 103,003 550,873 837,293 990,458 958,149 694,175 378,410 385.794 256,215 261,156 Non -Operating: i Capital SEE CIP 4,500,000 1,500,000 1,100,000 600,000 600000 300.000 City hasn't dentified but does anticipate there will be future capital spending in years Existing Debt Service SEE DEBT 2019 to 2021 not accounted for here. Future Debt Service cn Bonds to be Issued SEE DEBI 86,285 211,910 336,260 334,610 332,660 3,30,310 Other (Adjustments) REC TO AUDIT 17,015 (6,980) Trsf out to Other/Due to Oth Funls NONE Total Non-0peraf og 17,015 (6,980) 4,586,285 1,811,910 1,436,260 934,610 932,660 030,310 377,550 423,435 467,935 Total Use of Funds 78,528 66.373 103.003 5,137,164 2,649,203 2,426,718 1,892,759 1,626,835 1,008.720 763,354 679,650 728,991 NET DIFFERENCE SOURCES AND USES CASH BALANCE Available Cash Balance Purooses- Estimate of 50% of operating eoense for reserve Net available for capital Ending Cash Balance (26,989) (11,164) (52,903) 493,937 790,621 935,535 1,028,671 655,649 [25 9221 744 127 47,470 79,697 36,679 51,502 275,440 418,546 495,229 479,074 347,088 189,205 182.897 128,108 130,578 134,496 (7,453) (24,440) (292,081) 57,850 791,088 1,751,978 2,921,836 3.744,558 3,724,153 4,542,270 4,596,470 4,681,449 29,226 27,062 (16,641) 486,495 1,285,317 2,231,052 3,268,923 3,933,773 3,917,050 4,670,377 4,727,0,17 4,815,34 24 Financial Plans CITY OF LAKE ELMO STORM SEWER FINANCIAL PLAN Projected 1 2 3 4 5 6 7 8 9 10 Notes 2110 2011 2012 Budget 2013 2014 2015 2016 2017 2018 2019 202e 2021 SOURCE OF FUNDS: Operating: Customer Billing Revenue 185,245 235,252 150000 228,378 235,229 2,42,286 249,554 257,041 264,752 272,695 280,876 289,302 Interest income 1% (83) 468 71 685 1,341 2,040 2,783 3,574 4,413 5,304 6,247 Other Miscellaneous SEE AUDIT 32,721 17,000 17,500 2 - - Total Operating Sources 217,883 252,720 167,500 228,449 235,914 243,627 251,594 259,825 268,326 277,108 286,179 295,549 Non -Operating: Bond Proceeds SEE CIP Grants SEE CIP - Trsf In from Other/TIF/Develooer SEE CIP - Total Non -Op Sources - - . _ Total Source of Funds 217,883 252,720 167,500 228,449 235,914 243,627 251,594 259,825 268,326 277,108 286,179 295,549 USE OF FUNDS: Operating: Personnel 232, 39,855 41,134 40,532 41,343 42,159 43,013 43,873 44,751 45.646 46,559 47,490 48,439 NonPersonnel 2% 96,341 95,062 123,200 125,664 128,177 130,741 133,356 136,023 138,743 141.518 144,348 147,235 Depreciation 2N, 15,188 15,188 15,188 15,188 15,188 15,188 15,188 15,188 15,188 15,188 15,188 15,188 Total Operating Uses 151,384 151,384 178,920 182,195 185,535 188,942 192,417 195,961 199,577 203,265 207,026 210,863 Non -Operating: Capital SEE CIP Existing Debt Service NONE City hasn't ioentified but does anticipate there will be Future Debt Service on Bonds to be Issued SEE DEBT future capital spending in years 2018 to 2021 not Other (Adjustments) REC TO AUDIT 81,687 113,197 accounted for here, Trsf out to Other/Due to Oth Funds NONE Total Non-Operat(ng 81,687 113,197 - - - .. Total Use of Funds 233,071 264,581 178,920 182,195 185,535 188,942 192,417 195,961 199,577 203,265 207,026 210,863 NET DIFFERENCE SOURCES AND USES (15,188) (11,861) (11,420) 46,254 50,380 54,685 59,177 63,863 68,749 73,844 79,153 84,686 CASH BALANCE Available Cash Balance Purposes: Estimate of 51E'0 of operating expense for reserve 75,692 89,460 91,097 92,767 94,471 96,208 97,9B1 99,788 101,632 103,513 105,431 108,594 Net available for capital (75,692) (86,133) (84,002i (24,230) 39,634 107.770 180,363 257,606 339,700 426,851 519,274 615,985 Ending Cash Balance 3,327 7,095 68,537 134,105 203,978 278,343 357,395 441,332 530,364 624,705 724,579 25 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $0 ------- MI d City of lake Elmo ater Fund Projected Cash Balances at Year End 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Appendix The Capital Improvement Plan anticipates the use of cash in years 2015, 2016, and 2017 for capital projects in lieu of bonding. Year 2015 includes the largest use of cash for capital, estimated at $1.5 million in this year. The City may determine to increase or decrease the planned issuance of bonds depending on the actual amount of cash available in the in future years to pay for project costs or future debt service. The decision will depend on the amount of cash available which is a factor of the rate of growth from new development and the timing of collection of connection and availability charges and capital spend- ing. 26 $5,50C,000 $4,500,000 $3 500,000 $2,500,000 $1,500,000 $500,000 ($500,)00) ni jecte un nc tY a n 2012 2013 2014 2015 2016 2C17 2018 2019 2020 2021 Appendix The City's CIP anticipates bonding to pay for capital improvement projects, with the exception of $300,000 in year 2018. The City may determine to increase or de- crease the planned issuance of bonds depending on the actual amount of cash avail- able in the in future years to pay for project costs or future debt service. The decision will depend on the amount of cash available which is a factor of the rate of growth from new devel- opment and the timing of collection of connection and availability charges and capital spending. 