HomeMy WebLinkAboutAgenda Packet City Council - 08/26/2008 (W)Material for Council Workshop Meeting
of August 26, 2008 on
Utility Trust Fund Analysis
and
Development Impact Fees
• I
CITY COUNCIL
AGENDA MEMORANDUM
PRESENTATION
AGENDA ITEM:
A. Staff presentation on the results of a comprehensive utility trust fund analysis.
B. Consultant presentation on development impact fees.
STAFF PRESENTER(S):
Name Title /Position Department
1. Juan Perales, Jr. Deputy Director Development Svcs.
OUTSIDE PRESENTER(S):
Name Title /Position Organization
1. James B. (Jim) Duncan President Duncan Associates
ISSUE: The City Council has previously directed staff to develop means of ensuring
the solvency of the utility trust funds. The staff presentation is intended to provide an
overview of the results of analysis of the funds, as well as proposed changes in
related city ordinances and procedures. The consultant presentation is intended to
provide Council with an overview of development impact fees, related concepts, and
implementation requirements and considerations.
REQUESTED COUNCIL ACTION:
Motion(s) directing staff to begin action on formal adoption of staff recommendations,
as determined necessary by Council.
Robert Nix
Assistant City Manager
Development Services
PowerPoint presentation X
Supplemental information
Rev. 0-1 8.08
Utility Trust Funds
Results of Fund Analysis
and
Proposed Modifications
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Previous Work and Considerations
• January 23, 2007: The industry representatives of the Developer
Trust Fund Focus Group provided comments on, and suggested
revisions to, current procedures related to the administration of the
water and wastewater trust funds.
• Mid February, 2007: City staff members of the Focus Group
presented a response, including a proposed alternate method of
acreage fee assessment based on zoning classification.
• March 22, 2007: Developer representatives provided
correspondence suggesting a plan to increase fund revenues.
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Previous Work and Considerations
• August 30, 2007: City staff presented a new fee structure based
on historical water usage and size of water meter service.
• September 12, 2007: City Staff made a presentation to City
Council on the proposed fee structure for the wastewater trust
funds.
• May 22, 2008: Staff and representatives of the development
community agreed to apply new fee concepts to water trust funds,
also, prior to moving forward.
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Methodology for Analyzing Fund Activity and
Evaluating Proposed Trust Fund Revenue Structure
• The Trust Funds history begins in 1982, but the most detailed fund
information is available through the City's automated financial
system records, beginning in FY 2000.
• This evaluation is based on analysis of fund activity from FY 2000
through FY 2007 (analysis period).
• The evaluation assumes fund balances of zero at the beginning of
the analysis period.
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Methodology for Analyzing Fund Activity and
Evaluating Proposed Trust Fund Revenue Structure
• In previous analyses, future fund needs were based on estimates of
future development activity
• Estimating future development activity and its needs includes too many
variables to allow an accurate evaluation
• Evaluation logic was changed to apply proposed 'revenue model" to
actual development activity between 2000 and 2007
11501000 00
U.93300000
51003.000 00
1258000
5203000003
3,500,03003
S1,W000000
me° coo co
3000
Review of Water Arterial Fund History
Cumulative Revenue to Expenditure Comparison
WaterArterial & Grid Main Fund
calmer 'fair
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Review of Water Distribution Fund History
5450,070 00
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tsaoaooao
5250.00000
515003000
5100,00000
150,00000
1000
Cumulative Revenue to Expenditure Comparison
Water Distribution Main Fund
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Review of Wastewater Trunk Fund History
Cumulative Revenue to Expenditure Comparison
Wastewater Trunk Line Fund
SLOOO.mapa
5000
2000
7001
2000 2004
GMarYaar
am
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Review of Wastewater Collector Fund History
12$0000000
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5/20000000
11000/200 00
052000000
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Cumulative Revenue to Expenditure Comparison
Wastewater Collector Line Fund
ZOO 2001 2002
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Fund Inter -Fund Transfers
• Expenditures in excess of revenues prompted three transfers of
funds from the Wastewater Trunk Line Trust Fund to the
Wastewater Collection Line Trust Fund to maintain fund solvency
• $400,000 was transferred in 2001
• $800,000 was transferred in April of 2005
• $600,000 was transferred in December of 2005
• The impact of the transfers on these funds is illustrated on the next
two slides
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5
12.520
320[0
11.500
31000
Impact of Transfers to
Wastewater Collector Line Trust Fund
