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09-10-97 WS09/10/1997 14:30 6124753159 LANDFORM ENGINEERING PAGE 01 ,Pm'tandfo son Commercld! Sc Recidrnri.,l September 10, 1097 Site Plunning / 1'.sinceplotx Development Servicr, 'tf tln�j City Counell of Ot3ego Kc: Fabian Sodowski Property yotl were previously sent a letter addressing our concern about the apparent assessment rates for trunk sanitary sewer and water. At a recent meeting your engineer revised his estimate to .,; .t.. )t , per lot. Ivc gave Frojected our other costs associated wi t developing the Sodowski Property and have lo: 111iI that the project is not feasible with assessments in excess of $7,500 per acre. Above ti -.at ) clrl the project becomes too risky for the developer to pursue. i 11t>, lot-, of an assessment rate may not sound feasible but we believe that if you readdress tht> I'O,h-',Wssment policy it can be achieved. We offer the following suggestions: • •isseSG all benefiting undeveloped properties with an extendod assessment period to ke+!p : ,1 vm(nts low. By assessing all benefiting properties you will encourage development and . ollect interest payments as you go rather than inflating the assessment rates to cover III ry it Ig costs. • As-;e,4s developed properties a small fee for the "insurance" that the system provides slid 1114.• ability to subdivide their properties at some point in the future. For example a $],01X1 1--essinent amortized over twenty years will have little impact on the typical budget, b, -it t ill :iignificantly lower the overall assessment rate. Exi:ting property owners will berrL,it ,) rn the influx of tax base that development will bring. • 11,1cc a connection fee of up to $2,500 on the building permit. Builders are used to payh 4.g i, Ivt and can absorb the cost. • ! 'onsider expanding the service boundary to other parcels if requested by the property (Mr. Backes is interested in purchasing the Corbin property but this parcel is 'utsidt• of the service area.) 1'. 131' t•1tl,;ineer'S proposal to collect assessments t the time of platting is also objectionable. in til ;sthvr vommunities where we have developed these assessment are collected at the time the 1, t •1d t I the buyer. The developer still pays the assessiiivjit he just doesn't have to borroW Lip rront to do so. It V-11 Ntrive to keep the trunk rates as low and equitable as possible you will have developer;, j1 irr-huytIts and ultimately businesses knocking your doors down. If you continue down th.c Latadform tirrvro rath of extremely high assessments collected solely from developers we believe th.it Engineering a i!1 lu• disappointed in the results. Company 926 Twelve oaks Center �)t1•.r rt'1v. 15500 Wayzata Uuulevard Wayzata, MN 55391 I ANI )FORM ENGI EERING COMPANY office: (612) 475-3272 l/ Q '—/data: (611),37.5-11w J landlimn.nct tilt' 4. 1` M. store P.F. -tail: info(01andA)rn,.n,;r 09-10-1997 01:57PM FROM Radzwill & Couri Law Offi TO 4418823 P.02 , i MEMORANDUM 1 TO: city council Members, City of Otsego FROM:!; Andy MacArthur, RADZWILL & COU$I DATE:; Septemb�r 9, 1997 j RE.: Sewer TaXing Districts The following `memorandum is provided to discuss aLs'sues related to the possibility of establishing taxing districts or areas served by the proposed sewer area. It will also disco s the possible ramifications!of the already established urban -rural tax districts on taxing certain areas of the City at a differen� rate. The city has already established urban -rural taxixi�g districts. The City'has divided the City into two separate areas based upon the 'urban" and !"rural" nature of the respective.; districts. The district., is supposed to establish a ratio for taxation, purposes between the add4ional benefit conferred upon., equally valued properties due to the presence of urban services (sewer, water, storm sewer, improved roads, police and fire (service, etc.). obviously, at,this time there is not much of a difference between those defined areas of the City based upon the available services at this time. However, sanitary sewer and wateY4services would provide the basis for a higher differential between the two areas. While this would not directly link higher taxes inn the urban area with the :proposed sewer plant, it would provide a mechanism wherein the area morej directly benefited by the sewer and water services would pay a higher proportionate share of the ove^all cost in the event that the needed development did not occur.,,, In tl,e event .that a Sanitary District was created as the governing bodyof the area contemplated for sewer service under Minn. Stat. 115.1s et seq., such a district has taxing authority under Minn. Stat. 115.33.11ncluded with that authority is the ability to, "In the case wher4e a particular area within the district, but not the entire dlstri;ct, is benefited by a system , works , or facilities of the district, the board, after holding a public hearing as providedby law for levying assessments on berg fited property, shall by ordinance establish such area as a taxiZ subdistrict, to be.diesignated by number, and shall levy special taxes on all the taxAle propsrty therein..." Thies authority only exists under the application of a Sanitary Sewer districlt, which must be created through the .statutory