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052499 CC Ws AgP .. :. l J.. .. CITY OF SHOREWOOD 5755 COUNTRY CLUB ROAD. SHOREWOOD, MINNESOTA 55331-8927. (612) 474-3236 FAX (612) 474-0128. www.state.net/shorewood. cityhall@shorewood.state.net MEMO TO: Mayor and Councilmembers Al Rolek C~ FROM: DATE: May 20,1999 RE: Water Policy Work Session - Financial Analysis Water Cash Flow Analysis - Current, Noble Road, and Future Projects At the work session Monday night you will be reviewing the City's current water policy as it relates to installation of infrastructure, financing, special assessments and connection charges. Staff has previously related to you the difficulties in administering the current policy. The intent of this memo is to address some of the financial issues connected with present and future water policy. Attached are 5 different cash flow analyses for the Water Fund. The first scenario shows the cash flow based solely on the current system covering the period through the year 2012, at which time all water debt would be retired. Under this scenario, the Water Fund cash balance in 2012 is projected to be $602,514. The remaining 4 scenarios, labeled Scenario 1, 2, 3 and 4, illustrate the effect on the fund of installing water main on Noble Road along with the street project. The current water policy and charges have been used in developing these scenarios. Scenario 1 assumes that residents will only be charged for water at the time that they connect to the system. Since in this area the homes and wells are relatively new, new connections are expected to be infrequent and occur over a long period of time. For purposes of this and all other scenarios, and for lack of any historical data to draw upon, it is assumed that no connections will be made for the first 5 years, and that one connection will be made every other year. A connection fee of $10,000 is collected upon connection to the system. The result of this scenario would be a cash balance in 2012 of $419,122, $183,392 less than in the current system. Scenario 2 assumes that the total cost of water will be assessed against each affected parcel over a period of 15 years at 7% interest. The current water policy is somewhat confusing. It states that the total project cost for water installation will be assessed to affected parcels. It also states that upon connection to the system, users will be charged a o PRINTED ON RECYCLED PAPER - ~ ... connection fee of $10,000 less any previous water assessments. However, on similar past projects, such as the Smithtown Lakeside water main project in 1998, only the cost of the project was assessed. Therefore, I have only included assessment of the project costs for this scenario. The result is that the Water Fund cash balance in 2012 is $667,817, $65,303 more than the current system. Scenario 3 assumes a mix of the first two, assessing part of the cost and collecting a connection charge upon connection to the system. The connection charge is $10,000 less the previous assessment, as is the current policy. Under this scenario, the cash balance in the Water Fund in 2012 is projected to be $521,634, or $80,880 less than the current system. The last scenario assumes a fixed per unit assessment for water installation. As in the previous water policy, $5,000 is assessed to each affected parcel when water is run in front of the parcel. No other connection charges, other than permit and meter charges, are imposed. Under this scenario, the 2012 cash balance is $546,281, or a difference of $56,233 from the current system scenario. The per unit assessment approach could work if we were to follow the water implementation plan prepared in 1996. Under such a plan, the deficits and surpluses of the various projects would balance out over time. However, in a "piecemeal" installation approach, this assessment method would have a negative impact on the water fund. It is readily evident that under Scenarios 