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041006 CC WS Min CITY OF SHOREWOOD WORK SESSION MEETING April 10,2006 Page 2 of9 Dawson stated it had been the policy in recent years to wait for a petition from at least 67% of the property owners before water would be extended. He then stated there was an opportunity to extend water in the Wedgewood Drive/Mallard Lane/Teal Circle neighborhood as part of a major road project. He noted a four-fifths vote of the Council was required to extend water, even in the absence ofa petition. Mayor Love stated it had always been Council's intention to consider extending water as part of a major road project. He went on to state Council had worked aggressively for the success of the CUB Foods water extension and the extension toward Manor Road. In response to Councilmember Turgeon's comment that a number of road projects had been done where water extension had not been considered, Director Nielsen stated there had not been any road rebuild projects where the extension of water was not considered. Mayor Love stated the Wedgewood Drive road project was the only time he could remember where the opportunity was so great to extend water; he could not recollect any situation where the City had not seized an opportunity like that. He also stated the City had not been aggressive in identitying ways to extend water throughout the City. Director Nielsen stated he did not think the City had been remiss in taking advantage of extending water when it had done road reconstruction or road reclaimation projects. He stated City water had been extended on Smithtown Road (noting that had been done before Smithtown Road had been rebuilt). He also stated when a sewer project was done on Noble Road (which required the road to be replaced) the property owners were surveyed with regard to wanting City water and they chose not to have City water extended. Administrator Dawson explained the City's current connection charge was authorized by Minnesota State Statute Chapter 444 for which the test was if the charge was just and equitable. He stated Council had discussed what portion of the current connection charge was to cover watermain installation costs and what portion was to cover infrastructure costs. He also explained a special assessment could not exceed the special benefit to the property. Administrator Dawson explained Staff had contacted several property appraisers to get an idea of what the benefit to properties was of having City water. None of the appraisers were willing or able to provide a general range of value; a detailed before and after analysis for Shorewood would need to be done to provide that information. He then explained he had since spoken to an appraiser, who was recommended by Attorney Keane, and the assessor of a nearby city; both of the individuals thought the cost for installing a new well could be used as a benchmark amount for the connection charge. Director Nielsen explained he had done some research with regard to the cost of installing a private well. The costs ranged from $6,700 - $13,200 depending on the depth of the well. He thought the average cost of a well in Shorewood would be $8,000 - $9,000. Administrator Dawson explained Staff had done a survey of several area communities and their connection charges ranged from $1,600 in Wayzata to $5,000 in Chanhassen and Victoria. He then stated based on that information a uniform connection charge (which would be in addition to the special assessment) should be $2,500 - $3,000 for Shorewood. Councilmember Turgeon questioned if Chanhassen and Victoria allowed property owners to put in wells or did they have a policy that required City water. Administrator Dawson stated he did not know the answer to her question. Turgeon noted the City's policy allowed property owners the option, and therefore the comparison to the other cities may not be accurate. CITY OF SHOREWOOD WORK SESSION MEETING April 1 0, 2006 Page 3 of9 Director Nielsen explained single-family residential developments of more than three lots must connect to the City's water system, provided it was technically and financially feasible. He noted connecting to water would always be technically feasible; therefore, it was really based on if it was financially feasible. He noted simple subdivisions were not required to hook-up to City water. Councilmember Callies stated she did not think there was any relevance between whether or not a property was required to hook-up to City water and the amount ofthe connection charge. Director Nielsen stated the City's current ordinance and policy was based on the premise that water, as a commodity, had a value and the City had determined that value to be $10,000. He stated that was the benchmark amount used to determine financial feasibility. He explained the City's current connection charge was in effect a variable amount (the $10,000 charge was reduced by the amount of any special assessment); and the City basically charged $10,000 for the commodity of City water. Nielsen noted the Timber Lane property owners were not required to hook-up to City water because the $14,000 special assessment was not deemed financially feasible. He also noted in one project, property owners were willing to pay a $16,000 special assessment to have access to City water. He then stated there was a long list of projects that had been completed where the property owners paid the $10,000 to have access to City water. He also stated there were a number of property owners that had not been assessed any amount yet had a watermain available to connect to; consequently going to fixed fee of $2,500 - $3,000 would not be fair. In response to a question from Mayor Love, Administrator Dawson explained connection charge was a standard term but what the connection charge was could vary. Mayor Love stated the use of the term connection charge was confusing to property owners. The term was sometimes interpreted to mean the cost for bringing