process as s!et forth 'by the MPCA. MinA. Stat. 444 sets forth general municipality authority to build, construct and finance (including service charges, fees, and 09-10-1997 01:57PM FROM Radzwill & Couri Law Offi TO 4418823 P,03 taxation) .it does not include a separate mechanism for the within the estabL�shnuent of t do seforathe creation of iepargte storm sewer zunicipality, te as i districts - to establish gave n 1..996 the 149i6lature gave Cities the authorit limited period special service districts without legislation or i section 3. of time: Minnesota Laws 1996, chapter 471, Article s, allows This provision, which will sunset in on June 30{, 2001j, cities -to: establish a special service district o provide any service at a' heightened level, within a specified area by implementation -of an additional charge on the area to ba serviced. The establishment of such a district involves a ra,her complicated procedure,incl4ding petition of 25% of the affected properties and appears'to be applicable primarily to commercial/industrial land. The above' would appear to be the main available mechanisms far limiting the taxes or charges for sewer service`, a particular area. i TOTAL P.03 CITY OF OTSEGO COL'i`iTY OF WRIGHT NOTICE OF PUBLIC HEARING: The Otsego Planning Commission will conduct a Public Hearing on Wednesdav, October 1, 1997 at 8PM at the Otsego City Hall at 8899 Nashua Avenue NE, Otsego, SIN., or as soon thereafter as time permits. The matter has been initiated by ovv-ner,`applicant, Robert A. and Rachel A. Cullinan 7005 Odean Avenue NE, Otsego, Mn. 55330. PID LI 18-500-283401 described as part of SE 1/4 of SW 1/4 of Sec 28, Tvvp 121, R23 etc. Request is as follows: A. Conditional Use Permit to allow: a. Detached accessory building in excess of 1,500 Square Feet All interested parties are invited to attend the Hearings to express their questions and concerns,"comments. If you would like further information regarding the above described Hearing, please call the City of Otsego at 441-4414 in advance of the meeting. dCITOF OTSEGO: Elaine Beatty, Clert'Zonina dm. Dated: 9;'10/97 Publish: Elk River Star News 9/ 17/97 Posted: 9/ 10/'97 Otsego City Hall 2 -Boards Hearing: October 1, 1997 - 8PM - P.C. Meeting October 13, 1997 - 6:30PM - C.C. Meeting nwru � 1 ■`nl = � ■ t@ / a-s.•� ti - ��curs Rem _.nw. uumntw� plQONiI �, /f _ •- �� . ; � � .mss .ilnnr+ltIIM- lnlr_a.wwa ..0 —tlflllt � ��Igtr���� d � IM �I a � Ig � 1253104 Y N.E. 70th STREET 1252101 R b 7 12&34W /254203 7400-30 7460-30 #2542M 1254201 1"34-= 1254303 7064-30 1254 w4 125J40 7020-30 - _ 7005- C.SAH. NO. 37 R evaa-3o Y 1254102 NORTH LEGEND p _ M�. {,� PLAT NUMBER #059 Assoc r■ . P.1.0. #037310 c 6S1~ 6A1—V"-= rz scxt ADORESS-LAST 2 3083-30 4a7-alW FAX 1•.,4.00 OIOfTS OF ZIP COOE PREPARED S 1 W 7350-30 1253103 Z Q 7330-30 123+x2 77T. -30 � O 72°2-30 Z 7200-30 #2542M 1254201 1"34-= 1254303 7064-30 1254 w4 125J40 7020-30 - _ 7005- C.SAH. NO. 37 R evaa-3o Y 1254102 NORTH LEGEND p _ M�. {,� PLAT NUMBER #059 Assoc r■ . P.1.0. #037310 c 6S1~ 6A1—V"-= rz scxt ADORESS-LAST 2 3083-30 4a7-alW FAX 1•.,4.00 OIOfTS OF ZIP COOE PREPARED S DLr" . l l'1 . 1 77 f J ,77f I'I Hakanson Anderson Assoc., Inc. September 10, 1997 Elaine Beatty, Cleric City of Otsego 8899 Nashua Avenue NE Otsego, MN 55330 Re: Otsego Utility System Fi0ancing Dear Elaine: A question regarding financin sewer collection system and t 1997 Council Workshop. Thi tax -payers could face if devel connections per year. ThrouE prepared a general overview c NQ. JJ7 P. 1/2 3601 Thurston Avenue Anoka, Minnesota 55303 612/427-5860 Fax 612/427-34ft- 0620 of the Waste Water Treatment Facility, the sanitary e potable; water system was raised at the August 27, question: was related to the financial burden the City �pment opcurred at a rate less than the 80 equivalent i conversations with Gary Groen at the City, we have this issue: • The City portion of taxa generally accounts for 26-27% of the total tax burden levied against propertiep in Otsego. • The City operating bu get, supported by general taxation, is approximately $806,000. • The first years payment on the projected bond sale is as follows: • Waste Water Treat ent Facility $224,000 ► Sanitary Sewer Coll ction System 172,360 ► Water System 231,875 P. TOTAL A City tax could be levi�d to cover the deficit in income from connections if less than 80 Equivalent co nections per year were seen. The amount of any tax would depend on the s�iortfall in connections and an the assessed valuation; Engineers I Landscape Architects Surveyors SEP.10.1997 3:39PM No.337 P.2i2 Elaine Beatty, Clerk Page 2 September 10, 1997 The maximum percentage Increase is proportional to the potential shortfall verses the City General Tax Receipts. On a sliding scale, the impact could be as follows: Approximate Actual Connections 80 60 40 20 0 Increase in Taxes 0% 5% 10% 15% 20% The percentage increases is an overall estimate only. Any tax may be influenced by tax law related to tax capacity and to a statutory maximum increase permitted in any year. Sincerely, HAKANSON ANDERSON ASSOCIATES, INC. n A. Harwood, PE cc: Kevin P. Kielb, PE Bob Kirmis, NAC Andy MacArthur, Radzwill Gary Groen, Finance Director kel a%7Q9.eb Hakanson Anderson Assoc., Inc. TRANSMITTAL NORTHWEST ASSOCIATED