1, 3 and 4, the Water Fund cash balance takes a rather dramatic decrease. If the policies presented in these scenarios were extended to a number of water projects, it is very evident that the cash balance will be in jeopardy after only a few projects. If the project costs are assessed to affected parcels, as in Scenario 2, the Water Fund can maintain its projected cash balance. However, the per parcel project costs and assessments can vary widely from project to project. It is important to carefully weigh these factors in developing a sound, consistent water policy. It is also very important to develop a policy which is understandable and can be administered without creating confusion. It is my hope that in looking at these scenarios and in addressing the questions relating to how and when water should be installed, that a clear, consistent policy can be developed. I will be out of town and, therefore, will not be in attendance at this work session. I have discussed these scenarios with Jim. He will review and explain the differences between them to you during the session. I will be glad to address any questions that may arise when I return. . Current Water Cash Flow Analysis ... 5/20/99 .lW 200Q 2OO.l 2002 21m 200!1 2005 200Q 2OOZ. 2008. 2QQ2 2QlQ 2Qll 21112 Beginning COSh Balance 1.157.853 1.240.107 1.237.489 1.158.680 1.084.555 1.001.897 901.602 819.158 756.222 708.222 670.479 622610 600.641 553.781 Projected Revenues from Operations - Salef 236.000 236.000 236.000 236.000 236.000 236.000 236.000 236.000 236.000 236.000 236.000 236.000 236.000 236.000 Projected Revenues from Operations-other 10.750 8.000 6.000 4.000 2.000 1.000 Projected Expenses from Operations (197.200) (180.000) (180.000) (180.000) (180.000) (200.000) (200.000) (180.000) (180.000) (180.000) (200.000) (180.000) (180.000) (180.000) Projected Expenses for Capitol Outlay (CIP) (11.200) (25.000) (5.500) (15.000) (15.000) (15.000) (15.000) (15.000) (15.000) (15.000) (15.000) (15.000) (15.000) Sp Assessments - 1995 44.185 44.185 44.185 44.185 44.185 44.185 44.185 44.185 44.185 44.185 44.185 44.185 Sp Assessments - 1996 33.017 33.017 33.017 33.017 33.017 33.017 33.017 33.017 33.017 33.017 33.017 33.017 33.017 Sp Assessments - 1997 17.843 10.032 2.220 Sp Assessments - 1998 (lakeside) 2.495 2.495 2.495 2.495 2.495 2.495 2.495 2.495 2.495 2.495 2.495 2.495 2.495 2.495 Marsh Point Development 5/ A Prepays' 58.920 15.549 4.893 Watten Ponds Development 5/ A Prepays 18.903 17.964 Other 5/ A Prepays-Connect Chgs Marsh Point Development Connection Chg: 50.000 20.000 Total Special Assess/Connection Chgs (MP) 225.363 143.242 86.810 79.697 79.697 79.697 79.697 79.697 79.697 79.697 79.697 79.697 35.512 2.495 Victoria Payments 51.848 49.174 Revenue from New Connections 6.020 9.100 10.500 11.900 13.300 14.700 16.100 17.500 18.620 19.740 20.440 21.140 21.840 22.540 Additional Operating Costs (602) (910) (1.050) (1.190) (1.330) (1.470) (1.610) (1. 750) (1.862) (1.974) (2.044) (2.114) (2.184) (2.254) Revenue from AU Antenna Space Rental 21.767 22.420 23.093 23.785 24.499 25.234 25.991 26.771 27.574 28.401 29.253 30.131 31.035 31.966 Debt SeNice (296.235) (298.321 ) (285.039) (276.714) (268.204) (264.390) (245.545) (246.542) (232.247) (222.904) (213.344) (208.416) (188.436) (61.770) Interest @ 5% 35.743 33.676 30.378 28.396 26.380 23.934 21.923 20.388 19.218 18.297 17.129 16.594 14.373 14.756 Ending Cash Balance 1.240.107 1.237.489 1.158.680 1.084.555 1.001.897 901.602 819.158 756.222 708.222 670.479 622.610 600.641 553.781 602.514 . Adjusted per settlement Assumptions: - 6% of those having water available win hook up each year. up to 90% . New HOOkUps win use S 140 In water per year SCENARIO 1 Water Cash Flow Analysis NOBLE ROAD WATER INSTALLATION - PAY AT TIME OF HOOKUP 5/20/99 .lW 2WJ 2OO.l 2002 2CW 200!1 2005 200Q 2OOZ. 2008. 