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070897 CC WS Min . . , . " CITY OF SHOREWOOD WORK SESSION MEETING TUESDAY, JULY 8, 1997 COUNCIL CHAMBERS 5755 COUNTRY CLUB ROAD 7:30 P.M. MINUTES 1. CONVENE CITY COUNCIL WORK SESSION Mayor Dahlberg called the meeting to order at 7:42 p.m. A. Roll Call Present: Mayor Dahlberg; Councilmembers Stover, McCarty, and O'Neill; Administrator Hurm; Planning Director Brad Nielsen; Engineer Larry Brown; Finance Director AI Rolek. Absent: Councilmember Garfunkel B. Review Agenda The agenda was approved as presented. 2. DISCUSSION OF CAPITAL IMPROVEMENT PROGRAM, SPECIFICALLY WATER AND STREET POLICIES The Council reviewed a list of water policy questions which also outlined the existing policy for each. policy area as well as the suggested policies which had been discussed at a prior work seSSIOn. There were no changes made to the Council's suggested policies as outlined for Questions 1.1, 1.2, and 1.3. Question 2.1 Water is on Smithtown Road. Smithtown Circle is a cul-de-sac off of Smithtown Road with five homes on it. If they submit a 100 percent petition for water, what would they pay per unit? The suggested policy was that a feasibility study would need to be done and the project would have to be financially feasible. The formula would be the actual cost minus oversizing, minus water revenue over the break-even point. Total costs were not to be less than $5,000. Mayor Dahlberg felt this would be a clear policy if a break-even point were established, however, he noted that point would be somewhat arbitrary. He commented he would not want to deny an area which has a 100 percent request for water their feasibility for that by arbitrarily restricting the break-even point. He stated it would be much more reasonable to stretch the break-even point out five or seven years to make the project more feasible. Mayor Dahlberg suggested five years would be a good target for breaking even on the infrastructure. Councilmember Stover felt the existing policy simplifies the situation by setting a $5,000 assessment per unit. She stated under the suggested policy, different property owners would be paying different amounts for the same service. . . . COUNCIL WORK SESSION MINUTES JULY 8, 1997 - PAGE 2 Councilmember Stover inquired whether the Council would prefer residents are encouraged or discouraged to hook up to water and stated she would prefer the Council not do either. Mayor Dahlberg wanted this issue to be neutral. Councilmember McCarty commented she felt people are discouraged from hooking up. Mayor Dahlberg commented if property owners are given a reasonable break-even period, the policy would be neutral. He stated this would be as neutral as any business which offers a service for a price. Councilmember Stover pointed out the City is a monopoly in that property owners either have their own water or they have City water, but they do not have any alternative choice. She did not feel property owners should be charged more or less than someone else who is receiving the same water service. Councilmember Stover was in favor of charging a flat fee and noted everyone pays the same fee for sewer service. Councilmember O'Neill raised the issue of feasibility and asked at what point the Council would determine a project is not feasible. Nielsen explained this would be determined through a review of the project feasibility study which will include an analysis of the break-even point. Mayor Dahlberg felt applying the same standard of a five year break -even period would be fair to all neighborhoods. The alternative would be for the Council to consider each request on a case by case basis in determining financial feasibility. Brown suggested a possible alternative would be to develop a standard in which the City meets the legal requirements for determining feasibility from a statutory standpoint. Staff would also calculate the break-even point. It could also be calculated to meet the break-even criteria in the event residents are willing to pay a higher amount. Mayor Dahlberg and Councilmember O'Neill stated this is a compromise which would be acceptable to them. Mayor Dahlberg stated the Council could discuss the number of years over which a project must break even as a standard or guide. He felt it would be preferable to utilize a guideline rather than an absolute standard to avoid a situation where someone would be denied due to borderline feasibility. Mayor Dahlberg asked if the Council would be willing to adopt a five year break-even period as a guideline. Nielsen stated consideration would need to be given to how long the City could ffiance a project. If the system is not building, there will not be excess funds to cover the cost. Rolek stated at the present time, property owners are assessed over a 15 year period of time. He felt five years would be a somewhat limited period of time and that 10 years may be more appropriate. Councilmember O'Neill pointed out on smaller projects, due to the difficulty of obtaining bonds, the financing would have to be picked up by the City. He also pointed out the City would need to have the funds to invest. It was decided to amend Sentence No.3 of the suggested policy to read: "The formula would be actual cost minus oversizing minus water revenue over the break-even point as set by Council guidelines. " There were no changes