CC NSULTANTS 5775 WAYZATA BOULEVARD, SUITE 555 ST. LOUIS PARK, MINNESOTA 554 1 6 PHONE (6 1 2 )595-9636 DATE: 8 September 1997 NUMBER OF PAGES TO: INCLUDING Elaine Beatty COVER: FROM: Bob Kirmis QUANTITY: MATERIAL/DESCRIPTION: DATED: 1 Cover Memo to Council 1 Workshop Outline 1 Memo re: Building Permits 1 Memo re: Sewer Questions 1 Memo re: Sewer Policies VIA: REMARKS: MAIL Please provide the attached to the City Council, Gary Groen and Judy Hudson for the 10 September workshop. FAX 1-1 Please call if you have questions. PICK UP DELIVERY PROJECT: Otsego - Sewer Planning JOB NUMBER: 176.08-96.19 NORTHWEST ASSOCIATED CONSULTANTS INC COMMUNITY PLANNING - DESIGN - MARKET RESEARCH MEMORANDUM TO: Otsego Mayor and City Council FROM: Bob Kirmis / David Licht DATE: 8 September 1997 RE: Otsego - Sanitary Sewer Planning FILE NO: 176.08 - 96.19 Attached please find the following items pertaining to the forthcoming 10 September City Council workshop regarding sanitary sewer service to the eastern portion of the community. 1. Meeting Outline 2. Single Family Residential Building Permit Survey 3. Response to City Council Questions (Revised) 4. Sanitary Sewer Policies (Revised) The balance of requested information (i.e., trunk and treatment plant process outline, financial assurances, taxing district implications, etc.) is to be addressed by other city consultants who have not completed their work but anticipate having it available at the 10 September meeting. In review of the attached material, please make specific note of the following: City Council Questions. The previous 8/14/97 memorandum has been revised to acknowledge the intent of the City of Dayton to participate in the sanitary sewer service effort. Specifically, responses to Questions 17, 27, 28, and 29 have been modified. 5775 WAYZATA BOULEVARD, SUITE 555 ST. LOUIS PARK, MINNESOTA 554 1 6 PHONE 6 1 2-595-9636 FAX 6 1 2-595-9837 Sanitary Sewer Policies. The sanitary sewer policies have been refined to eliminate possible interpretation problems. Specific changes have been made to the following policies: Policy Page Number Issue 2 1.D Hook up to existing commercial/industrial uses 3 III. B Commercial/industrial capacity reservation Based on past informal discussions, we believe a further refinement of Policy 11.1 (on page 3) regarding the Darkenwald property may be appropriate. This material will be discussed at the forthcoming 10 September workshop. PC: Elaine Beatty / Judy Hudson Gary Groen Kevin Kielb / John Harwood Andy MacArthur Ted Field / Tom Roushar SANITARY SEWER / WATER PROJECT CITY COUNCIL WORKSHOP 10 SEPTEMBER 1997 Unresolved Issues / Assumptions A. Treatment Plant Ownership (see 9/3/97 MacArthur letter) B. Darkenwald Property Policy II. New and/or Updated Information A. Process Outlines 1. Trunk (J. Harwood) 2. Treatment Plant (Bonestroo) B. Area Building Permit Activity (NAC) C. Treatment Plant Floodplain/Shoreland Issues (Not applicable based on current site selection) D. Financial Assurances (i.e., mill rate, etc.) (Hakanson Anderson) E. Urban/Rural Taxing District Implications (MacArthur) F. Time Schedule III. Public Informational Meeting A. Moderator B. Presentation Outline 1. Background Issues and Need (D. Licht) 2. Study/Work to Date (D. Licht) 3. Decision -Making Process/Time Schedule (D. Licht) 4. Sewer Treatment System Plan (J. Harwood) 5. Trunk System (J. Harwood) 6. Water System (K. Kielb) 7. System Finance (J. Harwood/G. Groen) 8. System Policies (D. Licht/J. Harwood) 9. Public Comment C. Facility and Set Up IV. Other Issues MEMORANDUM NORTHWEST ASSOCIATED CONSULTANTS COMMUNITY PLANNING - DESIGN - MARKET RESEARCH TO: Otsego Mayor and City Council FROM: Bob Kirmis / David Licht DATE: 8 September 1997 RE: Otsego - Sanitary Sewer Planning Area: Building Permit Activity FILE NO: 176.08 - 96.19 As requested at the 27 August City Council meeting, we have assembled a summary of single family residential building activity of various surrounding communities. This information is provided in the following table. SINGLE FAMILY RESIDENTIAL BUILDING PERMIT SUMMARY City 1992 1993 1994 1995 1996 5 -Year Average Albertville 25 51 72 38 47 47 Buffalo 45 51 97 114 89 79 Big Lake 44 43 62 92 138 76 Dayton NA NA 24 18 11 18* Delano 19 24 41 51 58 39 Elk River 107 122 157 173 209 134 Monticello 50 73 108 105 115 90 Rogers 16 79 66 59 105 45 St. Michael 44 64 25 53 100** 57 Otsego 71 112 38 17 25 53 5775 WAYZATA BOULEVARD, SUITE 555 ST. LOUIS PARK, MINNESOTA 554 1 6 PHONE 6 1 2-595-9636 FAX 6 1 2-595-9637 " Three year average Includes former Frankfort Township permits from September through December On average, the City of Elk River has issued the greatest number of single family residential building permits in the 1992-1996 period, averaging 134 per year. The City of Dayton, on the other hand, has issued the fewest number of building permits in the 1994- 1996 period, averaging 18 permits per year (1992 and 1993 information unavailable). Hopefully, this comparative information will be of some aid in the City's consideration of possible sanitary sewer service. PC: Elaine Beatty/Judy Hudson Gary Groen Andrew MacArthur John Harwood/Kevin Kielb Tom Roushar/Ted Field i• NORTHWEST ASSOCIATED CONSULTANTS INC COMMUNITY PLANNING - DESIGN - MARKET RESEARCH