HomeMy WebLinkAbout9B Storm Water Discussion Report
Phone 952.447.9800 / Fax 952.447.4245 / www.cityofpriorlake.com
4646 Dakota Street SE
Prior Lake, MN 55372
SPECIAL ASSESSMENT WORK GROUP REPORT
MEETING DATE: DECEMBER 12, 2016
AGENDA # 9B
PREPARED BY: FRANK BOYLES, CITY MANAGER
DON URAM, FINANCE DIRECTOR
KATY GEHLER, PUBLIC WORKS DIRECTOR
AGENDA ITEM: CONSIDER APPROVAL OF A RESOLUTION AUTHORIZING THE
ADJUSTMENT OF VARIOUS COMMERCIAL, INDUSTRIAL AND
MULTIFAMILY STORMWATER ACCOUNTS
DISCUSSION
Introduction
The purpose of this report is to explain staff and city council work group
findings and request city council direction with respect to the approach to
be taken to address over and underpayments of stormwater fees by
certain commercial, industrial and multi-family stormwater accounts.
The direction provided will be used to revise billing records for accuracy
sake, reimburse certain account holders who have over paid and charge
others who have underpaid.
History
In response to increasing requirements to address surface water issues,
the city council adopted Section 703 of the Prior Lake City Code,
Stormwater Management Fee which applies to certain residential and
commercial/industrial properties.
Since its original adoption in 1993, the ordinance has been amended
from time to time but the fee has been charged to all residential,
multifamily, commercial and industrial accounts (totaling around 8500
accounts each year) on an ongoing basis as one of the charges on the
bimonthly utility bill.
Current Circumstances
In the last 120 days we have received inquiries from an individual
representing Shepherds of the Lake Church and the six parcels which
are part of that planned unit development. The inquiry was, that
compared with the other fees on the two-month utility bill, the storm
water fee seemed to be out of proportion to the rest.
We reviewed the ordinance and the first thing that became apparent was
that the fee is not supposed to be applied against vacant parcels whether
residential or commercial/industrial. Of the six parcels for which
Shepherd’s receives a bill, four of those are vacant. The obvious
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conclusion was that the Shepherds of the Lake account was being
overbilled.
Because of the overbillings for Shepherds of the Lake parcels, staff
began looking at other residential, commercial, industrial and multifamily
accounts to see if there were similar issues.
Most of the stormwater accounts are classified as residential—more than
8,200 of them. Each residential account is charged for one unit. The
value of one unit is well known. Our findings are there are no historic or
current issues with existing residential accounts. This fact
notwithstanding, it is our intention to review all residential property
addresses to assure that some addresses are not being missed
altogether.
Commercial/industrial properties are a different matter. All non-
residential account charges are based on the actual area of the lot(s),
multiplied by a land factor representing the level of impervious coverage
and a $/acre fee. Here we did find aberrations. From our investigation,
the “area” factor used in the calculation seems to be the most volatile
variable causing the billing problems.
We reviewed all current accounts in the non-residential categories
described above. In many cases, the stormwater fee has been in the
system for several years so the area used in the calculation was not from
the current day GIS system. Moving forward, the GIS area data that is
now readily available will be used to base the stormwater calculation. In
many cases minor adjustments to the area factors are needed to be in
compliance with the GIS area. In these cases, we see minor
adjustments as just that, using better more readily available information
so no error exists in applying the fee.
Conclusion
However, this analysis did provide for more stringent review of accounts
that had larger deviations. There are 32 commercial/industrial accounts
and 3 multi-family accounts that required additional review. In
completing this review an analysis period of six years was used in line
with the statute of limitations.
If the property has changed ownership within the six years, we have only
considered payments to or from the current owner. The review of these
accounts is attached in four separate tables. The tables show the
following:
1. TABLE 1- A listing of all nine commercial/industrial accounts
where there is an adjustment of greater than $1000 over six
years in the favor of the account holder (potential payment to the
account holder). This includes nine accounts totaling $79,842.08.
2.
3. TABLE 2- A listing of all twenty-three commercial/industrial
accounts where there is an adjustment of greater than $1000
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ISSUES:
over six years in the favor of the City (potential payment to the
City). This includes twenty three accounts totaling $107,650.40.
4. TABLE 3- Summary of Commercial/Industrial accounts. Note
that the summary shows all accounts that warrant an adjustment,
162 in total. The subtotal amounts consider only those accounts
over a threshold of $1000 for the six years.
