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Madam Mayor, Council Members and Staff, thank you for this
opportunity to speak to you this evening. My name is Perry
Edwards; I am the President of the Mississippi Riverwood
Associates, Inc. We are the RV Park tucked behind the sound wall
along Highway 101. Our group is made up of 118 individual owners
structured in a Not For Profit Corporation. Our only source of income
is to assess our members' amounts sufficient to cover our operating
expenses. Approximately 70% of our members are fully retired.
Many of them have personal memories of the hard times of the Great
Depression of the 1930's and war time shortages and rationing of the
1940's. They have a strong aversion to incurring debt, especially in
today's economy. As a not for profit corporation we are required to
follow the procedures laid out in our Articles of Incorporation and By -
Laws. Expenditure of any funds, beyond the member approved
annual budget, requires a vote of the membership with stringent
notice requirements and written ballots.
It seems that we are becoming 'Wrapped around the axle" on this
SAC and construction assessment issue. Please allow me to recap
how we have come to this point and explain our thinking.
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In August, 2007 we were notified that water and sewer would be
extended along Quantrelle Avenue as part of the State Highway 101
improvement project. In a meeting with city staff we were told that it
would be a "few years" before the bureaucracy would realize that the
sewer was available and, in accordance with state law, we would be
required to hook up.
Imagine our surprise when a few months later, in May of 2008 we
were told that things had changed and were presented with a
feasibility report for the project and told we would be required to
connect by 2009. Our estimated cost for assessments, SAC and
WAC was $376,150.00.
Estimates for sewer construction work within the park to connect to
the sewer system were about $250,000.00, not including engineering
and legal fees. A charge of over $600,000.00 is a considerable
shock to an organization whose annul operating budget is less than
$70,000.00.
At the public hearing conducted in June 2008 we objected to the
project. Despite the objections of all properties affected by this
project, it was ordered out for bids.
A meeting was scheduled later that week at which it was presented
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to us that if we would do some testing to confirm that our existing
septic system was operating properly, and if the other property owner
involved would agree to certain easements, the project could be
delayed until such time as it would be required. We were overjoyed
at the prospect of avoiding such huge expenditures. When the letter
detailing the required testing requirements arrived it contained
significantly more requirements than what was discussed at the
meeting. Estimates obtained to meet the testing requirements would
cost as much as $25,000.00 the first year and up to $10,000.00 per
year there after. The first year cost represented almost 40 % of our
annual operating budget. It did not make sense to us to spend that
kind of money. And, the other property impacted by this project
declined to grant the necessary easements. So, in late July you
decided to proceed and awarded the contract for the project.
We immediately began to move forward to get design services and
contractors to accomplish our required work.
We also sought expert opinion as to what benefit this project might
provide for our property.
On July 23, 2008 we were informed by the City Engineer, through our
engineering firm, John Oliver and Associates that we would not be
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required to conduct any testing if we proceeded with our plans to
connect to the sewer. We now have an in park system design and a
contractor in place, ready to start work. We are ready to go with our
part. Now we understand from our engineers that they have been .
informed that there is a license or permit required. Where does this
come from?
We engaged in discussions with City staff in an effort to reach an
agreement on the SAC and assessment charges. We were provided
an advance copy of a draft resolution dated August 11, 2008 for
consideration by our members at our membership meeting on August
16, 2008. That draft contained obvious errors and an incomplete
section. The formal letter from the City, dated September 17, 2008,
did not arrive in time to be properly considered by our membership at
our annual meeting held September 20, 2008. In any event the
September 17, letter contained a significantly different resolution than
the previous draft and applied pressure to accept the proffered terms
or face full SAC payment due upon connection. On November 12,
2008 our attorney forwarded our proposal to the City Attorney.
1 would like tolexplain how we came to what we proposed.