2QQ2 2QlQ 2Qll 21112 Beginning COSh Balance 1.157.853 1.061.860 1.054.785 971.409 892.602 815.524 710.699 633.991 566.684 524.583 482.636 440.838 414.842 374.232 Projected Revenues from Operations. Sole! 236.000 236.000 236.000 236.000 236.000 236.000 236.000 236.000 236.000 236.000 236.000 236.000 236.000 236.000 Projected Revenues from Operations-other 10.750 8.000 6.000 4.000 2.000 1.000 Projected Expenses from Operations (197.200) (180.000) (180.000) (180.000) (180.000) (200.000) (200.000) (180.000) (180.000) (180.000) (200.000) ( 180.000) (180.000) (180.000) Projected Expenses for Capital Outlay (CIP) (11.200) (25.000) (5.500) (15.000) (15.000) (15.000) (15.000) (15.000) (15.000) ( 15.000) (15.000) (15.000) (15.000) Noble Road Watermaln Installation Cost (173,900) Sp Assessments - 1995 44.185 44.185 44.185 44.185 44.185 44.185 44.185 44.185 44.185 44.185 44.185 44.185 Sp Assessments - 1996 33.017 33.017 33.017 33.017 33.017 33.017 33.017 33.017 33.017 33.017 33.017 33.017 33.017 Sp Assessments - 1997 17.843 10.032 2.220 Sp Assessments - 1998 (lakeside) 2.495 2.495 2.495 2.495 2.495 2.495 2.495 2.495 2.495 2.495 2.495 2.495 2.495 2.495 Marsh Point Development 5/ A Prepays . 58.920 15.549 4.893 Watten Ponds Development 5/ A Prepays 18.903 17.964 Other 5/ A Prepays-Connect Chgs Marsh Point Development Connection Chg 50.000 20.000 Connection Charges. Noble Road 10,000 10.000 10.000 10.000 10.000 Total Speclol Assess/Connection Chgs 225.363 143.242 86.810 79.697 79.697 79.697 79.697 79.697 79.697 79.697 79.697 79.697 35.512 2.495 Victoria Payments 51.848 49.174 Revenue from New Connections 6.020 9.100 10.500 11.900 13.440 14.840 16.380 17.780 19.040 20.160 21. 000 21.700 22.540 23.240 Additional Operating Costs (602) (910) (1.050) (I. 190) (1.344) (1.484) ( 1.638) (1. 778) (1.904) (2.016) (2. 100) (2. 170) (2.254) (2.324) Revenue from AU Antenna Space Rental 21.767 22.420 23.093 23.785 24.499 25.234 25.991 26.771 27.574 28.401 29.253 30.131 31.035 31.966 Debt SeNice (296.235) (298.321) (285.039) (276.714) (268.204) (264.390) (245.545) (246.542) (232.247) (222.904) (213.344) (208.416) (188.436) (61.770) Interest @ 5% 31.396 29.220 25.810 23.715 21.835 19.278 17.407 15.765 14.739 13.715 12.696 12.062 9.994 10.283 Ending Cash Balance 1.061.860 1.054.785 971.409 892.602 815.524 710.699 633.991 566.684 524.583 482.636 440.838 414.842 374.232 419.122 . Adjusted per settlement Noble Rood Facts: - There are 21 affected parcels on the Noble Rood Project - The cost af putting in water main Is $8.281 per parcel Assumptions: .6% of those having water avaUable will hook up each year. up to 90%. - New HOOkups wUI use $ 140 in water per year. . No Assessment for Noble Rood watermaln installation - residents win pay at time of hookup ($10.000) - One new hookup on Noble Rood every other year beginning in the 5th year. .... . SCENARIO 2 . Water Cash Flow Analysis NOBLE ROAD WATER INSTALLATION - FULLY ASSESSED 5/20/99 l22.2 2QOO 200l 2002 2003 ~ 2000 2llC.lQ 200Z 2008 2QQ2 2QlQ 2Qll .2O.l.2 Beginning Cash Balance 1.157.853 1.061.860 1.075.050 1.012.445 954.929 889.425 806.713 742.420 698.089 669.287 651.223 623.655 622.494 597.090 Projected Revenues from Operations - Sa~ 236.000 236.000 236.000 236.000 236.000 236.000 236.000 236.000 236.000 236.000 236.000 236.000 236.000 236.000 Projected Revenues from Operatlons-0ther 10.750 8,000 6.000 4.000 2.000 1.000 Projected Expenses from Operations (197.200) (180.000) (180.000) (180.000) (180.000) (200.000) (200.000) (180.000) (180.000) (180.000) (200.000) (180.000) (180.000) (180.000) Projected Expenses for Capital Outloy (CfP) (11. 200) (25.000) (5.500) (15.000) (15.000) (15.000) (15.000) (15.000) (15.000) (15.000) (15.000) (15,000) (15.000) Noble Road Watermaln Installation Cost (173,900) Sp Assessments - 1995 44.185 44.185 44.185 44.185 44.185 44.185 44.185 44.185 44.185 44.185 44.185 44.185 Sp Assessments - 1996 33.017 33.017 33.017 33.017 33.017 33.017 33.017 33.017 33.017 33.017 33.017 33.017 33.017 Sp Assessments - 1997 17.843 10.032 2.220 Sp Assessments - 1998 (Lakeside) 2.495 2.495 2.495 2.495 2.495 2.495 2.495 2.495 2.495 2.495 2.495 2.495 2,495 2.495 Sp Assessments - Noble Road 19.300 19.300 19.300 19.300 19.300 19.300 19.300 19.300 19.300 19.300 19.300 19.300 19.300 Marsh Point Development SI A Prepays . 