water from the watermain to the house. Director Nielsen stated there had been a period of time when the City policy included a special assessment and a trunk charge. After approximately 1 Y2 years with that policy the City Attorney advised there was not statutory authority for a "trunk charge". Mayor Love stated the water policy terms and their meaning must be clearly communicated to property owners. Councilmember Callies stated one of the reasons for the confusion with the connection charge was the City's policy mixed the special assessment and connection charge principles. Administrator Dawson stated Staff had prepared a map that depicted properties currently connected to City water, those properties where it was possible to connect, and properties where a watermain could be installed. He explained the City currently had 1,265 water customers (including ones in Deephaven off the Amesbury system); there were approximately 225 potential customers who have water in their streets, but had not connected to the City system; and there were approximately 93 properties that could be served if water was extended to their areas in conjunction with the street reconstruction schedule in the current CIP. He also explained there were approximately 2,800 parcels in the City. Administrator Dawson then stated one area of significant discussion amongst Staff was with regard to equity issues. There were several instances (which were listed in the memo) where City watermains had been installed by a private developer (with the costs then passed on to residents who purchased the lots), and property owners along the line had not had a special assessment. If the City decided to change its CITY OF SHOREWOOD WORK SESSION MEETING April 10, 2006 Page 4 of 9 policy to a lower uniform connection charge, those property owners would end up paying less for City water and that may not be perceived as fair. Dawson also explained there were some properties that had been assessed for City water, but had not yet connected and paid the remainder of the charge. Assessments of $5,000 had been levied for most of those properties. If a uniform connection charge in any amount less than $5,000 were established, those properties would not pay the full $10,000 currently in effect. Dawson explained the connection of the Amesbury and Southeast Area water systems was ready to go immediately. The project was considered to be an improvement to the City system; therefore the properties would not be assessed. They would pay the full connection charge at time of hook-up. If Council were to change the policy and follow a 429 improvement process for potential assessments with this project, it could not order the improvement and award a contract for the work prior to holding a public hearing. He noted if the change in policy were to start immediately the public hearing would be on May 22, 2006, which was the same day the bid was scheduled to be awarded. Councilmember Wellens questioned if Council would want to allow the Amesbury and Southeast Area systems project to move forward under the existing policy. Administrator Dawson stated if Council decided to change the policy, Staff suggested Council may want to consider the current connection charge remain in effect for the balance of 2006. All properties adj acent to City water as of December 31, 2006, that had not connected to the City water system, would pay the current ($10,000) connection charge when they did connect. All properties to which water was extended beginning January 1, 2007, would be assessed for the benefit to their properties (unless all affected owners of property in a project area agree to pay more); and the new uniform connection charge would be paid at the time that the property was connected to City water. Dawson stated Staff was waiting for direction from Council before they would move forward with the Wedgewood Drive/Mallard Lane/Teal Circle area project. Mayor Love stated the policy was made more confusing because of the policy's history, and because Council had avoided addressing the contentious issue on a regular basis. He noted the water policy was also controversial amongst property owners. He then stated a few years back Council had attempted to revise the water policy to one that neighborhoods would want to consider or Council would want to consider when road projects were undertaken. He conveyed he had no objection to the current policy. He stated knowing there was a chance the fee could be increased in the future could serve as an incentive to apply for City water at the current connection rate. He suggested this incentive be marketed as part of the effort. Councilmember Lizee had proposed to publicize the policy in a manner that could be clearly understood. Councilmember Callies again expressed her concern with the current policy which consisted of a combination of a special assessment and a service (i.e. connection) charge. She stated the $10,000 connection charge may be a good value, but maybe the special assessment was too low. Director Nielsen explained a number of different factors were taken into consideration before the $10,000 figure was determined. He thought a $10,000 charge for City water was a good value compared to the cost of an $8,000 - $9,000 private well. He also stated part of the reason for a connection charge in most cities was to recover some of costs that can't be assessed. He went on to explain water fees were to cover the cost of maintenance to the water system; trunk mains, water towers, and facilities were normally funded through assessments and connection charges. CITY OF SHOREWOOD WORK SESSION MEETING April 10, 2006 Page 5 of9 Director Burton explained a connection charge was to cover the cost of the water system infrastructure, and the City's infrastructure assets approximated $6 million. The infrastructure costs could be recovered if the connection charge was $2,500 - $3,000, assuming 2,800 parcels connected to the water system. In response