Cumulative Revenue to Expenditure Comparison
Wastewater Collector line Fund, Including Transfers from Trunk Line Fund
CO 03
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X43 00
11000
115
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Nt Inners
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moo
1131
2E03 2034
CNMY Year
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Impact of Transfers from
Wastewater Trunk Line Trust Fund
Cumulative Revenue to Expenditure Comparison
Wastewater Trunk Line Fund, Including Transfers to Collector Fund
U.b0.00000
$2.030.03000
31000¢000
5000
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Solutions Recommended to Increase
Wastewater Trust Fund Viability
• Re- distribute existing fund revenue sources to better align with
expenditures
• Increase existing lot/acreage fees by flat 15 %, as volunteered
by Developer Trust Fund Focus Group
• Implement a "density factor' adjustment of lot/acreage fees as
previously suggested by developer community representatives
and as previously presented by staff
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Evaluation of
Proposed Re- Distribution of
Existing Fund Revenue Sources
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Revenue Components of
Combined Wastewater Funds
RMni CwnpwM. for WnSa., Funds CmiiM
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Existing Apportionment of
Revenues for Wastewater Trust Funds
Rmnue Components /u Wastewater Funds CwMited
cdW&&M
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Proposed Re- Apportionment of
Revenues (Connection Surcharge Fees)
for Wastewater Trust Funds
Reath,. CanpanMF td W utrx4t Funds LaMimd
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The Following Slides Present the Results of
Applying this Concept to
Recent Wastewater Trust Fund Activity
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Wastewater Collection Line Trust Fund Activity
Before Connection Surcharge Re- apportionment
usao0mm
310001300 00
n 310000000
31.00000000
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Cumulative Revenue to Expenditure Comparson
Wastewater Collector Line Fund
2000 2004
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200e
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Wastewater Collection Line Trust Fund Activity
After Connection Surcharge Re- apportionment
Cumulative Revenue to Expenditure Comparison
Wastewater Collector Line Fund,
with Full Diversion of Connection Surcharge Revenues
2000
2031
2000
2000 504
OYMV Yw
2005
2007
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10
Wastewater Trunk Line Trust Fund
Before Connection Surcharge Re- apportionment
*002.000 00
I5P00,000.00
x.e00CUaa0
10
Cumulative Revenue to Expenditure Comparison
Wastewater Trunk Line Fund
210
1001
2002
2003 1001
GYMV Year
2001
are
2001
2t
Wastewater Trunk Line Trust Fund
After Connection Surcharge Re- apportionment
Cumulative Revenue to Expenditure Comparison
Wastewater Trunk Line Fund, Showing Effects of Moving Surcharge Revenues
S5,000030 C0
NAT(Wlp
2aWO.ODaO
12000.00000
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axe
2007
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Proposed Revenue Enhancements for the
Wastewater Trunk Line Trust Fund
• Increase basic lot and acreage fees by 15 percent, as proposed by
the developer's representatives in correspondence of 3/22/07,
paragraph 2.A.a
• Implement the use of a "density" adjustment factor as part of the
existing lot and acreage fee calculation process, also mentioned by
the Developer's Trust Fund Focus Group in correspondence of
3/22/07, paragraph 2.A.b.
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Density Factors Used in This Exercise
Zon�nO Maximum Deveiaomem Density, ggnsity Factor
units Der acre By Code
R -E 1.00 1.00
R -1A 4.38 100
R.113 7.28 1.00
RAC 9.88 1 .33
PUD-2 9.88 1 .33
R -2 14.52 2.00
A-1 21 .78 3.00
A -2 38.30 5.00
AT 43.50 8.00
0-1 36.30 2.00
0-2 36.30 2.00
B.3 36.30 2.00
6.4 36.30 2.00
B-5 36.30 2.00
1-2 36.30 2.00
1 -3 36.30 2.00
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Wastewater Trunk Line Trust Fund
Before Connection Surcharge Re-apportionment
Cumulative Revenue to Expenditure Comparison
Wastewater Trunk Line Fund
[smartie
Wastewater Trunk Line Trust Fund
After Connection Surcharge Re-apportionment
Cumulative Revenue to Expenditure Comparison
Wastewater Trunk Line Fund, Showing Effects of Moving Surcharge Revenues
30.03
2X0
NOI
2,32 2003 2024 2005 2033
comdar Yaw
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Wastewater Trunk Line Trust Fund with
Density Factor Applied to Historical Activity
Cuero lative Revenue to Fwendhn Ca1caisen
Wastewater Tuck Line Fund, oath "Density Factor Applied to lWPaeage Fees
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Expansion of Concept to
Water Trust Funds
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• Preliminary reviews by both development community
representatives and senior staff identified the need to evaluate the
application of these revenue enhancement concepts to the Water
Trust Funds before beginning any public review process.
• The following slides graphically illustrate the results of this exercise.
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Water Distribution Line Trust Fund Activity
Before Connection Surcharge Re- apportionment
145000000
140000000
100.000
2000.030 03
121000000
120000000
1150[1001
$103.030 00
11000000
1003
eumulatiee Revenue to Expenditure Comparison
Water Distribution Main Fund
2001
2003 204 'Nn 1200 2007
Calmly Year
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Water Distribution Line Trust Fund Activity
After Connection Surcharge Re- apportionment
Cumulative ReVemIa 00 Expenditure Comparison
Watercislnbution Line Fund,
with Full [Mansion or Connection Surcharge Revenues
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Water Arterial Line Trust Fund Activity Before
Connection Surcharge Re- apportionment
Cumulative Revenue to Expenditure Comparison
Water Arterial & Grid Main Fund
41,00000200
$3500 00000
12504000
20.11% W
4150000200
11.032.000 00
4544,40244
1200
SOO
2001
2203 2004
Calendar Thar
20Y
2201
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Water Arterial Line Trust Fund Activity After
Connection Surcharge Re- apportionment
S42T..0.tl.W
14.001200 W
13.500010.03
n00000003
4050000000
R033.000 Co
11501030 CO
S1020.00003
450000044
4010
Cumulative Revenue to Expenditure Comparison
Water Medal & Grid Line Fund,
Showing Effects of Moving Surcharge Revenues
sm
2001
am
2203 Ao1
CSa4erYear
20m
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Water Arterial Line Trust Fund with
Density Factor Applied to Historical Activity
Cumulative Revenue to Expenditure Comparison
Water Arterial & Grid Line Fund,
with 'Density Factor" Applied to Lot/Acreage Fees
000
Candle VW
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Staff Recommendation
• Adopt amendments to the City's Platting Ordinance to provide for:
• Re- apportionment of Connection Surcharge Fee revenues from the
existing 25/75% split between Water Distribution/Water Arterial and
Wastewater Collection/Wastewater Trunk Funds to 100% allocation of
Connection Surcharge revenues into the Water Distribution and
Wastewater Collection Line Trust Funds, respectively
• Use of "Density Factor" adjustment in calculation of lot and acreage fees
• Increasing the frequency of the developer trust funds "audit" from every
two years to every year
• Provide for formal participation by developer community representatives in
the annual "audit" of the developer trust funds
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Summary of Proposed
Platting Ordinance Amendments
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• Platting Ordinance Section V.B.5.b)(1): Lot Fee: The fee required to be
paid by the developer based on the number of lots in the development,
times any applicable density factors based on property zoning at the
time of plat recordation. The current lot fee and associated density
factors is are published in the Development Services fee schedule, Article
XIII, Chapter 14, Code of Ordinances.
• Platting Ordinance Section V.B.5.b)(2): Acreage Fee: The fee required to
be paid by the developer based on the acreage in the development,
including parks, streets, and drainage dedications, times any applicable
density factors based on property zoning at the time of plat
recordation. The current acreage fee and associated density factors is
are published in the Development Service fee schedule, Article XIII,
Chapter 14, Code of Ordinances.
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Summary of Proposed
Platting Ordinance Amendments, contd.
• Platting Ordinance Section V.B.5.e)(1): Lot and acreage fees and seventy -
five percent of the surcharge fees will be deposited into the Grid and Arterial
Transmission Mains Trust Fund for use .....
• Platting Ordinance Section V.B.5.e)(2): Pro -rata fees for distribution mains
and twenty -five one hundred percent of the surcharge fees will be
deposited into the Distribution Mains Trust Fund for use
• Platting Ordinance Section V.B.5.h): Once every two years year, the City
Council shall review the adequacy of all fees and charges established
herein and the sufficiency of the trust fund and may, after a public hearing,
adopt a new schedule of fees and charges and /or transfer monies from one
trust fund to the other in order to better carry out the purposes of this
ordinance.
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Summary of Proposed
Platting Ordinance Amendments, contd.
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• Platting Ordinance Section V.B.6.b)(1): Lot Fee: The fee required to be
paid by the developer based on the number of lots in the development,
times any applicable density factors based on property zoning at the
time of plat recordation. The current lot fee and associated density
factors is are published in the Development Services fee schedule, Article
XIII, Chapter 14, Code of Ordinances.
• Platting Ordinance Section V.B.6.b)(2): Acreage Fee: The fee required to
be paid by the developer based on the acreage in the development,
including parks, streets, and drainage dedications times any applicable
density factors based on property zoning at the time of plat
recordation. The current acreage fee and associated density factors is
are published in the Development Service fee schedule, Article XIII,
Chapter 14, Code of Ordinances.
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Summary of Proposed
Platting Ordinance Amendments, contd.
• Platting Ordinance Section V.B.6.e)(1): Lot and acreage fees and seventy -
five percent of the surcharge fees will be deposited into the Sanitary Sewer
Trunk System Trust Fund for use
• Platting Ordinance Section V.B.6.e)(2): Pro -rata fees for collection lines
and twenty-five one hundred percent of the surcharge fees will be
deposited into the Collection Line Trust Fund for use
• Platting Ordinance Section V.B.6.h): Once every two years year the City
Council shall review the adequacy of all fees and charges established
herein and the sufficiency of the trust fund and may, after a public hearing,
adopt a new schedule of fees and charges and/or transfer monies from one
trust fund to the other in order to better carry out the purposes of this
ordinance.
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Proposed Code of Ordinances
Amendments
• Code of Ordinances, Article XIII,
Chapter 14, Section 14 -1341,
Platting Ordinance Fees: (add
Density Factor table after Platting
Ordinance Fee table)
Lot and Acreage Fee Density Factors
R -E
R -1A
R -0a
HAO
PUD-2
R -2
A -1
A -2
AT
0-1
B-2
8-3
0-4
8-5
1-2
1 -3
Dan<iN Factor
1.00
1.83
1.00
1.33
1.33
2.00
3.00
5.00
8.00
2.00
2.00
2.00
2.00
2.00
2.00
2.00
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Requested Council Action
• Motion directing staff to begin formal adoption process
for recommended Ordinance amendments
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Comments and/or Questions
on Presentation Part 1
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Remaining Trust Fund Issues
• $3.5 Million "loan" from Wastewater Capital Improvement
Program to Wastewater Trunk Line Trust Fund
• Previous Council authorization of Water Arterial & Grid
Main Trust Fund Reimbursement Agreements for
London School and Rose Acres projects, both outside of
the City limits
• City Participation in new infrastructure costs
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History of $3.5 Million "Loan"
• Review of Wastewater Trust Funds activity in the 2004/2005 timeframe
projected a shortfall of over $1 million in the Wastewater Collection Line
Trust Fund.
• Consequently, a total of $1.4 million was transferred from the Wastewater
Trunk Line Trust Fund to the Wastewater Collection Line Trust Fund.
• This action re- established the Collection Line Fund's solvency, but had
significant impact on the Trunk Line Trust Fund balance
tt
• Additional "large project" reimbursement agreements out of the Trunk Fund
were also anticipated within the near future at that time
• Rather than delay the projects, the concept of the "loan" was developed,
presented, and approved by Council action.
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Current Status of $3.5 Million "Loan"
• Although the "loan" was approved, and funds appropriated, monies
were never actually transferred from the Wastewater CIP "account"
into the Sanitary Sewer Trunk System Fund "account ".
• The amount of the "loan" however, was included in the available
fund balance calculations from that time to present for purposes of
determining whether new reimbursements could be approved.