made to the Council's suggested policies as outlined for Questions 2.2 and 2.3. . . . COUNCIL WORK SESSION MINUTES JULY 8, 1997 - PAGE 3 Question 3.1 Water is on Smithtown Road. Smithtown Circle is a cul-de-sac off of Smithtown Road with five homes on it. A petition from four of the five neighbors is submitted for water. The suggested policy was that four would pay the cost of the project minus oversizing minus water revenue over the break -even period. The fifth person would not need to participate but would need to sign off on the project. Councilmember Stover suggested changing Sentence 1 to read, "Four would pay the cost of the project minus oversizing minus water revenue over the break-even period and the assessment would not be less than $5,000 per house." There were no changes made to the Council's suggested policies as outlined for Question 3.2. Question 3.3 What if the fifth resident wants to hook up at a later date, what would the charge to that property be? The suggested policy was they would pay the same as what the others paid for the project plus inflation. Councilmember McCarty remarked the fifth person should pay back the neighbors. The neighbors are then paying more to make up for the fifth person. Rolek pointed out the project cost divided by four property owners results in a higher assessment. The fifth person would then eventually pay the higher price which was paid by the neighbors. Councilmember McCarty felt uncomfortable with this given the additional burden it places on the surrounding neighbors. Councilmember Stover suggested the four neighbors pay their assessment and the City fund the assessment of the fifth person with the knowledge the City will recover the funds at some point in the future. Mayor Dahlberg stated this could be a possible approach in determining the financial feasibility of a project. Councilmember O'Neill was in agreement with Councilmember Stover's suggestion of the City funding the assessment of the fifth person. He stated he is not in favor of the surrounding neighbors funding the project for the fifth person. In addition, he would not be in favor of the windfall which the City would actually gain from this particular policy. Mayor Dahlberg felt Councilmember O'Neill was changing his position in an extremely fundamental way. He noted Councilmember O'Neill's previous position had been that a property owner should pay whatever the cost of municipal water becoming available to their property. Mayor Dahlberg suggested if the City retains the ability to determine feasibility, this will ensure property owners will not be over assessed. In addition, the Council could use some flexibility in determining the feasibility of a project and this would ensure that property owners wanting water will actually get it. Mayor Dahlberg pointed out if the City is paying the fifth assessment, this may be the determining factor in whether or not the project is feasible. Mayor Dahlberg stated there will be a judgment call relative to feasibility on a case by case basis. Brown stated the Council will have to determine the guideline for what is considered feasible for statutory purposes. . . . COUNCIL WORK SESSION MINUTES JUL Y 8, 1997 - PAGE 4 Nielsen pointed out it will still be necessary for the four residents requesting water to obtain the approval of the fifth in signing off with the knowledge the fifth person will eventually have to pay the assessment. Mayor Dahlberg stated he wants the system to be available when it is petitioned for and if financially feasible. Councilmember McCarty stated she also wants it to be viable. Question 4.0 A petition is received for water in an area where it is not available. A trunk main would need to be extended to provide the service. What would the cost be for each unit that petitioned for water? The suggested policy was the petition must be lOO percent (including sign-off). The project must be financially feasible. The project includes trunk main. Formula is cost minus oversizing minus water revenue over the break-even period. The question was raised if there is a need to extend the trunk main, would the people along the trunk main who are not petitioners also have to sign off. Mayor Dahlberg and Councilmember O'Neill stated they would. Rolek pointed out in the event the trunk main must be extended in the area of people who are not petitioners, but sign off on the project, this cost would have to be covered by the City and this would affect the financial feasibility of the project. Brown remarked the City would need to keep track of all of the various assessment costs for the point in the future when a resident who signed off on the petition would decide to connect to water and be required to pay the assessment. Councilmember McCarty stated another point relative to feasibility is the fact that potential hook ups could be improving the water system by connecting more wells and allowing it to operate more efficiently. Councilmember McCarty expressed concern that a large number of people could petition for water, however, if one person refused to sign off on the petition, the petition would not be successful. Mayor Dahlberg recalled the Council had discussed at a prior work session that under such extreme circumstances, the Council could, by 4/5 vote, make an exception and accept the petition. It was decided the Council