27 $800,000 700,000 600,000 500,000 $L00,000 300,000 $200,000 100,000 0 City of Lake Elmo Storm Sewer Fund Projected Cash Balances at Year End 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Appendix The steady increase in cash balance in the Storm Sewer Fund is due to the assump- tion that the annual charge for service will increase by 3 percent annually and growth in expenditures will increase by 2 percent an- nually. The Storm Sewer Fund has no outstanding debt or planned use of cash for capital improvements at this time. Possible addi- tion of capital spending in the future will impact the projected cash balances. If there is no future introduc- tion of plans for capital im- provements, the City may determine that future rate increases may not be neces- sary at the level included in the report. 28 $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 SO er Fund Source and Use of Funds ----- --___-_-;-_- -fi:-_-_,- _-,,--_r_ - - - ----' - -- 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Budget Source of funds Use of funds Appendix The annual projected source and use of funds vanes due to the timing of capital im- provement projects and planned use of cash. The other major factor is pay- ment of debt service. For example, in year 2015 and 2016, the City plans to use $1,500,000 and $925,000 of cash for capital improve- ments, respectively by year, 29 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 Sanitary Sewer Fund Source and Use of Funds 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Budget Source of funds Use of funds Appendix Projected source of funds exceeds use of funds, with the exception of year 2018. In year 2018, the City antici- pates the use of $300,000 of cash from the fund for capi- tal improvements. 30 $350,000 $ 300,000 $250,000 - $200,000 $150,000 $100,000 $50,000 $o City of Lake Elmo Storm Sewer Fund Source and Use of Funds _ _ = ---_ - - 2011 2012 2013 2014 2015 2016 2017 2018 2019 Budget Source of funds Use of funds 7:Ar-f 2020 2021 Appendix The source of funds is pro- jected to exceed the use of funds each year due to the projected 3 percent in- crease in the fee charged and 2 percent increase in annual operating expen- ditures. The Storm Sewer Fund has no outstanding debt or planned use of cash for capital improvements at this time. Possible addi- tion of capital spending in the future will impact the projected cash balances and the draw -down of fund bal- ance. The City may deter- mine to reduce the planned increase in the fee depend- ing on actual expenditures. 31 $140 $120 $100 $80 $60 $40 $20 so City of Lake Elmo Example Residential Quarterly Water and Sanitary Sewer Bill Based on 10,010 Gallons Per Quarter 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 = Water Sanitary Sewer Appendix The quarterly charge amounts shown in this chart are based on the fee schedule shown on page 19. The estimated volume of 10,010 is for household Wa - te r usage. Property with a sprinkler system will have a higher average volume . 32 $600 $500 $400 $300 $200 $100 $0 City of Lake Elmo Example Commercial Quarterly Water and Sanitary Sewer Bill Based on 45,500 Gallons Per Quarter 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Water - Sanitary Sewer Appendix The quarterly charge amounts shown in this chart are based on the fee schedule shown on page 19. 33 2 w 6 1- Comparison of Estimated Utility Bills Example Single Family Res Property Total Charge for Equivalent Three Month Period with 20,000 Gallons of Usage (Fee Data Available From Year 2012) 200 180 160 140 120 100 80 -'- 60 40 20 Stillwater Wooc bury Oakdale Ma mood Ma itomeci W 'lite Bear La ce osevil e Cottage La Grove e Elmo Storm Sewer Water Appendix As the City of Lake Elmo's number of customers and volume of livater sold in- creases, the City will have more customer units (and volume) to spread its fixed costs over and as a result the City of Lake Elmo's utility rates should begin to align more closely with other more developed cities utility rates over time. 34 700 600 500 400 City of Lake Elmo Projected New Residential Equivalent Connections As Prepared by the City of Lake Elmo 355 300 200 200 300 115 100 335 264 2013 2014 2015 2016 New Units Platted / Developed 633 225 210 220 263 2018 2019 2020 2021 New Unit Connections Appendix City staff identified total possible new residential equivalent units to be plat- ted / developed by year, To be conservative, for finan- cial planning purposes, the study assumes that approx- imately 50','4, of the total possible units will be plat- ted /developed. The figures shown in the chart are the units assumed for financial planning purposes. The "spike" in unit con- nections in year 2019 can be attributed to anticipated connections for units in Cimmaron Park. Water and sewer availabil- ity charges will be collected at time of plat or develop- ment. VVater and sewer connection charges will he collected at time of building permit / connection to the systems. 