HomeMy WebLinkAboutSewer and Water Fee Deferral ProgramSewer and Water Fee Deferral Program Policy
City of Prior Lake, Minnesota
Adopted February 11, 2013
Sections I through VII of this document govern the use of two programs, including the Metropolitan
Council’s “SAC Deferral Program” for certain sewer fees (“Regional Program”) and the City of Prior
Lake’s “Payment of Permit Fees” for certain sewer and water fees (“Local Program”). Hereinafter, the
City of Prior Lake is referred to as the “City”.
SECTION I - PURPOSE.
The purpose of this policy is to establish procedures to regulate, coordinate, and facilitate the approval
of certain sewer and water fee deferrals for eligible businesses or properties. Eligible businesses or
properties can apply for the deferral of a portion of one or more sewer/water fees, including:
1.Metropolitan Council Sewer Availability Charge (SAC) – Regional Program sewer fee;
2.Prior Lake Sewer Connection Charge – Local Program sewer fee;
3.Prior Lake Water Connection Charge – Local Program water fee; and
4.Prior Lake Water Tower Charge – Local Program water fee.
For any SAC deferral between a minimum of three (3) and a maximum of ten (10) units, this policy
provides for more consistency between the Regional Program and the Local Program related to
eligibility, terms and conditions. The 3-unit minimum and the 10-unit maximum are determined before
application of any credits on the site. The Local Program also allows anyone to apply for a deferral of
sewer/water fees when the SAC determination is greater than ten (10) units, before application of any
credits on the site.
SECTION II - AUTHORIZATION AND FUNDING SOURCES
On November 28, 2012 (based on Minnesota Statutes 473.517, Subd. 6), the Metropolitan Council
adopted changes to its SAC program to include a small business deferral program. The Regional
Program became effective on January 1, 2013, which allows a deferment of SAC fees up to ten (10) years
at a low annual interest rate based on Metropolitan Council Environmental Services’ (MCES) average
cost of debt per statute and applied to all new deferrals originating in that particular year.
Prior Lake City Code Sections 704.500 and 705.600 allow any business or property owner who qualifies
to defer a portion the City’s water and sewer fees. These Sections are to be amended into two (2)
categories, including:
1.“Local Program A” allows eligible small businesses or property owners to apply for a City
sewer/water fee deferment for SAC unit determinations between three (3) gross units and ten
(10) gross units to match the terms and conditions of the Regional Program.
2.“Local Program B” allows any business or property owner to apply for a City sewer/water fee
deferment for SAC unit determinations above ten (10) gross units, before credits are applied.
Note: The Regional Program is not available for businesses or property owners that are eligible
for Local Program B.
Funding for the Local Program is delegated to the Prior Lake Economic Development Authority (EDA).
Funding for the Regional Program is not required due to the Metropolitan Council’s deferral of its
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revenue for up to ten (10) years. The EDA will provide the Local Program deferred fund amounts to the
corresponding Sewer, Water and Water Storage Funds for each approved deferment. The EDA will then
be responsible for collecting all Local Program deferred funds from the business or property
participating in the Local Program.
SECTION III - PROGRAM OBJECTIVE
The Metropolitan Council’s stated objective is to encourage and help communities promote small
business development by deferring SAC payment obligations. The City of Prior Lake has an objective in
its 2030 Comprehensive Plan to encourage a diversified economic base and a broad range of
employment opportunities.
SECTION IV - ELIGIBILITY
For the Regional Program and Local Program A, an eligible applicant is a “small business” as defined in a
Master SAC Deferral Agreement between Prior Lake and the Metropolitan Council. Small business
means a property or business for which the aggregate SAC determination by the Metropolitan Council
results in a liability of ten (10) SAC units or less, before application of any credits available on the site.
For the Regional Program and Local Program A, the City has chosen to also exclude small businesses that
have a SAC unit determination less than three (3), before application of any credits available on the site.
For Local Program B, any business or property owner is eligible to apply if they have a SAC
determination resulting in over ten (10) units, before application of any credits available on the site.
SECTION V - DEFERRAL STRUCTURE
The structure of the Regional and Local Program deferrals include the following provisions:
1.The deferral amount can equal up to eighty percent (80%) of the total sewer and/or water fees
due.
2.The deferment term is five (5) years.
3.Each deferment liability will be effective the first day of the subsequent month (e.g., for an April
building permit that is due and typically reported in May, interest will begin accruing June 1).
4.Interest for the Regional Program and Local Program A is determined using the Metropolitan
Council’s SAC Deferral Program rate, which is determined annually and set for the deferment
period. Interest is amortized over the term of the deferment period using whole months.
5.Interest for Local Program B is determined using a rate of two (2) percentage points higher than
the net interest cost of the most recent bonds sold by the City.
6.For the Regional Program, payments are made by the business or property owner to the City
using a city automated system; a late payment fee of two percent (2%) of the unpaid amount
will be charged upon ten (10) days past due, subject to written notice by the City.
7.For the Local Program, payments are made by the business or property owner to the EDA using
a city automated system; a late payment fee of two percent (2%) of the unpaid amount will be
charged upon ten (10) days past due, subject to written notice by the EDA.
8.In the event of a default of payment that is at least sixty (60) days past due, the City or EDA shall
assess the unpaid balance upon the fee owner’s property taxes the following taxable year
subject to the same interest rate applied to the deferred amount. The fee property owner shall
sign a waiver of notice of hearing of assessment at the time of application. At the discretion of
the City, the City may terminate any amount due related to assessments for the Regional
Program, resulting in a SAC unit credit for only the amount paid by the small business or
property.
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9.A “Payment Agreement” will be executed between the eligible business, the fee property
owner, and the City stating all conditions and requirements of the parties for the Regional and
Local Programs. This document shall be recorded.
SECTION VI - INELIGIBLE CONDITIONS
The following conditions create ineligibility for a business or property to apply for the Regional or Local
Programs:
1.The fee owner’s property taxes are delinquent.
2.The business is not in good standing with the State of Minnesota, or is in violation of a Prior Lake
City Code.
3.The SAC determination (before credits) is less than three (3) units.
4.The small business does not meet the definition of eligible commercial properties in the
Metropolitan Council’s SAC Deferral Program (for the Regional Program and Local Program A).
5.The property is not located within the City of Prior Lake.
6.The property is located on tribal lands.
SECTION VII - ADMINISTRATION
The City of Prior Lake is responsible for administering the Regional Program on behalf of the
Metropolitan Council. Once the Master SAC Deferral Agreement has been executed by the City and the
Metropolitan Council, the City is responsible for all loan deferral collections from the eligible small
business or properties participating in the Regional Program. The City is responsible for making
payments of the required SAC deferment amount, plus interest, to the Metropolitan Council on an
annual basis. The Prior Lake EDA is responsible for administering the Local Program on behalf of the
City. No administrative fees or charges are made in connection with the Regional or Local Programs.
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