Agenda - Council Work Session - 04/24/2012

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CC Work Session 2. 2. Meeting Date: 04/24/2012 By: Tim Himmer, Engineering/Public Works Title: Discuss Comprehensive Utility Plan Updates 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 and/or the development community. 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, was 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 and Landform to undertake this study, which was last completed in 2004. The first order of business in advancing these plan updates is to review growth projections, which was the topic of conversation with the City Council on February 6, 2012. Without first understanding the assumptions related to how the City intends to grow, updates to these plans are extremely difficult. At that meeting Council directed staff to proceed with plan updates using the same assumptions from the existing (2004) comprehensive utility plans and 2030 Comprehensive Plan for the City; including growth, densities, and flow projections. On March 27, 2012 City staff and our consultants were again in front of the City Council at work session to discuss the sanitary sewer system. Direction from that meeting included maintaining a minimum fund balance equal to the average annual expenses over the study period, installation of a lift station to serve the Northeast Sewer Area (area near TH 47 and 167th Ave), and the creation of a residential equivalency factor for high density residential uses. The discussion for tonight's meeting will primarily focus on the water system. Through the evaluation of this system we have carried forward the previous assumptions as directed by the Council with respect to growth projections, minimum fund balance, and use of a residential equivalency factor for high density residential development. Bolton & Menk has analyzed the utility systems, consistent with this direction, and has developed a preliminary Capital Improvement Program (CIP) that evaluates future expenditures and projected revenues from user rates and development fees. Observations: