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061206 CC WS Min CITY OF SHOREWOOD CITY COUNCIL WORK SESSION MONDAY, JUNE 12,2006 5755 COUNTRY CLUB ROAD CONFERENCE ROOM 7:30 PM, or Immediately following the Regular City Council meeting MINUTES 1. CONVENE WORK SESSION MEETING Mayor Love called the meeting to order at 8:55 P.M. A. Roll Call Present: Mayor Love, Councilmembers Callies, Lizee, Turgeon, and Wellens; Administrator Dawson; Attorney Keane; Director of Public Works Brown, Finance Director Burton; and Planning Director Nielson Absent: None B. Review Agenda Without objection from Council, Mayor Love proceeded with the Agenda for the meeting. 2. LAKE MARY AND BOULDER BRIDGE AREA STORM WATER DRAINAGE Director Brown stated there were two drainage problem areas that required additional attention in spring of 2006 - Boulder Bridge Pond and Minnetonka Drive / Mary Lake. Both of the areas were landlocked basins that frequently required pumping after spring snow melt heavy rains. He then stated Staff had prepared draft feasibility reports that outlined possible solutions for reducing the potential for flooding in those areas. Brown then highlighted the draft reports findings. With regard to Boulder Bridge Pond, Brown explained the recommended option to reduce flooding at the Pond involved installing a control structure near the pond, and then installing a storm sewer line from the control structure along Howards Point Road to an existing storm sewer located on Smithtown Road. He also explained the option would require removal and replacement of a 1000-foot hedge adjacent to Howards Point Road, and the replacement of the hedge had not been included in March 2005 estimates. He noted Staff had met with representatives of the Boulder Bridge Homeowners Association to discuss the project. Brown stated the revised estimated cost for the project was $190,000. The preliminary assessment roll would be approximately $9,235 per acre, based on a 50-50 cost split between the City and the properties with area tributary to the pond. Discussion ensued with regard to who should be responsible for replacing the hedge which was located within a utility easement. CITY OF SHOREWOOD WORK SESSION MEETING June 12, 2006 Page 2 of 4 With regard to the Mary Lake watershed, Brown stated the water levels on Mary Lake had risen close to three houses that were adjacent to the Lake, and one had a building opening that was approximately the same elevation as the overflow elevation of Mary Lake. He explained the recommended option to was to install a new storm sewer system line east down Clover Lane, south on Minnetonka Drive, and southeast down McLain Road. The existing drain tile in the area would be connected to the new storm sewer system; and roadway edge control would also be installed. Brown stated the estimated cost for the project was $445,000. The preliminary assessment roll would be approximately $4,670 per acre, based on a 50-50 cost split between the City and the properties in the area. Based on that rate one of the properties would be assessed approximately $20,600 and another property would be assessed approximately $14,100. Brown stated the issue at hand was how to fund the projects. A Chapter 444 special tax district process could be used based on a 50-50 cost split, noting the test for those charges would be "just and equitable". He stated a Chapter 429 assessment process would be more difficult to use, because it would difficult to determine the exact benefit to the property, noting under Chapter 429 a special assessment amount shall not exceed the special benefit test (i.e. increase in value to the property as a result of the improvement). Brown stated Staff would recommend the projects be funded out of the Storm Water Utility Fund which would require a storm water utility fee increase, noting the City's storm water utility fee was less than neighboring cities'. He stated the City contained 3,667 acres, and the current storm water utility fees generated approximately $62,000 in revenues. If the rate were to increase to $10 per quarter, revenues would increase to approximately $110,000. If the rate were to increase to $15 per quarter (the same as the City of Minnetonka), revenues would increase to approximately $165,000. Brown went on to state the combined cost of $643,000 for those two projects would be paid in approximately 10.5 years based on the current fee, in 5.5 years if the fee were increased to $10, and in 3.9 years if the fee were increased to $15. Brown stated this evening's discussion should center on how to fund the projects, noting use of the Storm Water Utility Fund to fund the projects was the most practical from his perspective. Mayor Love questioned the sustainability of a rate increase to fund storm water drainage projects over the next ten years. Director Brown stated there were a number of sizable on-going storm water drainage projects that had been identified. He then stated the two projects discussed that evening were the most critical because they jeopardized a number of residential structures, and because of the recurring expenses to have Public Works drain the basins. He then stated the various rate increase alternatives would have to be assessed to determine the number of