35 SECURITIES Northland Securities, Inc, 45 South .7th Street , Suite 2000 Minneapolis, MN 55402 Toll Free. 1-800-551 -2920 Main 612-S51-5900 ‘AARA,,northlandsecurities.corn Member 7INR,A, and SIPC In July 2010, HKGi sent out Park Dedication Surveys to 120 Minnesota cities and counties. Thirty-two surveys were returned. This document summarizes the results of those surveys. Of the 32 respondents, three municipalities have no residential park dedication requirements, and six have no commercial park dedication requirements. Residential Property The survey asked communities to select the response that matched the current park dedication requirements for residential property. The potential responses were: • Cash or land equal to 10°/0 of land value/area • Cash or land equal to _°/0 of land value/area (fill in percentage) 14 12 10 • Fixed rate per type of dwelling unit • Fixed rate per acre of land S_Iacre 4 2 • Other method of calculation None The chart on the right summarizes the survey responses. The total number of responses is more than 32 because one survey checked more than one method. The category with the most checked responses was Cash or land equal to 10% of land value/area. Several cities also listed fixed amounts per dwelling unit in the next survey question. The average of these amounts are shown below. Fixed fee per unit: Many cities use a fixed fee per housing unit. The average park dedication fee by unit type is: Park Dedication Requirements for Residential Property 11 Fixed Fee Cash Dedication - Residential Property (amounts shown are per unit) Single Family $3,408 Duplex $3,036 Townhouse/Quad $2,923 Multi -Family $2,643 Cash or land Cash or land Fixed rate per Fixed rate per Olhor method equal to 10% equal to other type of acre of lend &land % et land dwelling unit_ walueiarea value/area 2010 DediPMioo Survey Reuit -Pj 1 Commercia Property Six of the survey respondents do not currently require park dedication for commercial property. The survey asked respondents to select the response that matched the current park dedication requirements for commercial - industrial property. The potential choices were: • Cash or land equal to 10% of land value/area • Cash or land equal to _% of land value/area (fill in percentage) • Fixed rate per building square footage • Fixed rate per acre of land $_/acre • Other method of calculation 9 6 4 t Park Dedication Requirements for Commercial Property 76 None Cash or land Cash or land Fixed rn:c per Fixed rate per Otner me hod equal to 10% equal to other building acre of land of land % of land square value/area value/area footage The chart on the right above summarizes the survey responses, Multiple cities selected cash or land as a percentage of the land value/area as well as listing fixed amounts for commercial and industrial property, Fixed amount per acre: Several communities use a set fee per acre of commercial -industrial development. The average commercial -industrial park dedication fees per acre are: Average Commercial -Industrial Fixed Fee Amounts Commercial Development per acre Industrial Development per acre $6,041 55,607 Other Fundmg or Irnoiementation tools The last question on the survey asked cities and counties to list methods being used for alternative funding tools for parks and recreation in this time of budget cuts and market decline. The potential answers were: grants, general fund, referendum, volunteers, user fees/permits, park system planning and prioritization, cutbacks to planned improvements and/or replacement and other tools, The chart on the right shows the frequency of checked answers, Other 25 write-in answers included: delaying 20 projects, donations, sponsorships, 15 gifts, fundraising, reserves, cell tower lo revenues, liquor store proceeds, 5 - Park Infrastructure Fund levy each 2. Other Funding and Implementation Tools year, elimination of mowing, street 0 reconstruction and stormwater projects, creating a dedicated fund for park improvements only funded by the selling of park land, and prayer. MIA Grants 7,71 General Fund Referendum Volunteers 2olo Park DE,dicHion surv,:r./ ResuRs - PaN 2 User FeesrPermits Park system planning 6, prioritization 17 Cutbacks to planned improvements and/or replacement Participating Municipalities HKGI would like to extend its thanks to the following municipalities for participating in the survey this year.: Andover Bloomington Chanhassen Chisago County City of Ramsey Cloquet Cottage Grove Duluth Eagan Fairmont Faribault Golden Valley Hastings Hugo Inver Grove Heights Lakeville Maplewood Mendota Heights Minneapolis New Brighton New Hope New Ulm Oakdale Owatonna Richfield Rosemount Roseville Shakopee St. Louis Park Stillwater Victoria Woodbury 2016 P6r kDcii Siirve./ Re!.;Lilis Pa,:e