58.920 15.549 4.893 Watten Ponds Development SI A Prepays 18.903 17.964 Other 51 A Prepays-Connect Chgs Marsh Point Development Connection Chg: 50.000 20.000 Total SpeClo1 Assess/Connection Chgs 225.363 162.542 106.110 98.997 98.997 98.997 98.997 98.997 98.997 98.997 98.997 98.997 54.812 21.795 Vletoria Payments 51.848 49.174 Revenue from New Connections 6.020 9.100 10.500 11.900 13.440 14.840 16.380 17.780 19.040 20.160 21.000 21.700 22.540 23.240 Additional Operating Costs (602) (910) (1.050) (1.190) (1.344) (1.484) (1.638) (1.778) (1.904) (2.016) (2. 100) (2. 1 70) (2.254) (2.324) Revenue from All Antenna Space Rental 21.767 22.420 23.093 23.785 24.499 25.234 25.991 26.771 27.574 28.401 29.253 30.131 31.035 31.966 Debt Service (296.235) (298.321 ) (285.039) (276.714) (268.204) (264.390) (245.545) (246.542) (232.247) (222.904) (213.344) (208.416) (188.436) (61. 770) Interest @ 5% 31.396 30.185 27.282 25.706 24.108 22.090 20.522 19.441 18.739 18.298 17.626 17.597 15.900 16.820 Ending Cash Balance 1.061.860 1.075,050 1.012.445 954.929 889.425 806.713 742.420 698.089 669.287 651.223 623.655 622.494 597.090 667.817 . Adjusted per settlement Noble Rood Facts: - There are 21 affected parcels on the Noble Road Project - The cost of putting In water main Is 58.281 per parcel - Annual special assessment Installment over 15 years @ 7% per annum Is $919.13 per parcel. Assumptions: - 6% of those having water available will hook up each year. up to 90%. - New Hookups wUI use 5140 In woter per year. - Assessment for cost of Noble Road watermaln InstaUatlon ($8.281) - One new hookup on Noble Rood every other year beginning In the 5th year. SCENARIO 3 Water Cash Flow Analysis NOBLE ROAD WATER INSTALLATION - SP ASSESSED & CONNECTION CHGS 5/20/99 l22.2 2QOO 2QQl 2002 2003 2ll!1;l 2005 2006 200Z 2OOB. 2002 2O.J..Q 2Qll 2Ql2 Beginning Cash Balance 1.157.853 1.061.860 1.062.B 15 987.670 917.300 845.508 749.463 678.391 620.225 584.129 551. 701 516.297 500.218 466.410 Projected Revenues from Operations - Sale! 236.000 236.000 236.000 236.000 236.000 236.000 236.000 236.000 236.000 236.000 236.000 236.000 236.000 236.000 Projected Revenues from Operatlons-0ther 10.750 8.000 6.000 4.000 2.000 1.000 Projected Expenses from Operations (197.200) (180.000) (180.000) (180.000) (180.000) (200.000) (200.000) (180.000) (180.000) (180.000) (200.000) (180.000) (180.000) (180.000) Projected Expenses for Capital Outlay (CIP) (11.200) (25.000) (5.500) (15.000) (15.000) (15.000) (15.000) (15.000) (15.000) (15.000) (15.000) (15.000) (15.000) Noble Road Watermoln Installation Cost (173,900) Sp Assessments - 1995 44.185 44.185 44.185 44.185 44.185 44.185 44.185 44.185 44.185 44.185 44.185 44.185 Sp Assessments - 1996 33.017 33.017 33.017 33.017 33.017 33.017 33.017 33.017 33.017 33.017 33.017 33.017 33.017 Sp Assessments - 1997 17.843 10.032 2, 220 Sp Assessments - 1998 (Lakeside) 2,495 2.495 2,495 2.495 2.495 2.495 2.495 2.495 2.495 2.495 2.495 2.495 2.495 2.495 Sp Assessments - Noble Road 7.648 7.648 7.648 7.648 7.648 7.648 7.648 7.648 7.648 7.648 7.648 7.648 7.648 Marsh Point Development S/ A Prepays . 58.920 15.549 4.893 Walten Ponds Development S/ A Prepays 18.903 17.964 Other S/ A Prepays-Connect Chgs Marsh Point Development Connection Chg: 50.000 20.000 Noble Rood COMectlon Chgs 6,719 6,719 6,719 6.719 6719 Total Speclol Assess/Connection Chgs 225.363 150.890 94.458 87.345 87.345 87.345 87.345 87.345 87.345 87.345 87.345 87.345 43.160 10.143 Victoria Payments 51.848 49.174 Revenue from New Connections 6.020 9.100 10.500 11. 900 13.440 14.840 16.380 17.780 19.040 20.160 21.000 21.700 22.540 23.240 Additional Operating Costs (602) (910) ( 1.050) (1.190) (1.344) (1.484) (1.638) (1.778) (1.904) (2.016) (2. 