Agenda - Public Works Committee - 11/15/2011

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Public Works Committee 5. 7. Meeting Date: 11/15/2011 By: Tim Himmer, Engineering/Public Works Title: Consider Authorization to Initiate Updates to the City's Comprehensive Sanitary Sewer and Water System Studies Background: On August 23, 2011 staff met with the City Council in work session to review the City's 2011 development cost study (see attached minutes). This was a comprehensive review of where the City currently stands in relation to other municipalities with regard to development costs (utility trunk fees, building permit fees, escrows, etc.). During the meeting utility rates were discussed; particularly how those rates are determined. Rates are determined by taking a comprehensive look at the City's utility system, projecting future growth, and then determining the infrastructure needs to support such growth. A plan is then developed that outlines potential timelines and costs for infrastructure improvements. The ultimate costs to construct and maintain that utility system is then evaluated to determine the appropriate funding mechanism to distribute those costs to users. Revisions to those rates are then adjusted annually, with the adoption of the annual rates and charges, and are based on the construction index related to inflation and construction costs. In the past it has been the direction of the Council to have new development "buy into the system." Existing user rates were kept low, as they had previously bought into the system when they constructed and /or purchased their homes. If Council direction is to investigate revised utility fees /rates in an effort to bring development costs down then we either need to scale back on proposed improvements or shift more cost to the existing users. It was mentioned in previous discussions that now may be the time to update the City's comprehensive sanitary sewer and water system studies, which were last done in 2004. In conjunction with the comprehensive utility plan updates we could also perform a rate study in an effort to determine a different distribution of such costs. Notification: Observations: The Metropolitan Council is currently going through their process to update regional population and demographic forecasts. It is anticipated that preliminary forecasts will be available next fall, and the results could affect population and infrastructure needs of any updates that we may make to the City's comprehensive utility plans. The next update to the overall City Comprehensive Plan will begin on 2015, and is due for approval in 2018. If directed, staff is prepared to solicit quotes from select consultants within the City's engineering services pool to initiate the requested comprehensive utility plan updates and /or rate study. It is estimated that this work would cost approximately $25,000, and it would take approximately 8 weeks to complete. Funding Source: Funding for updates to the City's comprehensive sanitary sewer and water system studies would come from the corresponding enterprise funds. Staff Recommendation: Staff is seeking direction on whether to undertake the comprehensive sanitary sewer and water system studies, and /or rate study. Committee Action: Based upon discussion.