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HomeMy WebLinkAbout12.D.6. Consider Shakopee Public Utilities Commissions Request to Assess Water Service Lines for the 2006 Reconstruction, Project No. 2006-2 J~.O.b. CITY OF SHAKOPEE Memorandum TO: Mayor & City Council Mark McNeill, City Administrator FROM: Bruce Loney, Public Works Director SUBJECT: Consider Shakopee Public Utilities Commission's Request to Assess Water Service Lines for the 2006 Reconstruction, Project No. 2006-2 DATE: February 7,2006 INTRODUCTION: This agenda item is to consider a request from Shakopee Public Utilities Commission (SPUC) to assess water service lines in conjunction with the 2006 Reconstruction Project. BACKGROUND: At its January 3,2006 SPUC meeting, the Commission passed a motion to request from the City Council to assess 100% of the cost of the water service lines with the 2006 Reconstruction Project. It is estimated that the cost of the service lines being replaced would be $1,454.93 per service line. Attached to this memo are memos and attachments from SPUC on this issue from the January 3rd and 1 ih meetings. At City Council's January 17, 2006 meeting, the Council considered the feasibility report for the 2006 Reconstruction Project and accepted the report in order to hold the public hearing on February 21, 2006. The feasibility report did not include the water service line assessments, as City staff felt that addition of $1,454.93 to the existing assessments may be problematic in proving benefit to properties in this project area. This agenda item is for an official action from the Council on the Commission's approved motion on their request to assess 100% of water service line replacement. In review ofthis item, staff believes there are four options for City Council to consider in regard to SPUC's request and they are as follows: 1. Deny the request and recommend a status quo for assessments on this reconstruction project. 2. Agree to assess 100% of the water service lines being replaced on the reconstruction proj ect. I 3. Assess a different percentage for the water service line. 4. Assess a flat rate for the sanitary sewer service replacement and a flat rate for the water service line replacement. On January 30, 2006, Mayor John Schmitt, Mark McNeill and Bruce Loney met with SPUC's Chairman, John Engler, Lou VanHout and Joe Adams to discuss these alternatives and the assessing of water service lines. For SPUC, the issue in considering the replacement of watermain with City reconstruction project was to consider assessing the water service line similar to what the City does for sanitary sewer services. Currently, the City policy for sanitary sewer lines is to assess 100% of the cost. The reason for sanitary sewer service line replacement being 100% is that the property owner owns the sewer line to the sewer main. Likewise the water service line is owned by the property owner to the watermain and SPUC was looking for consistency in assessments with the property owner paying for the lines that they own. In the discussions at the January 30th meeting, it was suggested by staff that assessing a flat rate for a sanitary sewer service line replacement and a flat rate for water service line replacement may address the issue of the property owner paying for a line that they own. Also, if the flat rate could be set so as not to increase the overall assessment to properties, in order to avoid assessment appeals, this would address the City's concern in proving benefit. In review of the 2005 Reconstruction Project, the sanitary sewer line assessments were $702.00 each. For the 2006 Street Reconstruction Project, the sanitary sewer line replacement is estimated to be $1,241.00 and the water service line at $1,454.93. If a flat rate for sewer service and water service line replacement would be established at $750.00 each for a total of$1,500.00, this amount would compare to the $1,241.00 included in the feasibility report for sanitary sewer line replacement. This would amount to an increase in assessments for properties that have service line replacement of approximately $260.00. This item is to consider SPUC's request to assess water service lines and to provide them an official action of the City Council in regard to this request. The general consensus of the meeting on January 30th by staff, representatives of the Commission and the Council was that a flat rate sewer and water service line replacement assessment may be amiable in meeting the Commission's concern of ownership ofthe service lines and the Council's concern of not increasing assessments much more than currently proposed. If the sewer and water service line were more than the flat rate being proposed to be assessed, it would be the Sanitary Sewer Fund that would pay the additional cost for sewer