5. TABLE 4- A listing of all three multi-family accounts where there
is an adjustment of greater than $1000 over six years. This
includes a total of three accounts with a total adjustment of
$5,817.88.
Before we can proceed to make the necessary adjustments the following
policy questions require attention. Immediately following each policy
issue is the combined recommendation of the work group and the city
staff.
1. If we reimburse or request funds, what time period is
appropriate? The staff has taken the position that since the
statute of limitations is six years, that is the proper time period
UNLESS the property has sold. If the property has been sold the
money owed or requested will be applicable only to the current
owner for the period of time they have owned the property. It
should be noted that the attorney has stated that this is the
maximum time which we may be held liable so a shorter period
could be considered.
For accounts which have overpaid, the recommendation is to reimburse
for the entire six-year period or if the property has changed hands within
that time to reimburse the present owner only. For accounts which have
underpaid, the city would seek reimbursement for three years or for the
period of time the property has been owned by the present owner.
2. Should interest be charged to the city or account holder as
appropriate? No interest has been included in the current account
analysis totals. Does the council concur?
The committee concluded that no interest would be charged or paid.
3. What size over or underpayment should be considered? The staff
has selected any over or underpay more than $360 over six
years. A higher threshold could also be chosen. For purposes of
scale, $360 equates to variance of $10 per billing period over 6
years $25 would be $900. $50 would be $1800. Another option is
to limit our reimbursement solely to Shepherd’s considering the
amount and the fact that they identified the concern.
Over and underpayment exceeding $1000 over six years are the only
ones which will pursued.
4. How shall the over or underpayment be tendered? Should the city
pay cash and likewise expect cash from those who have
underpaid? Should some time-period be allowed based upon the
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amount of money involved? Would we be willing to assess over a
threshold amount? To what extent would we be willing to
negotiate? We have assumed cash only and no negotiation.
The city will make payment in full and correct all accounts with the
February billing or sooner. Accounts requiring repayment to the city will
be given nine payment cycles (18-months) to reimburse the city. If the
storm water amount has not been reimbursed in full then the remaining
amount will be specially assessed.
5. How shall we contact account holders? The answer here is
related to the policy question responses above as they will dictate
the amount of follow up required. Regardless of any over or
under payments considered, there will be a couple accounts
where there will be more significant adjustments. Staff feels it
appropriate to communicate these adjustments as soon as
possible.
A letter with a follow-up phone call will be used to communicate with all
affected account holders.
Future Adjustments
What is apparent is that the number of variables which make up the total
stormwater calculation requires that these figures be audited on a more
regular basis. With GIS data more readily available, review of the
information in the billing system can be completed easier on a more
regular basis.
The Finance Department will place the periodic audit of Stormwater fees
on their master schedule. At the appropriate time they will run the
appropriate reports from the billing system to be audited with GIS data
from the public works department to assure that our billings continue to
be accurate.
This cycle will repeat itself over time to avoid a situation such as this in
the future.
Included with this agenda item is a resolution which would implement the
policies set forth above.
ALTERNATIVES:
1. Adopt the attached resolution as presented or with amendments to
address this matter.
2. Take no action and direct staff with regard to the appropriate actions
which should be taken.
RECOMMENDED
MOTION:
Alternative 1.
4646 Dakota Street SE
Prior Lake, MN 55372
RESOLUTION 16-XXX
A RESOLUTION AUTHORIZING THE ADJUSTMENT OF VARIOUS COMMERCIAL
INDUSTRIAL AND MULTIFAMILY STORMWATER ACCOUNTS
Motion By: Second By:
WHEREAS, In response to increasing requirements to address surface water issues the City
Council adopted section 703 of the Prior Lake City Code in 1993; and,
WHEREAS, As a result of a reported over payment the city staff has reviewed all 8,600 of the
stormwater accounts including approximately 8,200 residential and 350
commercial, industrial and multifamily accounts; and,
WHEREAS, The staff findings are that the charges for the 8,200 residential accounts are based
on a single family rate per the ordinance which is appropriate for the account
designation; and,
WHEREAS, Over payments in excess of $1,000 for the last six years have been identified for
nine commercial/industrial accounts; twenty-three commercial/industrial accounts
have been identified where underpayments in excess of $1,000 have been
identified for the last six years;; and three multifamily accounts have overpaid in
excess of $1,000 over six years and none have underpaid in excess of $1,000;
and,
WHEREAS, The City Council has been asked to provide policy direction to assure that all
accounts are adjusted properly.