100) (2. 1 70) (2.254) (2.324) Revenue from All Antenna Space Rental 21.767 22.420 23.093 23.785 24.499 25.234 25.991 26.771 27.574 28.401 29.253 30.131 31.035 31.966 Debt Service (296.235) (298.321) (285.039) (276.714) (268.204) (264.390) (245.545) (246.542) (232.247) (222.904) (213.344) (208.416) (188.436) (61.770) Interest @ 5% 31.396 29.603 26.393 24.504 22.753 20.410 18.676 17.258 16.377 15.586 14.723 14.331 12.429 12.970 Ending Cash Bolonce 1.061.860 1.062.815 987.670 917.300 845.508 749.463 678.391 620.225 584.129 551.701 516.297 500.218 466.410 521.634 . Adjusted per seltlement Noble Road Facts: . There are 21 affected parceis on the Noble Road Project - The cost of putting In water main is $8.281 per parcel - Annual special assessment installment over 15 years @ 7% per annum is $364.17 per parCel. Assumptions: .6% of those having water ava"able wi" hook up each year. up to 90%. . New Hookups wUI use $ 140 In water per year. - Assessment for port of cost Noble Road watermaln Installation ($3.281) and residents pay connection chg at time of hoakup ($ 1 0.000 _ $3.281) - One new hookup on Noble Road every other year beginning In the 5th year. SCENARIO 4 . Water Cash Flow Analysis NOBLE ROAD WATER INSTALLATION - UNIT ASSESSMENT 5/20/99 l222 2Wl 2QQl 2002 200.3 2004 2QOO 2QQQ 200Z 2OOB. 2QQ2 2QlQ 2W.l 2Ol2 Beginning Cash Balance 1.157.853 1.061.860 1.067.023 996.190 930.241 856.092 764.519 691.144 637.504 599.160 571.316 533.722 522.286 486.350 Projected Revenues from Operations - Sale! 236.000 236.000 236.000 236.000 236.000 236.000 236.000 236.000 236.000 236.000 236.000 236.000 236.000 236.000 Projected Revenues from Operations-Other 10.750 8.000 6.000 4.000 2.000 1.000 Projected Expenses from Operations (197.200) (180.000) (180.000) (180.000) (180.000) (200.000) (200.000) (180.000) (180.000) (180.000) (200.000) (180.000) (180.000) (180.000) Projected Expenses for Capital Outlay (CIP) (11.200) (25.000) (5.500) (15.000) (15.000) (15.000) (15.000) (15.000) (15.000) (15.000) (15.000) (15.000) (15.000) Noble Road Watermaln Installation Cost (173,900) Sp Assessments - 1995 44.185 44.185 44.185 44.185 44.185 44.185 44.185 44.185 44.185 44.185 44.185 44.185 Sp Assessments - 1996 33.017 33.017 33.017 33.017 33.017 33.017 33.017 33.017 33.017 33.017 33.017 33.017 33.017 Sp Assessments - 1997 17.843 10.032 2.220 Sp Assessments. 1998 (Lakeside) 2.495 2.495 2.495 2.495 2.495 2.495 2.495 2.495 2.495 2.495 2.495 2. 495 2.495 2.495 Sp Assessments. Noble Road 11.655 11.655 11.655 11.655 11.655 11.655 11.655 11.655 11.655 11.655 11.655 11.655 11.655 Marsh Point Development SI A Prepays . 58.920 15.549 4.893 Watten Ponds Development SI A Prepays 18.903 17.964 Other S/A Prepays-Connect Chgs Marsh Point Development Connection Chg: 50.000 20.000 Total Special Assess/Connection Chgs 225.363 154.897 98.465 91.352 91.352 91.352 91.352 91.352 91.352 91.352 91. 352 91.352 47.167 14.150 Victoria Payments 51.848 49.174 Revenue from New Connections 6.020 9.100 10.500 11.900 13.440 14.840 16.380 17.780 19.040 20.160 21. 000 21. 700 22.540 23.240 Additional Operatlng Casts (602) (910) (t05O) (1.190) (1.344) (1.484) (1.638) (1.778) (1.904) (2.016) (2.100) (2. 1 70) (2.254) (2.324) Revenue 'rom All Antenna Space Rental 21.767 22.420 23.093 23.785 24.499 25.234 25.991 26.771 27.574 28.401 29.253 30.131 31.035 31.966 Debt Service (296.235) (298.321) (285.039) (276.714) (268.204) (264.390) (245.545) (246.542) (232.247) (222.904) (213.344) (208.416) (188.436) (61.770) Interest @ 5% 31.396 29.803 26.699 24.917 23.108 20.875 19.085 17.777 16.842 16.163 15.246 14.967 13.013 13.669 Ending Cash Baiance 1.061.860 1.067.023 996.190 930.24\ 856.092 764.519 691.144 637.504 599.160 571.316 533.722 522.286 486.350 546.281 . Adjusted per settlement Noble Rood Facts: . There ore 21 affected parcels on the Noble Rood Project - The cost of putting In water main Is $8.281 per parcel - Annual special