service line replacement and the Water Utility Fund would pay for the additional cost to replace the water service line. If Council agrees to change the Assessment Policy and either assess the water service line at 100% or a different percentage or assess a flat rate, this would be a change in the Assessment Policy and also a change in the feasibility report. Amending both the Assessment Policy and the feasibility report would be brought back to the February 21, 2006 meeting for Council action. ALTERNATIVES: 1. Approve a motion responding to SPUC's request on assessing water service lines for: a. Not assessing the water service lines as per past reconstruction projects b. Assess the water service line 100% c. Assess the water service line at a different percentage d. Assess a flat rate for both sanitary sewer and water service line replacement. 2. Direct staff to amend the feasibility report and the Assessment Policy, if a change in the Assessment Policy is agreed to by the City Council. 3. Table for additional information. RECOMMENDATION: Staff would recommend that Council consider the alternatives and provide a response to SPUC's request. Staff would favor assessing a flat rate for sanitary sewer and water service line replacements at a rate that would not exceed $750.00 per service line. If a change in the Assessment Policy is agreed to by the City Council, then Council could direct staff to amend the feasibility report and the Assessment Policy. If Council is not comfortable in changing the Assessment Policy for this project, then the alternative of staying the status quo and not assessing the water service lines would be recommended. It would be appropriate for the City and the Commission to have a joint meeting to discuss how to proceed with this project and future projects for reconstruction of utilities, if an agreement is not reached. ACTION REQUESTED: 1. Approve a motion responding to SPUC's request to either not assess the water service lines, assess the water service lines lOO% or a different percentage or to assess a flat rate for both sanitary sewer and water service line replacement. 2. Direct staff to amend the feasibility report and the Assessment Policy, if a change in the Assessment Policy is agreed to by the City Council. ~~ Public Works Director BUpmp ENGRl2006PROJECT/2006RECONIWORDISERVICEASSESSPOLlCY ~ .' . " Continued - Tentative Agenda, 1/17/06 SPUC Mtg. 8. ) Reports: (Note: Reports may carry the designation ffAction" or "Advisory" , however the Commission retains the right to take action on any matter without being limited by designation.) 8a) Reports, Water Items: C=> 8al) 2006 Water Rate Study Approach 8a2) Sale of Water to Savage, verbal update 8a3) Recap of Watermain Reconstruction Policy Status and 2006 Projects 8b) Reports, Electric Items: 8bl) 2003-08 Power Supply Contract w/Xcel, verbal C=> 8b2) Prior Lake Franchise Ordinance 8c) Reports, General: 8cl) Aging Report 8c2) Delinquent Account Practices 8c3) SPUC and Staff priorities and Schedule Form - Quarterly Review (Exception Basis) 8c4) Virchow Krause as'SPUC'200S'Auditor 9. ) Old Business: lO.) New Business: C=> lOa) Marketing Director's scheduled presentation at SCHS lOb) SPUC PLANNING meeting, verbal (John Engler) 11. ) Human Resources: no reports , TO: SPUC ) I From: Lou I~~ '--' RE: Recap - Draft Watermain Reconstruction Policy Status, and 2006 Projects - ADVISORY MEMO DATE: 1/13/2006 Immediate Issue: This memo is a short review of the current status of the Commission's Draft Watermain Reconstruction Policy, and the involvement of that draft policy in the consideration of watermain work (and watermain related work) as part of the City of Shakopee's 2006 Street Reconstruction Project. Backqround: During the latter part of 2005, SPUC staff was working with the City Engineering Department Staff on watermain reconstruction contemplated as a part of the city's 2006 Street Reconstruction Project. During that same time period, SPUC staff was working on a Watermain Reconstruction Policy for the Utilities Commission to adopt as its guiding policy ,on such replacement decisions. The financial impact of this proposed policy (or chanqed policy) was evaluated in light of the City's intent to consider replacing all of its clay sewer pipe in the city over the next 15 years time - at time of street reconstruction projects over that period of time. The Commission first reviewed that draft Watermain Reconstruction Policy a few months ago and reacted favorably to its general direction, but there were some refinements to be made and some cost issues were raised in light of the projected long-term commitment. The cost for the waterrnain replacement was estimated at $5,000,000 if done with the projected street and clay sewer reconstruction projects over tha next 15 years. It