NOW THEREFORE, BE IT HEREBY RESOLVED BY THE CITY COUNCIL OF PRIOR LAKE,
MINNESOTA as follows:
1. The recitals set forth above are incorporated herein.
2. The City Council adopts the following policies with respect to adjustment of these accounts:
Commercial, Industrial and Multifamily accounts which have overpaid will be
reimbursed for the most recent six years if owned by the same owner.
If the owner has changed during the most recent six years, then the
reimbursement will be only for the accounts overpaid during the period owned by
the current owner.
No interest will be paid for overpayments nor charged for underpayments for the
last six years up to the date of this adjustment.
Commercial, Industrial and Multifamily accounts who have underpaid will
reimburse for the most recent three years of underpayment or for such shorter
time which the current owner has owned the property.
The city will make payment in full and correct all accounts with the February
billing.
Accounts which have underpaid shall be given nine payment cycles (18 months)
to reimburse the city.
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If the stormwater accounts have not been paid in full within 18 months, the
remaining balance will be specially assessed.
Account holders affected by these adjustments shall be notified by letter with a
follow up phone call.
3. Funds received for underpayments will be recorded as revenue in the stormwater fund
account code 602-49420.00-37120.00. City payments will be recorded as an expense in
account code 602-49420.00-54320.00.
PASSED AND ADOPTED THIS 12th DAY OF DECEMBER 2016
VOTE Hedberg Keeney McGuire Morton Thompson
Aye ☐ ☐ ☐ ☐ ☐
Nay ☐ ☐ ☐ ☐ ☐
Abstain ☐ ☐ ☐ ☐ ☐
Absent ☐ ☐ ☐ ☐ ☐
______________________________
Frank Boyles, City Manager
Commercial/Industrial Overpayment Accounts TABLE 1
Account Owner Property Address
Monthly Fee
(Current)
Monthly Fee
(Corrected)Difference
4-11400-00 SHEPHERD OF THE LAKE 3611 NORTH BERENS RD 2141.7 411.35 -51,146.37
1-11550-00 ABHE & SVOBODA, INC 17066 REVERE WAY 637.74 26.19 -14,566.02
3-10038-00 NEW HORIZON DAYCARE 4400 FOUNTAIN HL DR 431.56 298.25 -3,940.26
1-10058-00 WELLS FARGO PROPERTIES 16817 DULUTH AVE SE 197.39 101.19 -2,913.54
1-11017-00 SCOTT RICE TELEPHONE 5786 CREDIT RIVER RD 422.36 356.82 -1,937.38
4-11500-00 RIVER VALLEY YMCA 3575 NORTH BERENS RD 196.45 130.97 -1,935.44
1-11050-00 HARBOR COMMUNITY CHURCH 5995 TIMBER TR SE 231.87 191.44 -1,195.09
3-10071-00 ENGELSMA LIMITED PARTNER 14180 COMMERCE AVE N 150.34 110.65 -1,173.17
1-10148-00 LEMKE BUILDING 5116 GATEWAY ST SE 135.2 100.19 -1,034.79
Commercial/Industrial Underpayment Accounts TABLE 2
Account Owner Property Address
Monthly Fee
(Current)
Monthly Fee
(Corrected)Difference
6-30009-01 PRIOR LAKE MINI STORAGE 6000 CREDIT RIVER RD 86.78 1,146.98 26,109.49
4-10131-00 RESTAN 3151 WILDS RDGE CT N 302.31 936.91 18,757.91
6-30502-00 MEDIACOM 15821 FRANKLIN TR SE 335.88 310.41 9,953.48
4-10007-02 CHASE COMMERCIAL PROPERT 4385 FOUNTAIN HL DR 13.52 283.73 7,245.37
6-30002-00 XCEL ENERGY/CREDIT RIVER 5930 CREDIT RIVER RD 171.3 192.77 6,202.63
6-30007-00 BERENS ENTERPRISES LLC 16765 WELCOME AVE SE 73.84 191.06 6,081.12
1-10175-00 BUSSE PROPERTIES LLC 5823 GRANITE CT SE 326.91 434.91 3,192.01
