Agenda - Council - 02/06/2012 - Special

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CC Special Session Meeting Date: 02/06/2012 By: Tim Himmer, Engineering/Public Works Title: Discuss Updates to the City's Comprehensive Sanitary Sewer and Water Plans 4. 1. Background: On August 23, 2011 staff met with the City Council in work session to review the City's 2011 development cost study. 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 that 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. On November 15, 2011 the topic of comprehensive utility plan updates, and corresponding rate studies, were discussed by the Public Works Committee. This conversation was timely, in that the City Council wanted to understand how updates to these plans may impact adoption of the City's annual rates and charges. The Council wanted to delay action on adopting rates and charges for 2012 until these utility plan updates were completed. Since that time the 2012 rates and charges were adopted by the City Council in December, with the idea that the utility fees could be revised (if necessary) once the studies were updated and the results of the rate study completed. On January 10, 2012 the City Council awarded contracts to Bolton & Menk (in the amount of $28,000) and Landform (in the amount of $1,000 /month) to undertake this study, which was last completed in 2004. As stated earlier, the first order of business in advancing these plan updates is to review growth projections, which is the focus of this case. Without first understanding the assumptions related to how the City intends to grow, updates to these plans are extremely difficult. We cannot begin delving into the infrastructure needs of the future (and associated costs) if we do not have clear direction on how you believe the City will grow. Staff is looking for direction on what assumptions should be used to calculate future growth in the City; including: • Growth and population projections • Since we have not realized growth consistent with either the 2030 Comprehensive Plan (average of 455 units /year through 203 0) or the 2004 Comprehensive Utility Plans (average of 360 units /year through 2020), any revisions to growth projections would affect the amount of service connections (users) and ultimately rates and fees. • Density assumptions • Understanding where more dense growth will occur assists is developing a plan for appropriately sized and located infrastructure. It allows us to implement a program that will fund capital expenditures only where they are needed, and eliminates the potential for unnecessary extensions and /or oversizing. • Ultimate service area • This may be the most critical decision to be made with respect to ultimate City growth. This information will allow us to evaluate where growth is envisioned in the City, and the timing and sequencing for future development. Do we want to grow in an orderly fashion with progressive stages expanded from existing service areas, or are we open to "leap frog" development where a developer or the City need to expend large amounts of capital to serve a somewhat isolated area that may not support additional future growth? • Determining ultimate service area allows for the development of a plan with a known build out scenario, from which costs can be determined and then distributed appropriately to fund the needed