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HomeMy WebLinkAbout12-11-2012 CCM LAKE ELMO CITY COUNCIL MINUTES DECEMBER 11, 2012 Page 1 of 4 CITY OF LAKE ELMO CITY COUNCIL WORKSHOP MINUTES December 11, 2012 Mayor Johnston called the workshop to order at 6:30 P.M. PRESENT: Mayor Johnston, Council Members Emmons, Smith, and Pearson. Also Present: City Administrator Zuleger, City Engineer Griffin, and Finance Director Bendel. APPROVAL OF AGENDA Mayor Johnston forwent with formal Agenda Approval due to the short Agenda. REGULAR AGENDA B: WATER RATES City Administrator Zuleger explained background of item. Due to the City’s water conservation policy and tiered rate structure, there were a large number of high water bills. As a result there were also a large number of registered complaints regarding the rates. The rates were employed in 2010. Mr. Zuleger and Finance Director Bendel conducted a rate case study and analysis. The historical investigation went back to 2003 and included the response to the 3M contamination. Additional factors that were considered included: Fixed costs (infrastructure/debt service), operating and maintenance expenses (including treatment), billing cycle and meter conversion, user/tier analysis, commercial block rate, conservation rate effect, homeowner compliance with conservation rate, and conflicts with the municipal code. [Council Member Emmons arrived at 6:33 PM] Mr. Zuleger provided a summary and rate structure prior to 2010. It was noted that there was a sharp increase in water usage in 2007 due to a drought; however, 3M was still paying a portion of the water expenses. After the conservation rate was implemented in 2010, the water usage has gone down. Commercial use has not seen much of a change either way. Mr. Zuleger provided a summary of the conservation rate adoption history. City Engineer Griffin provided further explanation of the conservation rate and the impact on system design. He also explained the importance of achieving target conservation on future water system expansion in order to keep the system less robust. Mr. Zuleger provided a summary of the tiered rate structure. In general, the rates are in line with surrounding communities up to the conservation tier of 80,000 plus. At that point, the rate becomes punitive in comparison. LAKE ELMO CITY COUNCIL MINUTES DECEMBER 11, 2012 Page 2 of 4 It was explained that the only reason that the water system is operating “in the black” is due to depreciation. Finance Director Bendel provided a detailed overview of the balance sheet. The depreciation expense was explained and how that impacted the bottom line. It is barely at the cash flow level. This is just above what the bond companies require, but does need to be addressed for the future. Mr. Zuleger provided and overview of residential water user profiles. 26.21% of the users went over 70,000 gallons in the third quarter. Council Member Smith inquired about the average bill and if private wells factored into the calculations. A discussion was had explaining that the average figure incorporated everyone under 70,000 gallons and the average use was about 30,000 gallons. There were many users with very little usage that offset the higher bills. There was also a discussion regarding how it was evident that the users over 170,000 were not practicing any conservation methods. It was noted that lot size can play a huge role in increasing usage. Council Member Emmons noted that there may be a difference in the different preference towards irrigation based on location. Council Member Pearson asked what the average usage is for a family of four situated on a one-acre lot. A discussion was had regarding average usage standards. A discussion was had regarding the chlorination options and amount. It was explained that it was not a simple on/off implementation. Conclusions were that in the past, “fixed costs” were ignored due to the 3M contamination. After 3M ceased paying for a portion of costs, along with economic and conservation issues the tiered rate system was implemented. Increased usage resulting in higher treatment costs, along with drought conditions, led directly to high water rates for the heaviest users. Based on those conclusions, staff recommends: moving the billing cycle to break up the summer water costs (April-June & July-September); provide for bulk rate watering credit for new lawns at $3.77/1,000 gallons; pursue grants/funds to offset the fixed costs of providing potable water to 3M contamination areas, create bulk conservation rate of $6.03/1,000 gal. for verified use of saturation sensors/programmed conservation; consider the allowance of metered irrigation wells for watering at a lower rate (non-3M contaminated areas only); and NO RATE CHANGE AT THIS TIME. The City cannot afford a decrease at this time. Mr. Zuleger noted that additional users via growth, as well as grants and the reduction of depreciation rate, will drop the rates. Discussion was had regarding continued private well use for irrigation in non-3M contaminated