MEMORANDUM - Revised TO: Otsego Mayor and City Council FROM: Bob Kirmis / David Licht / Kevin Kielb / John Harwood / Andy MacArthur DATE: 8 September 1997 RE: Otsego - Sanitary Sewer Planning: Policies FILE NO: 176.08 - 96.19 As a result of discussions which took place at the 27 August City Council workshop meeting, we have revised the various "position statement" policies pertaining to sanitary sewer service. It is anticipated that these policies will be made available to the public as part of the forthcoming public information meeting scheduled for 15 September. While the following list of policies is certainly changeable, the implementation of such policies is strongly recommended to aid in the success of the sewer service effort. For reference purposes, the following policies have been categorized by topical heading. I. EXISTING DEVELOPMENT/ENVIRONMENTAL POLICIES A. The sanitary sewer system shall not be extended to existing unsewered development except if such sewer is requested or petitioned by property owners. Public sewer may be extended as directed and ordered by the City Council after specific public hearings on any extension. B. Existing residences shall not pay any connection charges and that no assessments against property will be levied for sewer benefit until and unless their residences are physically connected to and actually served by a public sewer. 5775 WAYZATA BOULEVARD, SUITE 555 ST. LOUIS PARK, MINNESOTA 55416 PHONE 6 1 2-595-9636 FAX 6 1 2-595-9837 C. To maintain the public health, existing septic systems shall be pumped a minimum of every two years. D. When directly available, sanitary sewer service hook up shall be required of all developed commercial, industrial and institutional uses within the immediate urban service area (sanitary sewer district). E. On-site septic systems shall be required to comply with MPCA 7080 Rules which establish minimum requirements for wastewater disposal (and imposed by Wright County) at time of property sale. F. In the event of failing on-site septic systems, the City shall consider mandatory connection to available municipal services. G. The City shall continue to monitor its ground water quality and construct additional monitoring wells as deemed necessary for such monitoring effort. II. FUTURE DEVELOPMENT POLICIES A. Due to possible ground water contamination threats, future unsewered residential development, where allowed, shall be limited to one dwelling unit per ten acres of land or four dwelling units per forty acres of land. B. Sanitary sewer service shall be required of all new development approved after within the immediate urban service area (sanitary sewer district). C. Undeveloped land within the long range urban service area, which is guided for single family residential development, shall be platted in accordance with standards for sewered development and be partially deed restricted (in accord with unsewered density requirements) until such time as sanitary sewer service is available. D. Boundaries of the immediate urban service area (sanitary sewer district) shall be expanded in accordance with the Comprehensive Plan. E. Urban growth (of lots 2.5 acres or less in size) shall be confined to the immediate urban service area (sanitary sewer district). F. The City shall periodically define the amount, type, and rate of growth which must be absorbed to accommodate sanitary sewer demands. 2 G. Economic service delivery shall be pursued through the promotion of concentrated development patterns within the sanitary sewer service district. H. The clustering of unsewered dwelling units shall be encouraged. Such clusters shall be connected to central sanitary sewer service when made available. Within existing MPCA permit limits, excess sewer capacity of the Riverbend Mobile Home Park may be provided to lands in east of Highway 101 which are under the ownership of the Darkenwald family. Excess capacity may be extended to lands west of Highway 101 and owned by the Darkenwald family upon demonstration of service capacity (to the satisfaction of the City) . J. Land use consumption and sanitary sewer system use shall be subject to periodic City review to determine the need for urban service area changes or expansions. K. Premature extensions of the City's sanitary sewer system and "leap frog" development shall be avoided, unless the costs of extending utilities through undeveloped property are funded by the developer. III. ECONOMIC DEVELOPMENT POLICIES A. An advantageous tax base shall be pursued through the promotion of sewered commercial and industrial development. B. A minimum of 30 percent of any waste water treatment plant capacity shall be reserved for commercial or industrial development with a maximum of 60 gallons per day capacity reserved for the forthcoming 20 year planning period (based on initial plant capacity). C. The enhancement of tax base associated with commercial and industrial development shall be a community priority to reduce the tax burden on single family homes. D. An expansion of the City's employment base shall be encouraged. IV. FINANCING POLICIES A. Sanitary sewer service shall be financed by those who receive such service. 