to a question from Mayor Love, Director Nielsen explained there were two charges a property owner would incur when connecting to the Metro Sewer system. There was a local sanitary access fee that is paid to the City to cover a property's share in the cost of the mains that had been installed. The second charge was a SAC charge of $1,500, which was incurred with a building permit, which was to cover the property's access to the Metro Sewer system. Councilmember Wellens explained Xcel Energy charged seven different fees to bury an electrical line and he listed what they were. He stated the City's water policy was relatively simple in comparison. Councilmember Turgeon agreed there was a need to educate the property owners on the water policy. She stated she had no issue with the current $10,000 amount, and did agree with a flat fee. She also agreed City water was a commodity. She stated City water was of equal value to properties, and it could only increase a property's value by a certain amount. Administrator Dawson stated it was difficult to determine what value City water was in the current land market. Councilmember Callies stated, based on her professional experience, water did add a different value to different properties. Mayor Love stated greater public good (a municipal water system that was available during power outages) was a reason to make connecting to City water a good value. He then stated if the City were implementing a water system for the first time the discussion of value-added could be more appropriate, noting the retrofitting of City water was a very difficult process. Councilmember Wellens asked Mayor Love and Councilmember Turgeon if they supported staying with the existing water policy. Both agreed that is what they supported. Mayor Love stated it was important that political support was maintained III order to support the expansion of the City's water system. Councilmember Turgeon suggested each time a City street was rebuilt or reclaimed a watermain should be installed if one was not already there, and property owners would be assessed at that time for the installation of the main. Discussion ensued with regard to lack of available funds to aggressively pursue water expansion. Director Nielsen noted the reconstruction of Star Lane and Star Circle, slated for this year or the next, was the only other major road rebuild project that would occur in the next five years. Councilmember Callies questioned why people thought changing the water policy would discourage property owners from connecting to City water and increase the cost. She was concerned the policy for charging for City water and the policy with regard to making City water available and mandatory were being commingled. Discussion ensued with regard to assessing the complete cost for installing watermains. CITY OF SHOREWOOD WORK SESSION MEETING April 10, 2006 Page 6 of9 Councilmember Callies stated she could support a fixed connection charge, but she did not support a fixed amount for a combination of the special assessment and connection charge. She stated property owners should be assessed for the cost of the watermain installation and uniform connection charge should be in addition to that. Mayor Love stated the fixed $10,000 cost had probably helped property owners affected by the installation of the watermain as part of the CUB Foods project and the Manor Road project. Administrator Dawson explained CUB Foods and the shopping center owners had considered various alternatives for bringing water to the site. After significant analysis, they determined paying for the installation of a watermain down Minnetonka Drive to County Road 19 was the best alternative. There was no City expense or expense to the property owners on Minnetonka Drive. Mayor Love stated that scenario was easy for the property owners to accept because their future obligation was definable. There was no special assessment and the cost to connect to City water would be fixed at the current $10,000 amount. With regard to the installation of a watermain down Smithtown Road, there was general consensus there would have been less controversy with the property owners had the water policy been clearly explained. Councilmember Callies respectfully excused herself from the meeting at 6:25 P.M. due to a family emergency. Mayor Love recessed the work session at 6:26 P.M. Director Brown arrived at 6:30 P.M. Mayor Love reconvened the work session at 6:34 P.M. Councilmember Turgeon stated she was not sure it was appropriate to continue the discussion in the absence of Councilmember Callies. Mayor Love stated he clearly understood Councilmember Callies's position of the mater, but Staff needed direction from Council. Councilmember Wellens again stated he was in support of the existing system, as were Mayor Love and Councilmember Turgeon. It was not a complex system. A known cost for City water helped property owners with their plans. Councilmember Turgeon stated she appreciated Councilmember Callies's perspective, but her own concerns were related to equity with the cost for City water. Councilmember Lizee stated both the equity in the cost for the commodity and the ease of application were important. Administrator Dawson stated Councilmember Callies's approach was a conventional method. The City's policy was somewhat unique because it was an incremental cost approach and voluntary. Staff was extremely aware of the need for clarity when communicating the water policy. Mayor Love was pleased with the open discussion about the controversial water policy subject. CITY OF SHORE WOOD WORK SESSION MEETING April 10,2006 Page 7 of9 In terms of direction to Staff, Administrator Dawson stated council policy to include automatically the projected costs of installing watermains as part of projects like the Wedgewood area project had been very helpful. Council could then deterIlline whether or not the watermain should be implemented as an assessment project. Mayor Love stated in addition to claritying the definition of terms used in the water policy, he would like Staff to clarity the benefits to property owners of paying the assessment now. Administrator Dawson stated one of the recent improvements to the City's water system was the Badger well project, noting it was not completely done. He stated a Council tour of the site would be scheduled for June 2006. Director Brown stated the Badger well provided service to residents when there was a fault in the system on April 10, 2006. He also stated components of the water system needed to be upgraded. He went on to state the Amesbury and Southeast Area interconnect was vital to the water system. He explained the EP A and Minnesota Department of Health were continually tightening the constraints on radon emissions, and Amesbury well was at a level that was near the acceptable limit. 