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HomeMy WebLinkAbout10.A.1. Sewer Availability Charge Credit Policy-Res. No. 7184 �a. ,�. i. City of Shakopee Memorandum To: Mayor and City Council Mark McNeill, City Administrator From: Bruce Loney, Public Works Director Julie A. Linnihan, Finance Director Subject: Sewer Availability Charge (SAC) Credit Policy Date: April 17, 2012 Introduction: The City Council directed staff to prepare and present a policy to guide the use of Sewer Availability Charges (SAC) credits that are available to the City as a result of Rahr Malting coming off the Metropolitan Sewer System (MCES). This Policy has previously been discussed with Council, Staff and the EDAC, to ensure the input and concerns regarding this new policy have been considered and integrated into the policy. Back�round• The City has been the recipient of a sum of SAC credits that may provide an economic development tool specific to the enhancement or development of underdeveloped or non-developed land. This policy will provide a basis for decision making that will follow the guidance and recommendations for consistent application of the credits. This draft policy was presented to the EDAC in February, 2012, and was discussed and approved for presentation to the City Council. City staff has reviewed and discussed this policy after EDAC review, to further refine the specific steps that will be followed, pending a request for the use of existing SAC credits. The request for use of SAC credits is applicable to the existing business sector, as well as new ventures. This revised policy is presented for Council consideration. As the City considers each application for the use of the remaining SAC credits, staff will bring forward the requests for discussion and approval. Recommendation: Staff recommends the approval of the Sewer Availability Charge Credit Policy. Requested Action: ►f Council concurs, it should, by motion, offer Resolution No. 7184, A Resolution Adopting a Sewer Availability Charge (SAC) Credit Policy, and move its adoption. CITY OF SHAKOPEE Memorandum TO: Mayor & City Council Mark McNeill, City Administrator FROM: Bruce Loney, Public Works Director SUBJECT: Discussion of Sewer Availability Charges (SAC) Credit Policy DATE: December 20, 2011 INTRODUCTION: This agenda item is to discuss the development of a SAC Credit Policy and what criteria to include in that policy. Attached for Council direction and discussion is a SAC Credit Policy from the City of Anoka. BACKGROUND: On September 30, 2008, the City of Shakopee received 1,494 SAC credit units from the Metropolitan Council Environmental Services (MCES) due to Rahr Malting coming off the regional sewer system. Currently a SAC is set at $2,230 per unit for 20ll . Since September 30, 2008, the City has been collecting the MCES SAC on building pennits and depositing the money in the sewer fund instead of sending it to the MCES. A SAC credit has been reduced from the total of accumulated credits, whenever a SAC was collected. The City of Shakopee also received from MCES in 2008 a major lift station (L-16), major force main and gravity sewer to the Blue Lake Treatment Plant. These facilities will require on-going maintenance and repair, and funding for these annual costs will need to be planned for through use of fund cash position or allocation of existing rate collections. In development of a SAC Credit Policy, staff believes a determination of how many SAC credits should be used in repair/replacement costs to the facilities given to the City. Remaining SAC credits could be available for use in economic or financial reserves, as determined in a SAC Credit Policy. Attached to this memo is a inemo to Julie Linnihan, Finance Director, in regards to SAC Credit Policy information and analysis on how many SAC units should be reserved for L-16 forcemain and gravity sewer transferred by MCES to the City. A minimum of 894 units is recommended, valued at approximately $2,000,000 which should be reserved for future sewer needs. An estimated current amount of total SAC Credits applicable to the City of Shakopee is approximately $3.3 M. As of December 15, 201 l, the City of Shakopee has a remaining balance of 599 SAC credits that will be applied against the payments that are typically paid to the MCES, as permits are issued. This level of credits will continue to be reduced, as permits are issued, and at some future point, the City will again be sending payments to MCES, rather than reducing the credit balance. The remaining SAC credits could be used as an economic development tool, as per the 2008 email from City Attorney Jim Thomson, which is attached. The fee waiver would need to meet the criteria of the City's business subsidy policy. The use of these credits as an economic