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04-13-09 PHL,— c,� — 0 9 —90— 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. i 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 2 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 3 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 4 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 6 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. s 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 8 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 9