7.5. SR 07-17-2006 - Laserfiche WebLink

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City of Elk River Item REQUEST FOR COUNCIL ACTION 7.5. Administration I July 17. 2006 1 Lori Tohnson. Citv Administrator Consider Funding Trunk Water Improvements for County Road 40 Proiect Introduction Sherburne County is undertaking a project to improve County Road 40, and to provide water service to this area, Elk River Municipal Utilities will be installing trunk water main along County Road 40 in conjunction with the County project. ERMU has requested that the city fund the trunk improvements at an estimated cost of $800,000. Discussion Typically the city funds water and sewer trunk line expansions through a bond issue with special assessments levied to the benefiting properties. In this case, the benefiting properties are not being assessed at this time; they will be assessed as development occurs sometime in the future. The earliest assessments may occur is 2008 for Liberty Heights if it proceeds on the developer's original schedule. Since assessments are not being levied now, there is no revenue stream to fund debt service on a bond issue. The city has a reserve fund for trunk water and sewer improvements that is intended to be used to fund future trunk improvements in areas that have already been assessed but may need additional trunk installed. There is not an ongoing revenue source to fund the reserve; once the funds are used, they will not be replaced. Because the CR 40 project is a unique situation with trunk water lines being installed prior to levying assessments and because there is not sufficient cash in the Water Fund to pay for the improvements, the trunk water and sewer reserve is the best option available to fund the improvements. The ERMU Commission at its July 11 meeting agreed that if the city funds the improvements, the city will receive all of the assessment revenue for water trunk fees associated with the installation of this trunk line. The assessment revenue will be used to repay the trunk water and sewer reserve. The trunk water and sewer fund will not be available to fund other projects for the water utility so future provisions need to be made by ERMU to fund other projects such as this. Ideally, trunk lines will be extended only when development is imminent and assessment revenue is available to pay for the improvements. Financial Impact Use of Trunk water and sewer reserve to fund approximately $800,000 of trunk water improvements. Attachments None S:\Council\Lod\2006\CR40'rrunk Water Improv.doc