02-17-1993 CC MIN - SPECIAL-JOINT

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. CITY OF ELK RIVER ELK RIVER MUNICIPAL UTILITIES Joint meeting of City Council & Utilities Commission February 17, 1993 The main purpose of this meeting will be to discuss the financing methods for water system improvements required by developments. It is important to consider that the only sources of revenue for these improvements can come from either the customers through the rates, the builder ( or homeowner) when the home is built, the developer when the lot is platted, or the taxpayer if the improvements are assessed. Let us consider the positive and negative aspects of each of these options. 1. The Ratepayer This person already feels that his rates are too high. The ratepayer feels that he/she has already paid his share of the costs supporting the water system and the improvements are of no immediate benefit to them. This person has already paid a water access charge and does not feel that additional dollars should be added to the rates to benefit another area of town or to make money for some developer. The positive of this method is that is it the least painless of all with the money coming in much smaller lumps over a long period of time. . 2. The Homebuilder The builder, or homeowner, is presently being charged $700 for a "Water Access Charge" which they consider too high. This fee was recently raised from the $300 fee which had existed for years. We have considered that this fee was for replacement of mains when that becomes necessary in the future. As a matter of fact, the Water Mains have been replaced on Main Street, Jackson A venue, and Proctor without the necessity of bonding or borrowing any money. The Utilities feels that the well and associated treatment facilities in the new City Hall area can be paid for with available cash and cash expected to be generated before the project is completed next fall. This cash has all come from the old WAC fees and existing ratepayer revenues. 3. The Developer The developer could pay by one of two methods, directly pay for a portion of the tower and associated facilities or pay a "water impact fee" for each developed lot when the plat is approved. If the developer is charged a portion up front, he/she may feel that he/she is paying for something from which a future developer may benefit. A properly calculated "impact fee" may be the best way to go, since the developer will pay only for the lots which are being developed at the time. The disadvantage of this is that the lots may not be competitively sold when competing against neighboring communities which do not have this charge built in to the cost of the lot. . 4. The Taxpayer In this method, the benefitting area would be defined and a taxing district would be set up and all acreage would be assessed. This appears to be the least attractive method because of the political ramifications. It is important to note that in all cases, the eventual payer is the ultimate user. All we have to decide is how do we extract that money with the least possible pain.