areas. It was explained that it was allowed and would be up to the preference of the land owner. LAKE ELMO CITY COUNCIL MINUTES DECEMBER 11, 2012 Page 3 of 4 Discussion was had to clarify the process of implementing these recommendations. It was suggested that there be a formal adoption at a future meeting, perhaps in January or February of 2013. There was a discussion regarding where the city was in comparison to other cities. It was stated that the base rate was perhaps low, but after sewer is factored in, it is comparable. Council Member Pearson noted that he was not in favor of the higher tier users subsidizing the artificially lower rates. Further minor discussion was had regarding system chlorination. Council Member Smith also inquired about the actual amount that was negotiated with 3M and what happened to that money. It was discussed that there is not very good documentation regarding the 3M agreements. It was pointed out that 3M’s intent was to deal with the specifically contaminated area and not aid in the development of the City system. 3M did provide land. C: KEATS AVENUE WATER ASSESSMENT City Administrator Zuleger provided overview of item. The primary question for the Council is “how should the residents of Keats Avenue be assessed for the trunk water main running in front of their property when the primary purpose is to improve the hydraulics of the water system as a whole?” City’s assessment policy prescribes $5,800 lateral benefit charge levied on all properties directly served by trunk water main. To date 21 out of 22 homes have indicated any interest in connecting to system. Additional benefits are: potential insurance reductions due to access to fire hydrants, however, this varies based on carrier; property value increase based on city-provided water (especially in salability). It was noted that the potential range of 5-8% value increase would practically pay for itself if accurate. The three main benefits to the system are 1) Relief of Head Pressure, 2) Improve Water Quality, and 3) Improve Hydraulic Circulation. City Engineer Griffin provided an overview of the water distribution system. Mr. Griffin also described the future issues that will arise if this loop is not built. Mr. Zuleger noted that here are additional neighborhoods along route that can eventually share the burden. Grants and settlements are also being looked at. Due to the fact that connection interest is so low, staff recommends that the City assess a Water Lateral Benefit Charge of 50% of the current approved fee= $2,900. Charge the remainder of the charge if the property owner connects. Mayor Johnston suggested that the second $2,900 was assessed if either the property connectd or was sold. There was a question of whether there would still be the $3,900 connection charge in addition to the assessment. The answer was yes. Council Member Smith expressed her concern for tying the second $2,900 to a sale because it would be demanded of the seller at the time of sale. Ms. Smith also expressed her position that she did not LAKE ELMO CITY COUNCIL MINUTES DECEMBER 11, 2012 Page 4 of 4 believe assessing the Keats Avenue properties was fair. In her opinion, it was not equitable with the rest of the community. There was a discussion regarding a resident who was waiting to decide on connecting until the cost was determined. Mr. Griffin reminded everyone how the assessment policy operated and the purpose of the Lateral Benefit charge. It was noted that the Keats Avenue properties would not be assessed the 100% like the adjacent streets and cul-de-sacs would. This in itself is a benefit. The benefit of access to city water in the event the groundwater develops issues at a later date was discussed. Mayor Johnston noted that this point needs to be addressed when the final decision is made. Discussion was had about the fact that the lower the initial fee, the more likely additional property owners would elect to pay up front. D: CITY UPDATES City Administrator Zuleger reported that Lennar Homes presented a concept plan at the last Planning Commission meeting. It received mixed results. Planners were generally pleased with presentation. The main issue was the builder’s architectural styles. There is another national builder looking at development in the Village. Met Council 2013 projections will be coming out soon. There may be room for extension and adjustment on the comp plan based on growth in the area. There may be a need for another meeting in December to pay bills. Possible workshop topic not granting permits to contractors who owe City money. Also, staff is trying to keep all developer meeting open and public. There was a discussion that the City should have a better and clear policy regarding developer meetings. Planning Department has a new wide-format printer. It was only half the budgeted amount. Adjourned open meeting at 8:10 P.M. LAKE ELMO CITY COUNCIL _______________________________________ Mike Pearson, Mayor ______________________________________ Dean Zuleger, City Administrator