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HomeMy WebLinkAbout05 21 2018 Private Streets and Public Utilities ReportPhone 952.447.9800 / Fax 952.447.4245 / www.cityofpriorlake.com 4646 Dakota Street SE Prior Lake, MN 55372 CITY COUNCIL WORK SESSION REPORT MEETING DATE: AGENDA #: PREPARED BY: PRESENTED BY: AGENDA ITEM: INTRODUCTION: MAY 21, 2018 1B JASON WEDEL, PUBLIC WORKS DIRECTOR/CITY ENGINEER JASON WEDEL PRIVATE STREETS AND PUBLIC UTILITIES At the City Council work session on February 20, 2018 the City’s assessment policy and capital improvement funding options were reviewed. The purpose of the review was to discuss how the City might fund the replacement of public sanitary sewer and watermain located beneath private street. The options for funding private streets and public utilities included the following: •Assess for private streets •Increase sewer and water rates across the entire City to cover the cost of replacing private streets •Make residents on private streets responsible for replacing their own sanitary sewer and watermain •Create a special sewer and water district for properties on private streets and charge them a higher utility rate to cover the cost of replacing their private streets There were concerns raised with the first three options. Assessing for private streets would be difficult since those same properties are already assessed for the first public street they connect to, so proving benefit would be a challenge. Increasing sewer and water rates across the entire City was not considered equitable since it was the choice of certain residents to live on private streets so why should everyone pay for them. The concern with having residents on private streets responsible for replacing their own sanitary sewer and watermain is that the watermain is interconnected throughout the entire City and the potential for cross contamination from having private parties working on the watermain. Based on these concerns, the City Council focused on the idea of creating a special sewer and water district for properties on private streets and asked staff to bring back more information on this topic. City Council also discussed the idea of the City covering a portion of the cost for the private streets, similar to our current policy on public street 2 assessments where 40% is assessed and 60% is covered by general tax levy. TOPICS: Within the City there is currently 9.27 miles of private streets. This equates to approximately 10% of our total miles of streets. The maintenance goal for the City has been to reconstruct 2 miles of streets each year so on average approximately 0.2 miles of private streets would be included as part of the annual street reconstruction program. On average it costs $1,000,000 to reconstruct 1 mile of street. If the City replaces 0.2 miles of private streets each year the average annual cost will be $200,000. Within the 9.27 miles of private streets there are 1,612 utility billing accounts. If the City chose to spread 100% of the annual cost of $200,000 for private streets across all of those accounts equally it would result in a cost of $124/year for each account or $10.33/month. If the City chose to spread 40% of the annual cost ($80,000) across of all the utility billing accounts located on private streets it would result in a cost of $50/year for each account or just over $4/month. If the City Council decides to implement this concept it should be noted that it will take a couple of years to develop a fund balance that would be available for new projects. In the interim, the City would need to bond for the private street improvements and repay the bonds from the proceeds generated from the new utility district. CONCLUSION: If the City Council believes the concept of creating a special utility billing district for private streets has merit, the next step would involve having staff communicate this idea with several of the Home Owners Associations (HOAs) throughout the City. Many of these HOAs may already be collecting dues for the eventual replacement of their private streets. Therefore, if the implementation of the new utility billing district allows them to reduce their dues because they are no longer responsible for their future street replacement the net cost to the residents in those neighborhoods might be neutral. On the other hand, if the City Council does not want to move forward with the concept of creating a special utility billing district the direction to staff could be to more research and come back to the City with additional ideas for funding the replacement of sanitary sewer and watermain located beneath private streets.