3. GLEN ROAD AREA STORMW ATER DRAINAGE Steve Gurney, Acting City Engineer, reviewed his memo dated April 10, 2006, regarding Glen Road Area storm water drainage problem. He noted they had been identified as early as 1988. Gurney then listed the problem areas: . The 24735 Glen Road property had experienced back yard flooding several times; · The 25145 Glen Road property had also experienced flooding in the past; · The Amlee Road surface was in poor condition and was in need of re-construction, including the installation of a drainage system for the subgrade; and, · The property owners adjacent the wetland behind 24740 / 24710 Amlee Road had expressed concern with the amount of sediment that was present in this wetland. They had requested assistance from the City in removing sediment from that area. Gurney reviewed the site location map for the proposed wetland improvement project under consideration. He stated that opportunity had developed after the City acquired of a parcel of property north of the Southwest LRT Regional Trail and west of Manitou Park. The area was a combination of wetland and upland wooded area. Gurney then reviewed a sketch of a proposed storm water management concept plan for the Glen Road area that was under consideration. The plan would address the impacts created by fixing the problem areas listed above. He stated increasing the amount of wetland area on the City parcel would provide the required mitigation was necessary to minimize the impact on the wetland behind 24740/24710 Amlee Road. He then explained there would need to be some clearing of the wetland area to facilitate the construction of the storm water sewer in the Amlee area. Gurney also explained the project on the new City parcel would also provide the necessary storage volume to mitigate increased runoff rates from improvements to upstream storm sewer systems. CITY OF SHOREWOOD WORK SESSION MEETING April 10, 2006 Page 8 of9 Gurney stated Staff recommended a preliminary plan be developed in collaboration with the Minnehaha Creek Watershed District pending Council's approval of the concept plan. The effort would involve gathering survey data for the area, and completing a tree inventory so a grading plan can be developed that would preserve as many substantial trees as possible. Once a preliminary design had been determined, an estimate of probable cost would be developed so that funding sources can be identified. Gurney stated it was a great example of a win/win project. Mayor Love had been involved in a Minnehaha Creek Watershed District (MCWD) study in 1987 with regard to funding for a Gideon Glen project, the MCWD had wanted the entire area to be evaluated in a comprehensive manner. He stated he would be willing to address the MCWD Board with Staff if they wanted him to, noting the project had been done as the MCWD had requested. Administrator Dawson noted one of the conditions with MCWD's financing of the Gideon Glen restoration was to a comprehensive solution. In response to a question from Councilmember Wellens, Director Brown explained the Glen Road area water project was not as high a priority as in the Mary Lake outlet area. He stated the Glen Road area project would solve six critical drainage issues that had been present for a long time. There had not been any good solutions to the issues until the City acquired the wetland. In response to a question from Councilmember Turgeon, Director Brown stated a drainage pipe would still be required between the 3 - 4 homes in some area. Councilmember Turgeon stated there used to be water behind Healy property and the aerial photo did not show any, and there was no water behind the Gagne property. She questioned what was blocking the water flow. Director Brown stated there was a sanitary sewer line which was protected with elevated ground cover behind the Healy property. Acting Engineer Gurney stated there was a small railroad culvert on the west end of the area. Director Brown stated Staff had attempted to minimize the impact on the existing wetland area. He explained the Wetland Conservation Act required two acres of wetland replace every acre impacted. Councilmember Turgeon questioned if the new wetland parcel would be upgraded, to which Director Brown answered it would. He stated the parcel was a low quality wetland. Mayor Love requested that every opportunity be taken to make the wetland an amenity to the area. He also requested Staff work with Tonka Bay on creating a formal entrance from the trail to Tonka Bay's park. Councilmember Turgeon suggested Staff be considerate of the Blandings turtle, which was on the protected species list, when embarking on the effort. Director Brown stated staff had not determined sources of funding to recommend for the project. 4. OTHER There was no other business for discussion. CITY OF SHOREWOOD WORK SESSION MEETING April 10, 2006 Page 9 of9 5. ADJOURN Wellens moved, Lizee seconded, Adjourning the City Council Work Session Meeting of April 10, 2006, at 6:58 P.M. Motion passed 4/0. RESPECTFULLY SUBMITTED, Christine Freeman, Recorder ATTEST: Woody Love, Mayor