was noted that replacement of (customer-owned) water service lines to go along with the Street/Sewer/Watermain project would be an additional $2,000,000. . v It was noted that in the past years, the Utilities had absorbed the costs of replacing water service lines when paying for watermain reconstruction. But it was also noted that in past years such watermain reconstruction was on a much-more-limited basis than was now being envisioned under the proposed Watermain Reconstruction Policy - and it was felt that the policy of absorbing those costs to replace customer-owned equipment should be reviewed. In summary then, the interim step at which things were left a few months ago was: a) the Commission favorably considered the proposed (draft) Watermain Reconstruction Policy but did not formally change from the existing policy, and b) as part of the proposed change in Watermain Reconstruction Policy, the Commission wanted to review and consider the possibility of also changing the practice on absorbing costs on customer-owned service lines January 3, 2006: On January 3, 2006, the Commission considered the question of funding the costs to replace water service lines. Besides the disparity between the ownership and the cost responsibility in the previous practice of absorbing the costs for replacing the (customer-owned) water service lines, also noted was the discrepancy between how these costs were treated for water service lines versus the City of Shakopee's practice on assessing costs for replacement sewer service lines (sewer laterals) at 100%. The Commissioners spoke to the need for consistency - in trying for consistency between ownership and cost responsibility; and trying for consistency with City policy in assessing sewer replacement costs. The minutes of the 1-3-06 SPUC meeting reflect the Commission's actions as to the approaches considered to address the service line cost 'responsibility / ownership. . " Conclusion: It should be noted that the current policy of the Commission in regard to watermain replacement has not yet been changed from that of previous years. That current policy is detailed in the attachment to this memo showing the process that has been applied to determining cost responsibility of replacing watermains. The cost responsibility was based on the "causation" of the replacement. It is important to note that under that current policy, watermain was never replaced just due to age alone - the understanding being that the life of watermain is very long, in excess of 100 years. Watermain WAS replaced if found to be too shallow or other operational reasons. IF watermains were MADE too shallow as a result of a street project, only then did the consideration of the age of pipe come into play. And if over 50 years the Commission would pick up the replacement costs, and if not over 50 years, then would not do so. As for the issue of paying for water service line replacement, if the Commission STAYS with the previous (current) watermain replacement policy, I believe the previous (current) policy for handling service line costs would also be followed as well. And if the Commission were to CHANGE to a new Watermain Reconstruction Policy, the water service Line cost questions need to be resolved as part of that - whichever way the decision goes. . CURRENT WATER MAIN REPLACEMENT CRITERIA (based on past practices prior to 2005) ISSUE 1 SPUC determination < History of breaks SPUC pays ,~ SPUC detem1ination < Size of pipe adequate SPUC pays ~ SPUC determination <: WM depth measured before SPUC pays city street project at less than 6 feet ,t WM depth projected after] ?' less than 50 yrs -7 City pays city street project to be Age of pipe less than 6 feet' ~greater than 50 yrs ---7 SPUC pays ~ ' WM pipe will be disturbe? ;lless than 50 yrs -7 City pays by sewer work Age of pipe ~ greater than 50 yrs -7 SPUC pays Causation VS. Benefit - ..' Jadams III 2/06 , .' <" " Continued - Tentative Agenda, 1/3/06 SPUC Mtg. 8. ) Reports: (Note: Reports may carry the designation IlActionll or IlAdvisoryll , however the Commission retains the right to take action on any matter without being limited by designation.) 8a) Reports, Water Items: 8al) Resin #829, Approving Payment for Watermain Oversizing on Valley Creek Crossing - Phase II 8a2) Resin #830, Approving Payment for Watermain Oversizing on Countryside Addition - Phase I C==> 8a3) 13 month Nitrate Report (advisory) C==> 1>- 8a4) Coordination on City 2006 Street Recon Project i7" 8a5) Water Service Lines Assessment Discussion 8a6) Water Rate Study (2004) Recap by Consultant 8b) Reports, Electric Items: 8b1) status update, 2003-08 Power SupplyContractwjXcel 8b2) Pike Lake Substation, progress and schedule 8b3) Prior Lake Franchise Ordinance 8c) Reports, General: C==> Bel) November Financial Reports 9. } old Business: 10. ) New Business: I c.,!