3 B. Risk of payment for non-users of sanitary sewer shall be reduced through utility phasing, the identification of potential user revenue sources, and the establishment of realistic growth expectations. C. Developers shall be responsible for costs associated with the extension of municipal utilities to new developments. D. Assessments associated with sanitary sewer service shall be imposed in accordance with the assessment rules of the City which establish financing methods for various City improvements, including, but not limited to trunk mains and laterals for sanitary sewer and water. PC: Elaine Beatty Judy Hudson Andy MacArthur Kevin Kielb John Harwood 51 N WA em** NORTHWEST ASSOCIATED CONSULTANTS INC COMMUNITY PLANNING - DESIGN - MARKET RESEARCH MEMORANDUM - Revised TO: Otsego Mayor and City Council FROM: Bob Kirmis / David Licht / Kevin Kielb / John Harwood / Andy MacArthur DATE: 8 September 1997 RE: Otsego - Sanitary Sewer Planning - Informational Meeting Questions FILE NO: 176.08 - 97.10 At the City Council's request, we have collaboratively attempted to respond to the various questions recently submitted by Council person Wendel which relate to the City's sanitary sewer planning efforts. In addition to the various questions raised by Ms. Wendel, a number of additional questions have also been included which have been raised at previous meetings. The following is a listing of specific questions raised by Council person Wendel followed by a staff response. 1. How much will the sewer plant cost and how long do we have to pay for it? The sewer plant will cost 2.1 million dollars for initial construction. A 1.9 million dollar plant expansion will occur in about ten years. Each expense will be paid over 20 years. Connection fees collected from new developments and existing commercial/industrial properties are anticipated to generate enough money to pay off the loans. 5775 WAYZATA BOULEVARD, SUITE 555 ST. LOUIS PARK, MINNESOTA 554 1 6 PHONE 6 1 2-595-9636 FAX 6 1 2-595-9837 2. How much will the trunk lines from the sewer plant cost and who pays for them? We have estimated that the initial trunk costs for the base system will be 1.395 million dollars. These costs are paid for in the same manner as treatment plant costs. 3. How much do the lateral lines from the trunk lines cost and who pays for them? The cost depends on which properties will be served first. Part of the cost will be trunk, paid by connection charge, and part will be paid by the developer or by an assessment. Lateral lines will be paid for by future developers and existing commercial/industrial/institutional properties. Costs will vary depending upon the project. The sewer study identified one potential initial system as costing $1,191,000 of which $739,000 was trunk and $452,000 was lateral. 4. If the sewer line goes past my home and I don't want or need it, do I have to pay something for the lines anyway? If not, who pays for them? This is a policy decision that the City Council will have to make. The City has the authority to decide to defer some assessments or charges until the property is developed, or until the existing system is inadequate. The City Council has previously indicated that existing residences will not be forced to connect to the system. The proposed policy is that residential housing would pay for system costs at the time of hookup. A funding program is being established with project costs paid from a debt retirement fund. For new residential housing (i.e., new small lot subdivision plats), the connection charge would become due at the time of plat approval. This is similar to park fees, storm water impact fees, or like platting related fees. For existing housing, the connection charge would be paid at the time of connection. 5. Who pays if the developers that you are counting on change their minds and don't build? The planning of the City is based on assumptions and expectations of development. The income from development is projected to meet debt retirement needs. X The City will borrow money from a State of Minnesota fund or will sell municipal bonds. With this debt, there will be the risk that the debt may have to be paid back through general funds. For this reason, the exhaustive analysis which we are presently engaged in is undertaken in order to provide a conservative and realistic projection of growth and development as the basis for a City Council decision. Nothing is without risk, it is simply a matter of making a good faith effort to reduce that risk as much as possible. 6. If I don't have the money to pay for the lines in front of my home, will it go on my taxes? If an amount is assessed against your property, you have a period of time, often a period of months but not less than 30 days, in which to pay off the entire assessment without interest. If you do not make full payment, the unpaid amount is placed as an additional item on your property tax bill and is amortized out over a period of years (usually 10, but it may be any other time period determined as reasonably by the City Council), at an annual interest rate which is also determined by the City Council. The charge could also theoretically be made part of the connection charges that you must pay at the time you hook up to the system. 