drainage projects that could be funded. Councilmember Turgeon asked to have the combined costs for the higher priority drainage projects identified in order to determine what a fee increase would have to be to fund the projects. Councilmember Wellens stated he wanted to "sunset" the fee increase. Councilmember Callies stated it was her understanding the question in front of Council was whether the drainage projects should be funded by a City-wide storm water utility fee increase or if the individual properties would be charged for 50%, or even 100%, of the project costs. Mayor Love stated Council had previously had discussions with regard to specific property owners being assessed for road improvements. He then stated he did not philosophically oppose increasing the storm water utility rate for the entire City. He did have concerns that during wet seasons there may be an influx of property owners wanting drainage issues resolved. He also wanted to ensure there was a mechanism in CITY OF SHOREWOOD WORK SESSION MEETING June 12, 2006 Page 3 of 4 place to reduce/eliminate the fee increase if it appeared unnecessary reserves were being built; yet it was important there were significant reserves available twenty years from now. He noted the change would be a change in policy. Director Brown stated for the City to fund the projects or pay 50% of the project costs would set precedent. Councilmember Wellens stated the Boulder Bridge Homeowners Association was asking for the project to be done; therefore, he thought it was appropriate for the property owners to pay 50% of the cost. Director Nielsen explained the City's Comprehensive Plan stated taxing districts could be used to pay for projects such as the two being discussed. The plan suggested 70% of the cost be assessed to the affected properties, 20% of the cost would be funded out of the Storm Water Utility Fund, and 10% would be funded from the General Fund under the Chapter 444 assessment process. Councilmember Lizee stated she would prefer a special taxing district approach be used to fund the projects rather than use a fee increase or Chapter 444 process. Councilmember Callies questioned if a Chapter 444 process was required to assess the properties. Attorney Keane stated he thought it would be more appropriate to use a Chapter 429 assessment process. Councilmember Callies stated she thought the City had been too conservative in assessing property owners for project costs. Director Nielsen stated assessing for storm water system improvements was extremely difficult. Administrator Dawson agreed, and would prefer a Chapter 444 process to be used if the properties were going to be charged. Mayor Love stated he did not have enough knowledge to recommend a Chapter 444 process over a Chapter 429 process. He asked if the question was whether the drainage issues be considered on hydrologic boundaries or political boundaries. From his perspective, if the storm water utility rate were increased it would be in accordance with political boundaries. If a process of having taxing districts were used property owners would be equally taxed and would equally benefit, noting the 50-50 cost sharing could still occur. Attorney Keane stated one of the questions Council needed to address was the timeframe for completing the higher priority drainage problem projects. Once that was determined there were three alternatives for funding the projects: 1) the City-wide storm water utility fund; 2) Council could establish a policy to split the cost 50-50 between the City and special Chapter 429 assessments to the property owners; or 3) create a special sub-utility district for special improvement projects. He went on to question if the Boulder Bridge development outlet had been undersized, noting the development was not that old. He also stated 14 property owners were being asked to fund a project that largely benefited only 4 property owners. Councilmember Wellens stated he would prefer the property owners be charged for part of the improvement costs (either 50% of the costs or in accordance with the comprehensive plan), but he did not support a rate increase to fund the projects. Councilmember Callies stated she would prefer an assessment approach to fund the projects; but a rate increase may also be in order to cover the cost of services provided. She then stated there may be projects where the City should absorb more of the costs because the improvements benefited the City in general. CITY OF SHOREWOOD WORK SESSION MEETING June 12, 2006 Page 4 of 4 Councilmember Turgeon agreed with considering a rate increase. There needed to the necessary funds for drainage projects that were not residential in nature. Mayor Love stated the purpose of the discussion was to develop some direction regarding how to fund the drainage projects. He also would support a rate increase. Director Brown stated Staff would conduct a storm water utility rate analysis. Staffwould also prepare a recommendation for Council regarding what portion of the projects costs should be assessed. 3. OTHER None. 4. ADJOURN Turgeon moved, Wellens seconded, Adjourning the City Council Work 2006,9:22 P.M. Motion passed 5/0. Meeting of June 12, RESPECTFULLY SUBMITTED, Christine Freeman, Recorder Woody Love, Mayor