HomeMy WebLinkAbout#33 Staff Report-Wastewater Incentive ProgramMAYOR AND COUNCIL COMMUNICATION
DATE: June 21, 2016
REGULAR
ITEM #:
MOTION
AGENDA ITEM: Wastewater Incentive Program
SUBMITTED BY: Kristina Handt, City Administrator
REVIEWED BY: Cathy Bendel, Finance Director
Sarah Sonsalla, City Attorney
Finance Committee
BACKGROUND:
Over the course of three Finance Committee meetings, staff has been asked to look into providing some
financial break to existing residents that will be required to hook up to municipal sewer in the future. At
the May meeting, staff referenced an incentive offered by the Melrose Public Utilities Commission.
Direction was given to look into that option more.
The City Attorney was also asked to look into what is allowed under statute. Water and sewer fees are
guided by Minnesota Statutes Section 444.075, which provides broad authority to cities to charge “just
and equitable” fees for the use and availability of water and sewer service. There is case law that
discusses the broad legislative authority of cities to create and set these fees. Based on that, the City
Council could consider and adopt a formal policy or program which lays out how credits will be awarded,
who is eligible, etc. If the program is being offered to any resident who has a septic system that is in an
area where the property may be hooked up to the City’s sanitary sewer system, that could be considered
“just and equitable” under the statute. In this situation, the City would be treating all similarly situated
residents the same.
ISSUE BEFORE COMMITTEE:
Should the Council approve an incentive to encourage folks to move from subsurface sewage treatment
systems (SSTS) to municipal sewer when it is available?
PROPOSAL DETAILS/ANALYSIS:
Included in your packet is a draft of a letter that could be sent to qualifying properties (those currently on
SSTS) after municipal sewer is completed in front of their property. The committee they did not want to
extend the incentive program to those currently on city owned and operated community systems but will
review those. A map showing those systems is included in your packet.
The dates are estimates as the sewer project is still in progress. The first letters could be sent out after the
final assessment hearing for phase one this fall. A letter making this change retroactive could also be sent
to those properties first impacted when sewer was brought up 39th St. (i.e. Brookfield, condos, etc.). This
was recommended by the Finance Committee.
To encourage people to connect to the municipal sewer sooner rather than later and potentially eliminate
environmental concerns related to some private systems, an incentive of 50% or ($2,000) of the SAC and
connection fee would be offered.
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In order to make this work however, the City would also need to update ordinance 51.022 to change the
required time for connection from one year to two, which would also be consistent with Met Council
Rules..
§51.022 CONNECTIONS WITH SEWER REQUIRED.
(A) Any building used for human habitation or in which a toilet or other plumbing facility for the
disposal of human waste is installed and located on property adjacent to a sewer main, or in a platted
block through which the system extends, shall be connected to the municipal sanitary sewer system within
1 year2 years from the date on which a connection is available to the building.
(B) All buildings subsequently constructed within the city on property adjacent to a sewer main or in a
platted block through which the municipal sanitary sewer system extends, shall be provided with a
connection to the sewer system for the disposal of all human waste.
(1997 Code, § 705.03) Penalty, see § 10.99
Increasing the time for connection may also help some with their financial planning, even if they take the
full two years to connect.
FISCAL IMPACT:
Approximately 300 RECs (Residential Equivalent Connections) could be impacted by this incentive. An
additional 50 RECs are currently on the city owned community sewage treatment systems within the
MUSA area.
Impact to the wastewater fund could be a loss of $600,000 in future revenue if all participate in the
incentive. The wastewater fund had an ending cash balance of $850,198 as of 12/31/15. That balance is
projected to increase each year by at least $500,000 to over $1,000,000 until 2022.
OPTIONS:
1) Approve the incentive as presented
2)Amend the incentive to increase/decrease amount of incentive then approve
3) Approve a different incentive or financing plan for properties moving from private to municipal
sewage treatment system.
RECOMMENDATION:
Finance Committee is recommending approval of the incentive as presented.
Motion to adopt the Connection Fee and SAC Incentive of 50% discount for those currently on
private septic systems who connect to municipal sewer within one year from the date the main is
available to their property.
Staff’s previous recommendation to the Finance Committee was not to approve any changes to fees.
Instead the Council should look at lowering assessments in order to minimize risks to the fund from
potential challenges. Fees cannot be challenged in the same manner as assessments. For example, instead
of lowering fees by $2,000 as presented above, the assessment per REC could be lowered by $2,000
(currently set at $13,000) and have the same impact to the fund while also helping the property owners.
June 21, 2016
XXXXXX
XXXXXX
Lake Elmo, MN 55042
Re: Connection Incentive/Wastewater Charge
Dear XXXXXXXXXXXX,
The City of Lake Elmo is offering a onetime incentive of a 50% discount, or $2,000, towards the
connection fee and Sewer Availability Charge (SAC) to connect to the City’s wastewater system. The City
is encouraging properties that are currently on private septic systems to connect within one year from
the time the main is available as opposed to the two years allowed by ordinance. The incentive for your
property will expire on XX XX, 2017.
If you connect to the wastewater main after XX XX, 2017, you will be charged the full $4,000 connection
fee and SAC. This charge may be adjusted periodically to offset increased costs. The connection fee and
SAC charge is established to fund the initial construction and future replacement of trunk lines, lift
stations and other wastewater system infrastructure necessary to keep the system functioning. The
current city policy for the replacement of wastewater system infrastructure which benefits the system is
to have the wastewater fund pay for those items, not assess properties for the updates.
We are here to assist you with the transition from private septic to the City wastewater system. If you
would like to discuss this in more detail, please feel free to contact me at 651.747.3905 or
khandt@lakeelmo.org
Sincerely,
Kristina Handt
Administrator, City of Lake Elmo