7. How many years do we have to pay this system off? The entire system will be constructed over many years. Each time an improvement is made, bonds will be sold. Each bond sale will be paid off over a 20 year period. 8. Who are we borrowing the money from and what kind of interest do we have to pay? A portion of the debt is proposed to be low interest loans from the State revolving fund at approximately 4 percent interest. Some bonds may be general revenue or public improvement bonds. These would likely have a higher interest rate. The City fiscal and bond consultants will assist in developing the best bonding program. It is very possible that different portions of the proposed project, especially if it includes the proposed water system, may be paid from different sources including grants, loans, bonds or any combination thereof. The City has authority to issue bonds under Minnesota Statutes 429, if 20 percent or more of the project cost is assessed to benefitted properties. The City also has authority to bond for sewer and water works under Minnesota Statutes 444 without assessment for benefit. Minnesota Statutes 475.58 is the general law for municipal debt. The statute 3 requires a vote or referendum of the population to incur municipal debt. The statute also provides exceptions where referendum is not required. It is the responsibility of the Financial and Bond Consultants to determine the best combination of funding for the project and how the funding should be structured. 9. Who will be in charge of the sewer plant, Dayton or Otsego, or both together? The sewer plant could be owned and operated solely by the City of Otsego. The City could then enter into an agreement, if it so desired, with the City of Dayton (or St. Michael) for delivery of sewer service. The cities could also enter into a joint powers agreement under Minnesota Statutes 471. A joint agreement would set forth the terms of ownership, control, delivery of services, and any other relevant matter. It is also possible that the Cities of Otsego and Dayton could also establish a sanitary sewer district. 10. What if the majority of the people don't want the sewer, will we go ahead anyway? The authority of the City of Otsego, as established by State Statute, requires the City Council to make any decision ordering construction of a waste water treatment plant or associated sewer utility. State Statutes do not allow this decision to be made by a vote of the population. The decision whether or not to go ahead with the project is a Council decision that can be made either way, notwithstanding what the majority of people want, based upon the Council's informed decision as to what is in the best interests of the City as a whole. 11. Will my taxes go up once I get hooked up with sewer because my property will be worth more? A house with public sewer and water is likely more valuable than the equivalent house without to the extent that the value of the property increases because of the improvement to the extent that the increased valuation will increase taxes. 12. Who will pay for fixing the landscape that gets ruined when installing the lines? Restoration is a part of the project cost. All project costs, including restoration, are ultimately paid by the properties served. 12 13. Will the lines go down the middle of the road or on the side? Sewer and water lines will be located in right-of-way or easement to minimize total construction cost. The evaluation for least total cost will include review of road damage and the cost of restoration. The exact utility location is a final design decision. Depending on local conditions, it is at times best and least costly to install the lines under the road. At other times and locations, the best alignment may be in the road ditch or on an easement. 14. Will we be getting sewer and water at the same time? It is the current plan to make sewer and water available at the same time. 15. When do we have to hook up? A City policy is recommended whereby once public sewer is available, the residence will be connected. Commercial property should connect immediately. Connection to existing residences could be required either within an established number of years or could occur when any on-site septic tank or system problem develop. Once the City has a sewer and water system, everyone should plan on connecting someday. That someday may be quite far in the future. 16. If our well is bad but not the sewer, can we hook up just to the water? The City can adopt a policy of allowing only water hookup, or a policy of requiring both sewer and water hookup. 17. What happens if Dayton doesn't want to go along? Do they have to pay their share of the expense for the planning and engineering fees? There is an allocation of fees set forth in the original agreement between Otsego, Dayton, and Frankfort Township with the Bonestroo report. Each community paid its share of the treatment study. At this point, it appears that the plant will be a joint operation between the City of Otsego and the City of Dayton. The two cities will have to proceed to either form a separate entity, like a sewer district to own and run the plant, or to proceed under a joint powers agreement. At what point the joint powers entity will come into existence has not yet been decided at this time. It is possible to have one city own and run the plant and to guarantee to the other city a certain amount of capacity by contract, or the land can be acquired, and the plant 5 can be constructed and operated entirely by a joint powers entity. This agreement will set forth an equitable cost sharing arrangement between the two cities. 