assessment installment over 15 years @ 7% per annum Is $554.95 per parcel. Assumptions: - 6% of those having water available will hook up each year. up to 90%. - New Hookups will use $140 In water per year. - Assessment for Noble Road watermain installation Is $5.000 per parcel . One new hookup on Noble Rood every other year beginning In the 5th year. " Water Policies - Past and Present 3/29/99 Policy Prior to 1995 Camp Plan I. Anyone can get water from any available source (i.e. private wells, small, centralized systems, connection to adjoining community system, connection to an existing Shorewood system or extension of an existing Shorewood system). 2. With the exception of commercial (nonresidential) and multiple-family residential properties, no one will be required to connect to, or pay for, City water (until they choose to connect). 3. Anyone may extend and connect to City.water, provided those who want it are willing to pay 100 percent of the cost. Example: If nine out of 12 residents in a neighborhood want water, the nine will pay the entire cost. Subsequent hookup fees go into the water fund. 4. Unless previously assessed, properties connecting to the existing system must pay a connection charge (currently $4000*). Credit is allowed (currently up to $2000) where trunk or lateral lines must be extended. *Present fee is $5000 1995 Comprehensive Plan 1. Extend water to entire city (with exceptions for financially, or physically infeasible areas) over 10 years Oater revised to 20 years). 2. Short term objectives: a. Analyze current system to determine the limits and capacities of the current independent systems. Done. b. Provide reliable source of water for fire protection where water exists (i.e. water tower on west end and interconnects with other cities). c. Enhance viability of west end system; provide elevated storage. Done. d. Make water available to a senior housing project. e. Finance elevated storage on west end by means of private development fees, TJ.F. for senior housing, and other funding sources. Done. Heritage, Marsh Pointe, Watten Ponds, Smithtown Circle paid $10,000 per lot for water. City of Victoria paid $232,000for interconnect on south end of Smithtown. Existing residents along water main extensions were assessed $5000 for water availability. The plan forfinancing is, however, dependent upon future water revenues. f. Coordinate road improvement projects with water main projects. Done in the case of Eureka Road nonh and Church Road. -1- , 3. Long term objectives: a. Interconnect all water systems. Done in the case of Boulder Bridge and Badger systems. Partially done for Amesbury and Southeast Area. b. Examine multiple jurisdiction water utility district. c. Establish a depreciation fund for system replacement. d. Provide water to as many residents as is feasible. 4. Analysis of existing and future system resulted in following fee structure: a. Existing lot of record (single-family)- $5000. b. Newly created lot (single-family)- $5000 assessment plus $5000 trunk charge (trunk has since been changed to connection charge). c. Developer can petition to have the connection charge assessed as well as the assessment. d. Multiple-family residential and nonresidential are subject to formula using $5000 base and $5000 connection fee. 5. New development must connect to City water where feasible. If not feasible, development pays $5000 per lot trunk charge, plus recorded agreements require assessment to be paid at such time as water is available. 6. Hookup to the system is not mandatory. Current Policy 1. No water extensions programmed in C.IP. 2. Completely voluntary system. Anyone can get water from any available source (i.e. private wells, small, centralized systems, connection to adjoining community system, connection to an existing Shorewood system, or expansion of an existing Shorewood system). 