Agenda - Council - 06/26/2012 - Laserfiche WebLink

Home

Twenty year Capital Improvement Programs (CIP) and preliminary budgets were being prepared for each utility report, following the direction and assumptions as approved by the Council. No acquisition costs are included for easement and/or right-of-way to install the required improvements; it is assumed they are part of a development scenario whereby the applicant would be responsible for all associated costs. The operation and maintenance (O&M) expenses for each utility (with the exception of the water treatment plant - see below) are proposed to be funded with user rates, while system expansion is proposed to be funded with development/connection fees. The City's current policy requires development to be responsible for all costs associated with the required utility extensions to serve their project; the City does not typically advance utility infrastructure expansion without an available funding source. The current utility reimbursement agreement with 21st Century Bank, related to the NW Sewer and Water Extension project, has been incorporated into the budgets as well. Under this agreement the City is required to pay back utility connection charges as properties and/or developments tie into this system, which currently stands at approximately $5.3M in outstanding eligible connection charges. The City is still able to offer fee credits for lateral extensions to serve the connecting properties, so the total eligible trunk fee reimbursements from a development would likely be reduced by the infrastructure costs to serve the development. Based upon this information staff has factored in a $2M payback from the water utility, and the total amount of $112,000 from the sanitary sewer utility through the year 2025. WATER TREATMENT The City's current groundwater water supply exceeds secondary standards for iron and manganese content, and as more users are added to the system it is likely that complaints will increase and there will be a demand and expectation for improved water quality. Therefore, staff recommended (and Council concurred) that it is imperative to plan for water treatment and include the associated costs in the water system plan. Since there was a relatively low cost differential to construct a surface water treatment plant vs. a groundwater plant staff proposed (and Council concurred) that a surface water treatment plant be included in the future plan. A surface water treatment plant allows for greater flexibility in servicing future population demands, provides an infinite source, eliminates concerns with with respect to contamination and/or surface water connections within the aquifer, and potentially introduces additional funding sources if it were to be elevated to a regional supply concern. Based upon Council discussions, and to remain conservative in our funding approach, it is proposed that this facility be funded 80% by the City. Also within the budgeting analysis staff proposed (and Council concurred) that a portion of the water treatment facility should be funded by existing users, since they would also be realizing a benefit from improved water quality. Bolton & Menk compared the number of users that are projected to be on the municipal system at the time a treatment facility will be necessary, and factored the user rates from this serviced population into paying a portion of the treatment plant construction. This analysis approximated that 50% of the 2030 MUSA service population will be connected to the water system at the time the plant will be necessary (approximately 2019), and therefore the water utility plan factors in an approximate 50-50 split as an equitable distribution of costs between user rates (primarily O&M costs) and development fees (primarily system expansions) to fund this future treatment facility. It should also be noted that property acquisition may be required for constructing this facility, which costs are accounted for in the estimate to construct. Two proposed locations for this facility are included in the plan; one being the original location as has been carried forward from the previous plan and located just south of fire station # 1 on Armstrong Boulevard, and the other being the recently acquired property from the Legacy Christian Academy development on the southeast corner of Alpine drive and Puma Street. Aside from the intake line from the Mississippi River to the facility, all the existing infrastructure to/from the municipal wells in the COR are located along Bunker Lake Boulevard and Armstrong Boulevard. If it is unfeasible to acquire the land for site A (near fire station # 1) the costs of infrastructure extensions to site B (Alpine/Puma) would be offset by the budgeted acquisition price of site A. Decisions on acquisition should be considered in the near future, as it is estimated that this facility would be on-line by 2019 and it will take approximately two years to complete construction. Preliminary design and planning, including acquisitions, is slated for as early as 2013. UTILITY RATES