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City Council Minutes 08-26-1996 SpecialMINUTES SPECIAL MEETING - MONTICELLO CITY COUNCIL Monday, Auust 26, 1996 - 6 p.m. Members Present: Brad Fyle, Shirley Anderson, Clint Herbst, Brian Stumpf, Tom Perrault Members Absent: None Assistant Administrator O'Neill reported that on April 8, 1996, City Council adopted a trunk storm sewer policy, which would apply to industrial properties at the rate of $4,933 per acre, $5,200 per acre for commercial/business, and $4,502.50 per acre for residential. The original policy required payment at the time of building permit issuance and would include calculations using the total acreage of the parcel. The proposed policy amendments for Council review were based on information and concerns provided by a number of property owners with property primarily located in the industrial areas in the community. Prior to discussing the proposed modifications, O'Neill summarized the goals of the trunk storm sewer program as follows: A. Include engineering design standards that will assure cost-effective construction and maintenance. B. Prevent serious storm water problems caused by urbanization while limiting premature capital improvement expense. Achieve timely acquisition of land and construction of facilities. C. Rely on general taxes only when assessment and storm sewer revenue is unavailable to pay for construction. D. Include assessments against properties benefiting from storm sewer development. E. New development pays its share of the cost associated with managing storm water created by new development. F. Design and administer the program in a manner that supports business expansion and development. O'Neill then reviewed concerns that had been expressed by property owners during previous meetings with City staff. Page 1 Special Council Minutes - 8/26/96 A. Design standards may be excessive, which drives up the cost for storm sewer service per acre. B. The program resulted in an unexpected fee for existing industrial developments, who felt they owned completely developed, "assessment - free" property. Applying this unexpected fee retroactively to the entire industrial site is an impediment to existing expansion plans. C. The fee should be based on only that portion of a parcel that is actually being developed and not based on the size of the entire parcel on which a development occurs. D. The program does not provide for a method of financing the fee or spreading the cost over a period of time, but requires full payment at the time of building permit issue. E. Concerns were expressed regarding the timing of project construction in relationship to collection of the fees. Pete Willenbring of WSB & Associates reviewed how the fees were developed in relationship to the design standards. He noted that in comparing the storm water cost and conveyance with other communities, Monticello's fee is less than any community in which he has worked. He also noted that the City would need to occasionally review the fee and update it accordingly. Assistant Administrator O'Neill then explained the proposed modifications to the program. A. No modifications were proposed to the design standards of the trunk storm sewer system, which calls for centralization of ponding systems and interconnection of regional ponds with overland and underground systems. B. Calculate the fee paid by a development based on the actual area developed rather than on the total potential area of the site. When 85% of a parcel is developed, the parcel would be deemed fully developed, and the fee would be based on development of the full parcel. C. The trunk storm sewer fee would not be retroactive to cover existing development; however, existing development would be subject to the standard assessment process. Benefiting properties would consist of all parcels developed as of August 1996. The entire acreage of the area benefited by the trunk storm sewer improvement would be used in calculating the rate. Individual parcel assessments would be based on Page 2 Special Council Minutes - 8/26/96 the area within that parcel developed as of August 1996. This area would be measured based on the footprint of the building area, parking lot, outside storage, and setbacks. D. The City would allow the property owner to place the cost of the trunk storm sewer fee against the property as an assessment. John Bondhus, owner of Bondhus Corporation, stated that Monticello needs industrial development, but it will be driven away if required to pay $5,000 per acre. It was Bondhus' view that vacant land should be charged rather than existing industries. Glen Posusta, owner of Amax Storage, asked if properties that provide ponding would also be charged a storm sewer fee; and once paid, would the City provide in writing that the property would not be charged additional fees in the future. City Engineer Bret Weiss stated that the previous storm sewer policy required