18. If sewer goes across my field and there are no homes there yet, will I be assessed for the entire line? Current planning is for costs to be incurred only upon connection. The City will request easements across open fields but is not planning to place costs against undeveloped property unless that property is served. Any assessment will be based upon the assessment ordinance and policy which is now being reviewed to consider current sewer planning, and whether your land is enrolled in the "green acre" or agricultural preserve program. The adopted assessment policy will be a City Council decision. Deferments can be granted if that appears to be equitable and they are granted in an even handed manner. Lands enrolled in the green acres program are allowed to defer assessments, while assessments upon lands enrolled in the agricultural preservation program cannot be levied due to "benefit" from sewer and water availability. 19. Who will pay if we don't have enough new development coming in each year? If bond payments cannot be made by anticipated fees, it is likely that any deficit would have to come out of the general fund as a general obligation of the City. 20. Will this plant ever go City-wide? It is not likely that sanitary sewer will ever be constructed or extended to serve the entire City. However, it may not be prudent to say that the plant will "never" provide service to the entire City. 21. Will there be two separate sewer plants, one in the eastern end and one in the western end? To date, there has been no formal policy direction in regard to accommodating development in the western portion of the community (as evidenced in the existing Comprehensive Plan). It is the strong recommendation of staff that development not be allowed in areas outside the immediate urban service area until such time as the financial solvency of the eastern sanitary sewer system can be A demonstrated. Subsequently, sewer service in the western portion of the City can be evaluated. 22. Will the Comprehensive Plan be changed to the western part can develop once they have sewer? There have been no formal direction has been given by the City Council as to whether the City's existing development policies in the western portion of the community should be changed. It is staffs recommendation that sanitary sewer service and related development densities not be allowed outside of the immediate urban service area until the financial solvency of the "east side" sanitary sewer service can be demonstrated. Until such time, staff recommends that a continuation of agricultural uses be encouraged in areas outside of the immediate urban service area. Ultimately, decisions regarding the allowance of development in the western portion of the City must be made by the City Council and should be addressed as part of the Comprehensive Plan Update. 23. If I live in the eastern part of the City but not in the sewer area yet and my system goes bad, can I put in a new septic system or will I be forced to hook up? Repair and reconstruction of existing septic tanks and drain fields will be controlled by policies that have yet to be fully adopted. The sewer system has been laid out and evaluated as if some day every residence in the sewer study area, which is the east portion of the City, will be hooked up to public sewer. Until the sewer is physically in place in front of a residence, some level of repair to failed systems must be permitted. Once a public sewer system is in place, septic tank and drain field repair or replacement should be prohibited. When on-site systems fail, connection to the public system should be required. If a property has a public sewer available, the property should not spend thousands of dollars maintaining or repairing a septic tank or drain field system. 24. If I have to hook up because of a bad system, and the line has to run past my neighbors, do they have to hook up or pay for the line even if they don't need it yet? Any future extension of sewer or water into a neighborhood will require specific public hearings with the official steps and actions required by Statute. The property owners and a future City Council will make decisions based on public need and on conditions existing at that future time. The bottom line is that some day every f1 property will be served and will pay its share of system costs. It could be that construciton of a sewer system will occur when most properties have gotten full use out of their original private, on-site system and are facing increasing costs to maintain or repair the aging system. At the time, the availability of public sewer may be of extreme value to the property. 