\, .' SHAKOPEE PUBLIC UTILITIES MEMORANDUM TO: LOU VAN HOUT, UTILITIES MANAGER r FROM: JOHN R. CROOKS, WATER SUPERINTENDENT i .. SUBJECT: 2006 RECONSTRUCTION FEASIBIL TV STUDY . DATE: DECEMBER 30, 2005 It was anticipated the Feasibility Report for the 2006 street reconstruction project would be brought to the Commission for approval at the first meeting in January. Commission approval is required for the project per Resolution 262, Step 8. Unfortunately, the Feasibility Report is still in draft form. The reason for this delay is the City of Shakopee prefers to wait for a Commission decision on the assessment of water service lines; an issue on the agenda to be discussed at the January 3 meeting. Once direction is provided by Commission members regarding the assessments, SPUC Staff will contact the City and the decision will be incorporated into the feasibility report and it then can become final. Therefore, the final report will be presented at the next Commission meeting for approval. It is also anticipated the final Feasibility Report will go to the City Council at their January mid-month meeting. The public hearing can then be scheduled once approved by both the Commission and Council. Thank You. " cPt: / .'/ ./ j.P SHAKOPEE PUBLIC UTiliTIES MEMORANDUM TO: LOU VAN HOUT, UTILITIES MANAGER . ~ JOHN R CROOKS, WATER SUPERINTENDEN \' FROM: SUBJECT: WATER SERVICE LINE ASSESSMENTS DATE: DECEMBER 30, 2005 ISSUE- During the last Commission meeting, the potential assessment of water service lines connecting to the municipal water main was discussed. The water service line is owned and is the responsibility of the property owner. It is the service line, from the watermain connection, to the curb stop that would be replaced during a watermain reconstruction project Attached to this memo is a detail of that water service. BACKGROUND- In the Commission adopted Water Policy Manual it is stated "Service lines are owned and maintained by the property owner from the point of connection to the municipal watermain, including fittings, etc. on the water main which are . necessary for that connection. 11 During a watermain replacement project the individual water services are disconnected and the affected properties are provided temporary water service as the old pipe is removed. Once the new watermain is installed, new water service lines are attached (tapped into the new watermain) and brought to property and attached to a new curb stop (an outside shutoff valve for the home). It is at this point the new service is attached to the existing service line into the home. The individual service line, from the connection point at the watermain to the curb stop, is replaced in its entirety as one continuous piece of copper. No couplings or patches are allowed in this copper service line per the Water Policy Manual. This coupling would become a weak point in the service line and be at risk for future leakage or breaks. It is because this portion of the service line is under the street that there are no exemptions to this SPUC requirement. " It has been the past practice for SPUC, on street reconstruction projects with watermain replacement, to absorb the cost of this portion of the service line. These costs are spread over the entire system and funded through water rates. But as the utility plans for the future and more programmed watermain replacement projects are done in conjunction with City street recon's, the issue of these service line costs become more evident. The estimated cost per individual service line for the 2006 reconstruction project is $1400. In the past the rational for replacement has not been the age of materials, but specific identified deficiencies of the watermain. With this change in causation, the assessment issue should be considered. The SPUC Commission is the governing body to decide this issue. DISCUSSION- An informal survey was conducted to see how similar municipalities address the assessment issue. The cities contacted were to provide a cross section of results based upon neighboring communities, communities of similar size, different governing bodies and systems of a similar age as Shakopee. Attached to this memo are the results of the survey. As can be seen, nominally it appears the most common practice is to spread the service line portion across the entire water system and to not assess the costs. Two cases, though, are Rochester Public Utilities and the Anoka Water Department which do assess the water service lines from the watermain to the curb stop. Rochester assesses the entire cost of the replacement to the property owner. Anoka assesses a flat fee of $950 per service. By assessing a portion of the water service line replacement, Anoka addresses the ownership issue of thatline. Since