3. With the exception of commercial (nonresidential) and multiple-family residential properties, no one will be required to connect to, or pay for, City water (until they choose to connect). 4. Anyone may extend and connect to City water, provided those who want it are willing to pay 100 percent of the total cost. Further, those who are unwilling to pay initially must approve the extension. If they connect later, the connection charge goes to the water fund. 5. Previously assessed lots are subject to the $5000 assessment and $5000 connection charges. Extensions of water main to existing lots are subject to the $5000 assessment or the cost of the improvement whichever is greater. Credit may be given based upon future projected water revenues. -2- '. 6. Newly created lots are not required to connect to the system. If the developer chooses to connect to the system, newly created lots pay $10,000 less any previous assessments. 7. Amendments to the water policy require a public hearing, notice of which must be published in the official newspaper and in the City newsletter. Note: One policy that has remained constant throughout the years is that all water main extensions must be consistent with the overall water system plan, originally adopted in 1984 and updated in 1996. This applies to the sizing of pipes. -3- '. City Council Work Session June 16, 1997 FILE COpy Water Policy Questions 1) 1.1. Water is available in the street, however, at the time it was put in one resident chose not to hook up. At a later date, when he want to hook up to municipal water, what should he pay? Existing Policy: Existing lot - $5,000 if not previously assessed; new lot - $10,000 upon creation of a new lot. Suggested Policy: Those who hook up later should pay whatever was originally paid plus inflation. 1 .2. Is there a need to put it on parity with what original costs to neighboring properties were? Existing Policy: Existing lot - $5,000 ifnot previously assessed; new lot - $10,000 upon creation of a new lot. Suggested Policy: Same as 1.1. 1 .3. What is the money collected used for? Existing Policy: Water system infrastructure Suggested Policy: Water system infrastructure. 2) 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% petition for water, what would they pay per unit? Existing Policy: $5,000 Suggested Policy: A feasibility study would need to be done. Project needs to be financially feasible. The formula would be actual cost minus oversizing minus water revenue over' the break-even point. Total costs are not to be less than $5,000.00. 2.2. What factors would be used to determine this fee? Existing Policy: Flat unit fee set by ordinance, Suggested Policy: See 2.1. " 2.3. Would they pay any toward the cost of the infrastructure? Existing Policy: Potentially Suggested Policy: No, unless the actual cost of the project is less than $5,000.00. 3) 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. Existing Policy: Allfive would pay $5,000 Suggested Policy: Four would pay the cost of the project minus overszzmg 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. 3.2. Do the four pay the entire cost of extension? Existing Policy: No, all five pay toward the project cost Suggested Policy: The four pay the whole cost of the project. It will be considered a 100% petition if the fifth property signs off on the project. 3.3. What if the fifth resident wants to hook up at a later date, what would the charge to that property be? Existing Policy: None, they have already paid their assessment. Suggested Policy: The same as what the others paid for the project plus inflation. 4) 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? Existing Policy: All lots would pay $5,000 once the project is deemedfeasible. Suggested Policy: The petition must be 100% (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. . .... ... - = a "CIbll c.: ~ a ";8 .... Q,I ~.c e;t: ~~ CJfIJ Q,I~ "" ~ .... "Cl =Q go", "" C e-. 0.... Q,I ....c = ~;t: c CJ~~ .... 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