that properties place a pond on 5 acres of land and pipe storm water to the pond; however, all properties eventually discharge water off site and would be required to pay a portion of the storm sewer fee. It was also noted by staff that a credit could be calculated against the trunk fee if an on-site system is built; and once the trunk fee is paid, the property would be clear of any assessments. Tom Holthaus asked what the policy is for existing businesses and residential areas in regard to trunk storm sewer fees. Weiss replied that after a project is constructed, an assessment hearing is held. Bill Tapper, owner of Genereux Fine Wood Products, stated his concern that establishment of the fee was very sudden and was, in his opinion, not very well thought out. The policy seemed to be in limbo for several months with no consistent answers to questions raised by the industries. Tapper noted that he was aware of companies who were considering locating in Monticello but went elsewhere after being told they would have to pay a trunk fee. City Engineer Bret Weiss stated that there have been meetings held throughout the process and that the policy was not intended to drive business away but to require that each business pay its fair share. The Assistant Administrator noted that delays were associated with efforts to adjust the program to help businesses with financing plans in place when the program was adopted. Tapper continued to point out that no policy should be implemented unless a plan is complete and can pass being scrutinized. As Chair of the Industrial Development Committee, Tapper stated his concern that the City has a Page 3 Special Council Minutes - 8/26/96 reputation for being anti -business. He noted that it recently took 3 months to obtain a building permit, which only adds to the concern by companies that it's too much hassle to build in Monticello. Mayor Fyle noted that the City is only asking for funds to be available to take care of problems in the future. Fyle noted his support for the storm sewer fee policy as originally proposed. Tapper also reported that provisions in the law state that the City can collect taxes prior to construction of a project, but the project must be done quickly or the City would be challenged. The Assistant Administrator agreed and noted that the City Attorney had also reviewed those laws. O'Neill went on to note that the City does want to do the project on a timely basis, but the funds could also pay for the Hart Boulevard project already completed. Tapper also noted his concern that the trunk storm sewer policy was not fair and equitable, citing that for the Meadow Oak storm sewer outlet project, 80% of the cost went to ad valorem taxes. The City Engineer stated that the original assessment was in the neighborhood of 25-30%, and the remainder of the cost was upfronted by the City through a bond issue; however, those funds should be recaptured through future trunk storm sewer fees. Weiss also noted that funds will likely be spent for trunk storm sewer on the Highway 25 project slated for 1998 construction and that the trunk storm sewer fund will likely experience a deficit over the next 20 years. Assistant Administrator O'Neill explained that all development results in additional storm water and associated storm sewer management expenses. The question is, who should pay for this cost, the new development that creates the storm sewer cost or the general taxpayer? O'Neill noted that a trunk storm sewer fee paid at the time of development is employed by many cities that wish to have new development pay for the cost of new trunk storm sewers. The assessment method is not used as the primary method to pay for storm sewer expenses for these cities because it requires that the cost be paid after development has occurred. Under the assessment method, a city can only assess an amount equal to or less than the added value to the property resulting from a storm sewer improvement. In most cases, the added value is less than the actual cost, which results in the need for general tax dollars to pay the balance. Tapper acknowledged that the problems cities encounter when not obtaining funds upfront are very real and agreed that those who benefit need to pay. He also noted that the proposed changes to the policy make more sense; Page 4 Special Council Minutes - 8/26/96 however, it was his view that the proposed policy was a rough outline and needed to be studied further to make sure it is affordable for people and is applied equally and fairly. AFTER DISCUSSION, A MOTION WAS MADE BY BRAD FYLE AND SECONDED BY BRIAN STUMPF TO TABLE ADOPTION OF MODIFICATIONS TO THE TRUNK STORM SEWER FEE POLICY UNTIL ADDITIONAL INFORMATION IS OBTAINED ON WHAT AMOUNT OTHER COMMUNITIES CHARGE AND THE METHOD OF PAYMENT REQUIRED FOR TRUNK STORM SEWER. Motion carried unanimously. There being no further business, the special meeting was adjourned. Karen Doty Office Manager Page 5