the property owner in Anoka owns the service line from the connection atthe watermain, paying a portion of that replacement conveys ownership of that line. And with having the partial assessment of that line, the Water Department addresses the City's potential liability issue if the replaced water service line would leak or break in the future. Individual sewer service lines are currently assessed by the City of Shakopee. Our attached survey did not address the sewer service line. There is a fundamental difference between water and sewer service lines. Water lines are less likely to be affected by the owner of the line. Sewer service lines carry away a product from the property and are routinely cleaned out by the owner. All this may well affect the service life qf that line. Therefore, the service life is more of a responsibility with the property owner for the sewer line than in the case of the water service line. , , COMMISSION ACTION- 1. To continue the SPUC Utility practice of replacing the individual service line from the watermain to the curb stop at no cost to the property owner. or 2. Decide if the Commission intent is to request the City Council assess all or a portion of the costs for the individual service replacement from the watermain to the curb stop. These costs would be the responsibility of the property owner. Thank You. , / I " I Ul Z -l >- 0- CX", UlUl "-0- Co CXUl l1.CX CX~ C" uJ ~~ 0- Ul ~ Ul Ul ex '" 0- < HOUSE '" Ul . . -' - '- CURB BOX Z .~~. l1. u,l!( .- .r..: WAlER METER VATERHAIN CURB STOP TYPICAL \J A TER SERVICE CONNECTION NO SCAU: House CURB STO CURB &: GUTTER - WATER SERVICE WAlER I.IAIN , . / SERVICE LINE ASSESSMENT SURVEY CITY/SYSTEM TYPE OF OWNERSHIP ASSESSMENT ELK RIVER main only no BLOOMINGTON no NEW HOPE main only no APPLE VALLEY to curb stop no EDINA to curb stop no ST. LOUIS PARK main only no SPUC main only no CHASKA to curb stop no MAPLE GROVE to curb stop ST. PAUL no BURNSVILLE to curb stop no PRIOR LAKE to curb stop no SAVAGE to curb stop no CHANHASSEN to curb stop no OWATONNA main only no MOORHEAD to curb stop no ROCHESTER main only yes BRAINERD to curb stop no ANOKA main only yes - partial HASTINGS no response STILLWATER no response DULUTH no response I' , MINUTES OF THE SHAKOPEE PUBLIC UTILITIES COMMISSION (Regular Meeting) President Engler called the regular session of the Shakopee Public Utilities Commission to order at the Shakopee Public Utilities Meeting room at 5:00 P.M., January 3, 2006. MEMBERS PRESENT: Commissioners Engler, McGowan, Lynch, Miller and Mars. Also present Manager Van Hout, Finance Director Archerd, Planning & Engineering Director Adams, Line Superintendent Athmann and Water Superintendent Crooks. Liaison Joos was absent. ... more ... Mr. Engler stated that there were three Consent Business items: 13 Month Nitrate _Rf"]1o~oordination on City 2006 Street Recon. Project, and the November Financial r--- Reports. Mr. Mars requested that three items be added to Consent Business: item 8b1: ( 2003-08 Electric Supply Clarification (Agreement, Contract) with Xcel; item 8b2: Pike Lake Substation, progress and schedule; and item 8b3: Prior Lake Franchise Ordinance. Motion by Mars, seconded by Lynch to approve the Consent Business as arnended. Motion carried. ... more '" ;> Item 8a4: Coordination on City 2006 Street Recon. Project, was received under Consent Business. '1 The funding of Water Service Line replacements during watermain reconstruction projects was discussed. A background memo by Water Supt. Crooks noted Shakopee policy is service lines are owned by the property owner from the point of connection to the watermain. The Utilities has absorbed costs of service line replacements done when paying for watermain reconstruction. With the consideration to change to an expanded policy on reconstruction, funding of service line replacements needs to be reviewed. The survey of various cities practices and Shakopee practice to assess sewer service lines was discussed. Bruce Loney, City Engineer, was in attendance and made some comments referring to the sewer service line policy. The desirability for consistency between ownership and cost responsibility was discussed. The change in policy on ownership of service lines was discussed. r , Motion by Lynch, seconded by Miller to not assess replacement water service lines and to take over ownership of water service lines from the watermain to the curb stop within a reasonable distance within the watermain. Lynch withdrew the motion. Motion by Mars, seconded by McGowan to ask the City of Shakopee to assess the actual costs of the service line from the watermain to the curb stop in a reconstruction project. Motion carried by unanimous vote. ... more ... Motion by Lynch, seconded by Miller to adjourn to the January 17, 2006 meeting. Motion carried.