development tool could involve the coordination of a cost sharing through use of credits for a specific sanitary sewer project, specific to a business incentive plan or other requests. Another use of SAC credits would be in a sewer project in which the City wants to provide incentives to bring sanitary sewer to an area andlor avoid assessment appeals. Staff has also attached a policy from the City of Anoka, to use as a point of reference on the use of SAC credits. In review of this policy, there are criteria on the use of SAC credits; however, the implementation is still done on a case by case basis. There are few cities in Minnesota that have a SAC credit policy, as few cities receive these credits. For the CR 69 sewer extension project, the use of SAC credits to the three parcels previously discussed could be done if Council decides this situation meets the criteria. Staff has suggested that the use of SAC credits should be for a specific sewer purpose. The City may also find it useful to request a waiver of assessment appeal upon granting use of SAC credits. Ironically, on this project, SAC credits could be issued to Rahr Malting where the credits were originally generated. ALTERNATIVES: 1. Discuss the draft SAC Credit Policy and provide staff direction. 2. Table for additional information. RECOMMENDATION: Staff recommends Council to review the issues and provide direction in formulating a policy on the use of SAC credits. Staff would also recommend taking a draft policy to the Economic Development Advisory Committee (EDAC) for their input and comments. Upon development of a policy and review by the EDAC, this City policy on SAC credits will be brought back at a future Council meeting, along with a resolution for Council review and approval. ACTION REQUESTED: Discuss the draft SAC Credit Policy and provide staff direction. Bruce Loney, P.E. Public Works Director ENGR/201 I PROJECTS/SO 1 I-COUNG UDISUCSSION-SAGCREDIT-POLICY RESOLUTION NO. 7184 A RESOLUTION ADOPTING A SEWER AVAILABILITY CHARGE (SAC) CREDIT POLICY WHEREAS, the City of Shalcopee has been the recipient of a sum of Sewer Availability Charge (SAC) credit that may provide an economic development tool specific to the enhancement or development of underdeveloped or non-developed land; and WHEREAS, Sewer Availability Charge credits will be available to existing businesses as well as new businesses within the community; and WHEREAS, a Sewer Availability Charge Credit Policy will provide a basis for decision making that will follow the guidance and recommendations for consistent application of these credits; and WHEREAS, City staff will continue to monitor and appraise the City Council as to the status of the existing Credits available for said program; and WHEREAS, as each application for the use of the remaining SAC credits is made, it will be presented to City Council for their consideration. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SHAKOPEE, MINNESOTA, that the Sewer Availability Charge (SAC) Credit Policy attached hereto and made a part hereof, is hereby adopted. Adopted in Adj. Regular Session of the City Council of the City of Shakopee, Minnesota, held this 17th day of April, 2012. Mayor of the City of Shakopee ATTEST: Deputy City Clerk SEWER AVAILABILITY CHARGE (SAC) CREDIT POLICY I. General Purpose and Objective for Creatin� this Policx To help sustain the local economy and to maintain and strengthen the tax base, the City often considers ways to stiinulate economic development. The City is committed to promoting quality development, redevelopment and reuse of properties. In certain situations, up front utility costs may prevent business start-ups, renovations or expansions. In any of these situations, they City may consider assessing, granting ar borrowing the funds necessary for sewer and water availability charges. This will be determined on a case by case basis for each fee and/or a combination of all of these fees. At any time, the City may discontinue the option to provide any assistance for these fees. II. Background• A. Metro�olitan Council Sewer Availability Char�e When there is new construction or a change in use of a property that requires additional sanitary sewer capacity, a fee is charged by the Metropolitan Council-Environmental Services. The fee is based on a determination of the number of sewer availability charge (SAC) units. One SAC unit equals 274 gallons of daily wastewater flow (based on the Metropolitan Council's calculation of what a single family dwelling produces in one day). The fee for each Metropolitan Council SAC unit is as charged by the Metropolitan Council. If the property has a change in use, the SAC fee is reduced by any previous SAC payments. In September, 2008, the City received 1,494 SAC credits from Rahr Malting