The URL can be used to link to this page

Home My WebLink About04 21 2014 EDA Report 4B 4646 Dakota Street SE Prior Lake, MN 55372 ECONOMIC DEVELOPMENT AUTHORITY AGENDA REPORT MEETING DATE: April 21, 2014 AGENDA #: 4B PREPARED BY: Casey McCabe, Community Development Specialist AGENDA ITEM: SEWER AND WATER FEE DEFERRAL PROGRAM AMENDMENTS DISCUSSION: Introduction The purpose of this agenda item is to review the revised Metropolitan Council Master SAC Deferral Agreement and make recommendations to the City Council related to: 1) approval of the revised Master SAC Deferral Agreement; 2) sched- uling a public hearing to consider amendments to Subsections 704.500 and 705.600 of the City Code; and 3) recommending amendments to the City of Prior Lake Sewer and Water Fee Deferral Program Policy. History On February 11, 2013 the Prior Lake City Council adopted the Metropolitan Coun- cil SAC Deferral Program which allowed for the deferment of SAC fees for small businesses that receive SAC determinations of 10 units or less (SAC refers to Sewer Availability Charge). The City Council also approved the City of Prior Lake Sewer and Water Fee Deferral Program Policy, which amended the city’s previous sewer and water fee payment program to mirror the Metropolitan Council program without limiting SAC units per applicant. Current Circumstances Revised Master SAC Deferral Agreement - Metro Cities Commissioned a SAC Task Force which made recommendations about SAC. One of the recommendations is that the Metropolitan Council Deferral Program apply to companies of up to 25 SAC units rather than the previous max- imum of 10. This revision was approved. The Metropolitan Council allows the deferment of community SAC payment obli- gations so participating communities may pass through to businesses the benefits of deferred SAC payments. During their January 22, 2014 meeting, the Metropol- itan Council adopted changes to the SAC deferral program in an effort to encour- age and help communities promote business development. The Met Council has added the definition of “Business” to mean a property or business for which the aggregate SAC determination results in a liability of twenty- five (25) SAC units or less, before application of any credits available on the site. Business does not include any type of residential property or publicly assisted housing as those terms are defined in the SAC Procedure Manual; nor does it include motels, hotels, camps, nursing homes, senior housing or prisons. Busi- ness includes commercial properties, as that term is defined in the SAC Procedure Manual, but only when the aggregate SAC determination for a commercial prop- erty is twenty-five (25) SAC units or less, before any applicable credits. The previous Master SAC Deferral Agreement defined “small business” as a prop- erty or business for which the aggregate SAC determination results in a liability of ten (10) SAC units or less, before application of any credits available on the site. The revised agreement language will allow businesses with a SAC determination of 25 units or less, before application of credits, to be eligible for the program. The previous agreement language only allowed those businesses with a SAC determi- nation of 10 units or less, before application of credits, to be eligible. The Met Council’s Sewer Availability Charge Procedure Manual (January 2014) states that communities that want to participate in a SAC deferral program must execute a standard master SAC deferral agreement with the Council. Public hearing to consider amendments to City Code - On February 11, 2013 the City Council approved an ordinance amending sections 704.500, 705.600 and 705.1002 of the City Code relating to deferral of certain water connection, sewer connection, water tower charges and Metropolitan SAC charges for economic development purposes. The ordinance deleted City Code language related to a previous program which allowed someone to pay city sewer and/or water fees over three years at an interest rate of 8.0% and added language to mirror the Metropolitan Council SAC program. The current ordinance language in sections 704.500 and 705.600, related to pay- ment of fees, references a maximum SAC unit determination of ten (10) units which will need to be amended to reference a maximum SAC unit determination of twenty-five (25) units if the program is approved by the City Council. City of Prior Lake Sewer and Water Fee Deferral Program Policy Amendments - Attached is a copy of the City of Prior Lake Sewer and Water Fee Deferral Program Policy which was adopted by the Prior Lake City Council on February 11, 2013. If the city’s sewer and water fee deferral program is to mirror the revised Master SAC Deferral Agreement language, the current City of Prior Lake Sewer and Wa- ter Fee Deferral Program Policy language will need to be amended. Because additional funding has not yet been identified for the sewer and water fee deferral program and the EDA may not be able to fully fund qualifying projects, staff has proposed additional policy language which states, “The City reserves the right to approve or reject specific Local Program funding requests based on the availability of EDA funding.” Conclusion To date, the City of Prior Lake has entered into two sewer and water fee deferral agreements; one with Artisan Coffee Bistro and one with Honest-1 Auto Care. Staff anticipates that extending the maximum SAC unit determination of 10 units to 25 units may result in additional applications or larger projects which would re- quire additional program funding. 2 The EDA is asked to: 1) make a recommendation that the City Council authorize the Mayor and City Manager enter into the revised Master SAC Deferral Agree- ment with the Metropolitan Council; 2) recommend the City Council schedule a public hearing to consider amendments to Subsections 704.500 and 705.600 of the City Code; and 3) recommend the City Council amend the City of Prior Lake Sewer and Water Fee Deferral Program Policy to mirror the Metropolitan Council SAC Deferral Program. Funding for the City of Prior Lake Sewer and Water Fee Deferral Program is cur- rently provided with an allocation of funds from the EDA Professional Service Fund. The EDA may need to consider alternate funding sources if additional pro- gram applications are expected. Staff will provide funding options for EDA con- sideration during the May 2014 meeting to address potential future applications with more SAC Units. ISSUES: The EDA should review the revised Master SAC Deferral Agreement and pro- posed amendments to the City of Prior Lake Sewer and Water Fee Deferral Pro- gram Policy and direct any questions or comments to staff. FINANCIAL The proposed revisions to the local sewer and water fee deferral program may IMPACT: require additional funding from the EDA and/or City Council. ALTERNATIVES: 1. Recommend that the City Council authorize the Mayor and City Manager enter into the revised Master SAC Deferral Agreement with the Metropolitan Council. 2. Recommend that the City Council schedule a public hearing to consider amendments to Subsections 704.500 and 705.600 of the City Code. 3. Recommend that unless new substantive information is presented to the city council as part of the public hearing that the City Council amend the City of Prior Lake Sewer and Water Fee Deferral Program Policy to mirror the Metro- politan Council SAC Deferral Program. 4. Take no action and provide direction to staff. RECOMMENDED Staff supports a motion and second in support of Alternatives 1, 2 and 3. MOTION: ATTACHMENTS: 1. Revised Master SAC Deferral Agreement 2. Sewer and Water Fee Deferral Program Policy Amendments 3