will further discuss setting a percentage given the fact there is a substantial difference between a 15/1 petition and a 4/1 petition. Councilmember McCarty commented this language would be acceptable, as long as a percentage is addressed. The suggested policy will be amended to include, "A 1 00 percent petition can be changed by a 4/5 vote of the Council." The Council will further discuss what the exact threshold will be. Question 5.1 It has always been the City's policy to require commercial and multi-family units to hook up to water within 90 days of it becoming available. Should this policy continue? The suggested policy was not for buildings of four or fewer units. Yes for commercial, apartments of over four rental units and anything requiring a sprinkler system. . . . COUNCIL WORK SESSION MINUTES JUL Y 8, 1997 - PAGE 5 Brown reported he has received calls from NSP relative to water and running a 6-inch watermain. NSP stated this is not a budgeted item at this time. Councilmember Stover suggested exceptions and variances could be considered. Question 5.2 If so, what would be the cost for water for these types of development (example, four unit multiple family)? The suggested policy was cost. Mayor Dahlberg commented this should be a minimum of $5,000 to cost. Councilmember Stover felt in the case of a larger development such as the Shorewood Shopping Center, that type of facility should pay a higher cost than a single family residential property. Mayor Dahlberg anticipated the assessment for a multi-family unit to be higher since it is a more expensive project. Brown clarified a larger pipe is run for a multi-family unit. Mayor Dahlberg remarked if it is more expensive to supply water to a multi-family dwelling as it would be to supply it to a commercial unit, he would not have a problem with assessing them more. Hurm provided a copy of the current policy relative to the method of assessment. Councilmember Stover stated the policy would stay the same with the Rate of Assessment being $5,000. Question 6.1 If a developer of a new development submits a 100 percent petition for municipal water, will water be extended to the area? The suggested policy was yes, if financially feasible and if water is immediately adjacent. Properties where main goes by must agree with or sign off on the project. The language of the suggested policy was changed to, "Yes, if financially feasible. Council will take into account all other policies when determining financial feasibility." Question 6.2 At what cost? The suggested policy was cost minus oversizing. Councilmember Stover recalled the minimum of $10,000 was initially established with the thought that new lots are being created and the new lots have not contributed to the water system over the years as have the existing lots. Rolek clarified under the existing policy, new lots were charged a $5,000 assessment in addition to a $5,000 connection charge. Mayor Dahlberg was comfortable with the idea that charging $10,000 would shorten the break- even period. If the actual cost is ultimately more than $10,000, then the assessment would be the actual cost. Brown pointed out some developers are installing their own watermains which would affect the cost. Mayor Dahlberg clarified there would be a minimum cost of $5,000 plus the $5,000 connection fee. . . . 4!'.. ." . COUNCIL WORK SESSION MINUTES JULY 8, 1997 - PAGE 6 The suggested policy was amended to read, "Cost, but no less than $5,000, plus a $5,000 connection fee." 3. REPORTS Brown reported the Public Works Committee met and discussed pavement management. A number of the cities are beginning three to five year seal coating programs. Currently $30,000 is budgeted for this work. Brown stated these funds will cover only a small fraction of the city. With increasing roadway reconstruction costs, Brown believed maintenance a far better solution than attempting to catch up and pay the costs of reconstruction of the roadways. Brown suggested contributing additional funds toward preventative maintenance rather than reconstruction. He stated the funds would be obtained from the roadway fund and this would be a better cost alternative. Brown also reported on the situation with the Smithtown Road contractor relative to the failing pavement. Brown is recommending to OSM, who is in agreement, that options be explored with the contractor taking the mill down Smithtown. It would be a total cost to the contractor to mill and overlay the roadway. In addition, the contractor would also pay the cost of mill for the City's portion of the roadway and the City would cover the cost of the overlay. Brown reported compaction reports came back indicating the density requirements were met, however the overlay was insufficient. He pointed out the wet weather has allowed for the maximum amount of failure to the roadway. Brown explained from a practical standpoint of interruption and inconvenience, milling and overlay is the best alternative. It was the consensus of the Council to follow Brown's recommendation. Councilmember Stover was in favor of not inconveniencing the residents. 4. ADJOURNMENT Dahlberg moved, Stover seconded to adjourn the City Council Work Session Meeting at 9:38 p.m. Motion passed 4/0. RESPECTFULL Y SUBMITTED, Cheryl Wallat, Recording Secretary TimeSaver Off Site Secretarial ATTEST: '1 ITY ADMINISTRATOR