25. Will water be installed at the same time? It is the current intention to install public water along with public sewer. The goal is to address the health and safety aspects of public utilities by making both sewer and water available. For new small lot developments, both sewer and water will be extended with platting. For the existing developed area within the City, both sewer and water are seen as being made available to meet a current or future need. 26. What will you charge monthly for water and sewer, a flat fee or will it be metered for the monthly cost? There will be monthly or quarterly user fees for sewer and water treatment. A rate structure has not yet been established. Normally, water is metered and sewage is not. Many communities establish a minimum charge per quarter and charge more than the minimum only for higher usage. The following is a listing of charges for sewer and water service in neighboring communities: City Sewer Charge Water Charge Rogers $1.15 per 1,000 gallons 95¢ per 1,000 gallons Elk River $2.82 per 1,000 gallons (based $44 per month plus $11.11 per Residential on avg. water consumption for 1,000 gallons Nov. -Mar.) Elk River Commercial Same as residential $7 to $85 per month depending on pipe diameter Albertville $39.20 per quarter (up to 15,000 $17.60 per month (up to 10,000 gallons) gallons)* " Joints Powers charge n. 27. Will only Old Town Dayton be in the sewer system? At this time, Dayton appears to consider Old Town Dayton as their primary service area. However, future expansion of the plant may be partially driven by Dayton's desire at some point to serve areas beyond the Old Town. The mechanism for making decisions regarding service areas and future expansion of the plant will be contained within an agreement between the two cities. 28. What if they want to expand their part of the sewer system, will they be able to do so? The proposed plant can be expanded to accommodate both Otsego and Dayton. The mechanism for expansion and cost sharing related to expansion will be set forth in the joint powers or other agreement between the two cities. 29. Who will own the sewer plant? At this point, it would appear that there will be joint ownership of the plant by both Otsego and Dayton. It is still possible for the cities to determine that Otsego would own the plant and that Dayton would receive capacity by contract. The terms and conditions of plant ownership, whether joint or otherwise, will be contained in an agreement between the City of Otsego and the City of Dayton. The issue of what entity owns the plant will have to be decided prior to submittal of the facility plan to MPCA. 30. How many years can you build new homes in the present sewer area before you run out of land and you have to expand to other areas of the City? The Phase I sanitary sewer service area is basically along the TH 101 corridor. There is "room" within the corridor, on currently undeveloped land, for an estimated 2,600 residential connections along with over 300 acres of commercial/industrial development. The 20 year projected growth of the City will fill in only about one- third of this development potential. 31. When will the City Hall have to hook up? The City Hall is not located within the sanitary sewer service area as identified in the sewer plan. It is unknown when City Hall would have to "hook up". Service to the City Hall would likely coincide with one of two events: 1) request for or need to A service nearby development (i.e., Bulow Estates); or 2) future inclusion of the City Hall property within the sanitary sewer service district. Such district inclusion would likely occur only after the eastern portion of the community has been fully developed. In this regard, it is anticipated that City Hall hook up would be more than 20 years away. The following is a listing of additional questions considered highly pertinent to this matter: A. Will the City Council confine development to the sanitary sewer service area? While the City Council has historically not been consistent with the intent of the Comprehensive Plan (by allowing development outside of the "immediate urban service area"), it is believed by staff that development confinement is necessary so as not to dilute the community's housing market and the ability to finance sanitary sewer. B. What happens if sanitary sewer service is not provided? Should the City choose not to pursue sanitary sewer service to the community, it would be staff's recommendation to establish maximum development densities of four dwelling units per forty acres of land throughout the community. Regardless of whether such service is pursued, it is further staff's recommendation that mandatory septic tank pumping be required (i.e., every two years). If sanitary sewer (and water) is not pursued, the City can only expect to attract dry industries which typically do not contribute significantly to a community's tax base. Additionally, the rate of commercial/industrial development would likely be less than if sanitary sewer were provided. C. What impact will sanitary sewer service have upon property values? Based on input from area developers, raw law with sanitary sewer and water availability brings between $10,000 and $15,000 per acre. Conversely, land without such service brings approximately $3,000 to $6,000 per acre in today's marketplace. 10 Hopefully, the aforementioned will aid the City Council in their consideration of this matter. It is anticipated this material will be discussed at the forthcoming 19 August City Council workshop. pc: Elaine Beatty Judy Hudson 11