1-10060-00 KEYLAND HOMES 17021 FISH POINT RD 73.82 179.19 3,114.54
1-11370-00 NOREX 5505 COTTONWOOD LN S 350.17 454.40 3,080.82
1-10094-00 GREYSTONE CONDOMINIUMS 17180 ADELMANN ST SE 119.65 214.95 2,816.85
1-10104-00 VELISHEK AUTO SALE 16661 HIGHWAY 13 S 71.39 164.31 2,746.74
1-10125-00 RIVER VALLEY VET SERVICE 15900 JORDAN AVE SE 13.52 98.78 2,520.24
1-11500-00 CJF HOLDINGS 16861 WELCOME AVE SE 163.73 236.56 2,152.86
3-10154-00 DUNLOP HOLDING, LLC 14070 COMMERCE AVE N 13.52 70.95 1,697.48
1-10086-00 MIKE'S SEPTIC SERVICE 16991 MUSHTOWN RD SE 266.21 320.45 1,603.22
6-30010-00 MN VALLEY ELECTRIC COMMERCE & 140TH S 59.06 59.29 1,601.06
1-10122-00 PRIMESITE INVESTMENTS LL 4995 160TH ST SE 41.1 90.96 1,473.59
4-10096-00 RESTAN 14998 WILDS PKWY NW 46.64 94.46 1,413.58
1-10063-01 PRIOR LAKE PET HOSPITAL 16680 FRANKLIN TR SE 13.52 59.57 1,330.26
1-10044-00 ROD DEHMLOW AUTO SALES I 4810 DAKOTA ST SE 26.09 67.94 1,237.06
6-30501-00 MONNENS SUPPLY 16214 MAIN AVE SE 15.12 50.44 1,223.54
1-10105-00 VFW CLUB 6208 16306 MAIN AVE SE 39.48 75.52 1,065.42
1-10050-01 MCDONALDS 16831 HIGHWAY 13 S 83.15 133.04 1,031.13
Summary of Commercial/Industrial Accounts TABLE 3
Calculations based on 5 bills in 2016 and 1 bills in 2010
Overpayment Count Total
$0 - $-1,000 79 -$14,044.02 88 Accounts needing adjustment in software
$-1,000 - $-2,500 5 -$7,275.87 9 Accounts above threshold
$-2,500 - $-5,000 2 -$6,853.80
$-5,000 - $-20,000 1 -$14,566.02
$-20,000 - $-70,000 1 -$51,146.37
Subtotal above threshold -$79,842.08
Max Overpayment:-$51,146.37
Underpayment Count Total
$0 - $1,000 51 $9,080.67 74 Accounts needing adjustment in software
$1,000 - $2,500 11 $15,829.20 23 Accounts above threshold
$2,500 - $5,000 6 $17,471.19
$5,000 - $20,000 5 $48,240.52
$20,000 - $70,000 1 $26,109.49
Subtotal above threshold $107,650.40 162 Total accounts needing adjustment in software
32 Total accounts above threshold
Max Underpayment:$26,109.49
Sum of underpayments and overpayments:$27,808.33
Assumptions for calculations
- Differences based on 6 years of billing history, or the current owner
- Area for corrected fee based on Scott Co. GIS data
- Based on bills from Nov. 2010 - Nov. 2016. Final adjustment amount will reflect Stormwater Unit adjustment date
Multi-Unit Residential Accounts TABLE 4
Account Owner Property Address
Fee
(Current)
2016 Fee
(Corrected)Difference
1-05678-00 STONEGATE COMMONS TORONTO AVE SE 265.02 187.16 -1480.82
1-00672-00 TOWER HILL WEST TOWER ST SE 390.84 339.53 -1046.18
1-01289-00 TOWERING WOODS CONDOMINI TOWER ST SE 432.33 97.49 -3290.88
Summary of Multi-Unit Residential
Calculations based on 5 bills in 2016 and 1 bills in 2010
Overpayment Count Total
$0-$-1,000 11 -$1,455.24 14 Accounts needing adjustment in software
$-1,000-$-2,500 2 -$2,527.01 3 Accounts above threshold
$-2,500-$-5,000 1 -$3,290.88
$-5,000-$-20,000 0 $0.00
$-20,000-$-70,000 0 $0.00
Subtotal -$5,817.88
Max Reimbursement:-$3,290.88
Underpayment Count Total
$0-$360 6 $706.32 6 Accounts needing adjustment in software
$360-$1000 0 $0.00 0 Accounts above threshold
$1000-$5000 0 $0.00
$5000-$20000 0 $0.00
$20000-$70000 0 $0.00
Subtotal $0.00 20 Total accounts needing adjustment in software
3 Total accounts above threshold
Max Underpayment:$401.71
Sum of underpayments and overpayments:-$5,817.88