1. We advised that we were proceeding to secure bids for a common
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First, the average flow figure. In August of 2007 we were requested
to provide our total water usage for the previous three years as
reported to the Minnesota Department of Natural Resources, which
we did in a letter dated August 31, 2007. Presumably these figures
were what were used to determine the REC. The average of the
three years is 1,518,933 gallons. The amount used in the feasibility
report computes to 1,631,880 gallons which is approximately the
maximum year flow.
Second, according to the City Engineer the average daily flow was
computed using 180 days of park operation. In fact, the park
operated 210 days each of the three years of data requested.
Starting this year, the park does now operate only 180 days per year,
but during the period of requested water readings the season was
210 days long.
Using these corrected figures the average daily flow computes to
7,233 gpd and results in 41 total RECs, or 20.5 assessable RECs,
resulting in a SAC of $134,788.00. We asked that the payment be
deferred for payment with our taxes due in 2010. Using the proper
average flows and days of operation seems only fair.
4. Assessment for construction. The actual construction cost came
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sewer system to connect to the municipal system with construction to
begin April 15, 2009 when the park reopened.
2. We asked that we not be required to connect to city water until
such time as our current well should fail to meet State of Minnesota
and EPA guidelines for safe water. Our well and pump system
provides sufficient water to meet our needs and meets State and EPA
guidelines. Being forced to abandon a perfectly good well does not
make economic or common sense.
3. Sanitary Sewer Access Connection (SAC). The formula for
determining this charge was presented and explained as follow: An
Average Daily Sanitary Sewer Flow is determined. That number is
then divided by what was called a Residential Equivalent Connection
(REC) which is 175 gpd. That number is then multiplied by the SAC
unit charge of $6,575.00.
In our specific case the city Engineer's feasibility report states that
our average flow was used to determine the RECs and that the SAC
and WAC fees were then set at 50% due to half a year contribution.
The resulting SAC fee was $170,950. We see two errors in logic in
determining this charge.
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in considerably less than the original estimates; nevertheless our
cost share came to about $81,000.00. Our understanding is that
Minnesota Statutes are clear that construction assessments for
projects such as this one cannot exceed the amount of increase in
value to the effected property.
We think there is no increase in value to us from this project.
First, in our conversations with the Wright County Assessor, Mr.
Kramber has stated to us that in his opinion, switching to public
sewer would not trigger any increase in the assessed value of our
property. His exact words were, "You could flush your toilets before
the connection to city sewer and you can flush them after, so there is
no increase in value to the property."
Second, we retained the services of the Shenehon Company,
specialist in business & real estate valuations, to evaluate this
project's benefit to our property. It is their opinion that there is little or
no apparent increase in value from the utility project.
In an attempt to come to terms and settle this issue we increased our
offer. Our thinking was that there may be some benefit to the
association, in that connecting to public sewer would allow us to
continue operations without interruption, thereby preventing future
loss of value. Additionally, to appeal this assessment in the courts
would have financial and emotional costs.
With all of that in mind, at the Special Assessment hearing held
November 24, 2008, we increased the total dollar amount of our
proposal to $200,000.00. That represents, roughly, $135,000.00 for
SAC and $65,000.00 for construction assessment.
At that hearing the subject of testing our existing system was again
raised. The Council was apparently under the mistaken impression
that we were required to conduct testing and report, despite that we
were specifically told that testing was not required if we connected.
The hearing has been continued twice to tonight. Our request for
clarification as to the purpose of the proposed inspections of a
system that is being replaced, the proposed costs and who will pay
those costs have yet to be answered.
On April 9, 2009, at a meeting between staff and our attorney we
were asked if we would consider paying $200,000.00 upon
connection to the sewer and that flow be monitored over a two year
period to determine actual usage and the SAC be calculated and any
overpayment be refunded or underpayment be paid.
A proposal of that nature may have merit, however; we lack sufficient
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details of the proposal and in any event, have had insufficient time to
evaluate it.
We have made every effort to do what has been asked of us. Now,
our contractor is ready to start work next Thursday morning. Is there
some problem with that? We need to know.
Thank you
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