9.3. SR 07-07-2008 - Laserfiche WebLink

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Item # 9.3. Citv of fiver MEMORANDUM TO: City Council FROM: Lori Johnson, City Administrator DATE: July 7, 2008 SUBJECT: Request to Fund Trunk Water Line under 193rd Avenue Extension As we discussed during the last 193Td Avenue project update, Elk River Municipal Utilities is installing a trunk water line under the 193`d Avenue extension to loop the water system that serves the northeastern portion of the urban service area. Bryan Adams, general manager of ERMU, has indicated that this is the last trunk water main that will be necessary to serve this area. Mr. Adams and the ERMU Commission are requesting that the City fund this extension or a portion of the extension through the City's Trunk Utility Fund. As background, here is a brief summary utility financing pertinent to this discussion. Elk River Municipal Utilities does not have authority to issue debt or to levy assessments; as a result, the City issues debt for water improvement projects, levies the assessments, and ensures the assessment revenues are used for payment of the debt. As with the sewer utility, the intent is that the water utility maintains a fund balance sufficient to pay for improvements that are not going to be assessed to benefitting property owners. The Trunk Utility Fund was established in 1996 to segregate trunk assessments received in areas of the urban service area where trunk lines had previously been installed but assessments were not levied when the improvements were made. The intent of the fund is to provide internal financing for future trunk assessment projects and to pay for future trunk line capital repairs in areas that have already been assessed. The eastern area improvement project started contributing to the Trunk Fund after the bonds for this 1998 project were paid ul full. Because development occurred rapidly in the eastern area following the installation of municipal services, special assessment pre-payments were sufficient to pay the bonds early. In addition, new areas were opened to development, bringing in assessment revenue not originally anticipated at the time of the improvement project.