coming from the regional system. As a result, the City has a limited `banlc' of Metropolitan Council SAC credits that can be applied city-wide. A credit is equivalent to the fee for one SAC unit. The total number of City credits is automatically reduced when new SAC units are required for new construction or additional SAC units are required for a change in use of a property. B. City Sewer Availabili Char es In 1994, the City adopted access fees for the sanitary sewer system (SAC). Those fees are used for construction of other MCES interceptors and long-term maintenance of the City sanitary sewer system. For any construction project or change in use, the City SAC is the same as the number of units determined by the Metropolitan Council. However, city fees will be imposed only for the units resulting from an expansion or a change of use that requires additional charges. The total number of units for a project may be reduced in instances where the use was established priar to adoption of the City fees. III. Potential Situations for City Assistance The following list provides examples of potential projects that may benefit from City assistance: CR69 Sewer Extension of sewer to existing businesses East Shakopee Industrial Reuse or expansion of existing spaces that result in increased jobs H/SAC Policy/sewer availability charge/4-17-2012 SEWER AVAILABILITY CHARGE (SAC) CREDIT POLICY Page 2 III. Potential Situations for City Assistance Industrial Development Development of industrial properties, job creation Commercial Development Development of underutilized commercial properties, job creation In making a decision or considering a request under this assistance policy, the Council may wish to consider the number of available City-owned Metropolitan Council SAC Credits, the City's future need for credits, and the benefits to the economic base of the community. Request specific to construction of single family homes are not eligible under this program. N. Basic Requirements In addition to the requirements of the application/approval process described below, the following basic tenets shall apply: Assessment or Loan Agreements: • Agreements may be developed to bear interest as determined • Period of agreements shall not exceed five (5) years or as approved by Council • The owner of record must execute an agreement and waiver wherein the amount of the assessment or loan (per agreement) shall be recorded and assessable to the property in the event of default according to the terms of the agreement Any applicant who has not been in good standing with the City, in regards to licenses, fees or other specific charges will not be considered for this program. V. Financin� Upon application, the City may consider an interest bearing loan or assessment that allows financing of sewer access charges. The loan or assessment must be approved by City Council. In general, payments shall be placed in a pre-determined fund. Use of funds will be subject to Council approval. Nothing herein shall imply or suggest that the City is under any obligation to provide incentives to any applicant. VI. Criteria for Evaluatin� Requests The following may be utilized in evaluating request for use of SAC Credits: • Does the request provide for a redevelopment project? • Does the request provide the community with o Increased employment of job retainage? o Additional spin-off development? o Potential for increased property tax capacity? o Has the project met the requirements of the comprehensive plan, building code, zoning? o Are there any other identified sources of other public assistance? H/SAC Policy/sewer availability charge/4-17-2012 SEWER AVAILABILITY CHARGE (SAC) CREDIT POLICY Page 3 VII. Application/Approval Process The City may charge a fee for requests under this policy, and these fees will be adopted annually during the fee schedule review. The City reserves the right to determine and limit the amount of SAC credits that are applied for by any one applicant. This is to allow for the maximum utilization and benefit of the credits. The following information must be submitted for application for request of SAC Credits: • Business Name • Address • Legal Description • Name of Authorized Representative or Contact • Name of Property Owner (if different from Business Owner) • Description of Business • Description of Improvements and Any Anticipated "Change of Use" that the project will result in • Narrative Explaining the Request When the complete packet of information is received, staff will review the application and contact the applicant for any additional information needed to process the application. Upon review, the appropriate documents and information will be presented to the City Council for their consideration. H/SAC Policy/sewer availability charge/4-17-2012