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Trust Fund Balances as of July 31, 2008
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Wastewater
Water Arterial Main Water Distribution Wastewater Trunk Collection Line
Fund Main Fund Line Fund Fund
Fund Balances as of 7131/07 52.551.553.20 5950,310.51 61.316029.51 S1,301341.28
Deposits from 7/31(07 through 7/31W6 5591,574.44 3148.888.35 $870,816.87 5155.104.67
Reimbursements paid (3001.248.50) (325,254.80) 152.655.459.65) (6488,08232)
Funds appropriated but not expended ($1,218.594.02) (337,15323) (3483.881.38) •310,028894)
Fund credits $25.09225 (57.084.00) (510.628.33) (370.32795)
Balance available ®July 31,3008 31,048,914.31 31,038,404.19 (5943,038.98) 3609,908.74
Approved loan from fund 3430
Ad)uetedlCOrrected Balance ]9 52,551,71.03 5609,908.14
® July 31,3008 31,040,984.31 51,035, 484
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Recommended Disposition of Loan
• Repeal the original $3.5 million loan, and transfer $1.3 million to
the Water Arterial and Grid Main Trust Fund from the Water CIP
fund to "reimburse" the Water funds for the London School and
Rose Acres projects; and re- distribute monies between the four
trust funds to establish equitable fund balances; or
• Repeal the original $3.5 million loan, and transfer $1.3 million
directly from the Wastewater CIP fund to the Wastewater Trunk
Line Trust Fund.
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Requested Council Action
• Motion directing staff to prepare an agenda item which will provide
for the repeal of the previous ordinance; a transfer of funds from the
Water CIP fund to the Water Arterial, Grid & Transmission Main
Trust Fund; and related re- distribution of individual fund balances; or
• A motion directing staff to prepare an agenda item which will provide
for the repeal of the previous ordinance, and a transfer of funds from
the Wastewater CIP fund directly to the Sanitary Sewer Trunk Line
Fund.
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Final Development Issue:
City Contribution Toward New Infrastructure
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• This concept, as discussed up to this point, would require City Council's
adoption of a plan to promote growth and /or redevelopment in locations
identified and prioritized by the Council
• Funding would be established as a "directed development component"
within future Capital Improvement Programs
• Infrastructure improvements could either be directly financed and
constructed by the City, or administered as an incentive program through
either shared participation or reimbursement agreements
• The amount of contribution would need to be determined. However, current
discussions with developer representatives are based on the concept of the
city's contribution being roughly equivalent to the amount of developer fee
revenues going into the trust funds.
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City Contribution Toward New Infrastructure
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• The City's Capital Improvement Program does currently include
various projects which provide for increases in system capacity that
make it possible to support new development.
• These improvements include treatment plant expansions such as
the currently proposed expansion of the Greenwood plant;
• Lift station and force main upgrades such as that proposed for the
Wood River lift station;
• And gravity trunk main extensions, such as the trunk line extension
being built in conjunction with the re- construction of Everhart Road.
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City Contribution Toward New Infrastructure
• Positive aspects
• The City, acting through the Council, will have a mechanism to
directly influence development or redevelopment of targeted
areas within the City
• The potential may exist to leverage the City's resources through
shared participation with private entities
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City Contribution Toward New Infrastructure
• Negative aspects
• The primary funding mechanism available to the City is through
the Capital Improvement Program
• Consequently, these improvements would be funded through
utility rate revenue bonds, ultimately paid by utility rate payers
city wide
• Given the limits on debt service capacity, funding this program
would decrease the funds available for other projects
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Requested Council Action
• Motion directing staff to develop a more detailed plan to
incorporate a development component within future Capital
Improvement Programs as a part of a City directed growth and /or
redevelopment incentive plan
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Comments and/or Questions
on Presentation Part 2
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Related Discussion
(time permitting)
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Storm Water Trust Fund
• The City's Platting Ordinance, as revised in 2003, provides for a Storm
Water Trust Fund. However, the storm water acreage fee amount is
currently set at $0.
• The setting of reasonable storm water acreage fees would be based on
the estimated cost of infrastructure improvements identified in the City's
storm water master plan.
• Efforts toward updating the city -wide storm water master plan have been
underway since 1999. Completion is not expected until late 2009 or
early 2010.
• It is desirable to initiate interim storm water acreage fees so that a fund
balance will exist at the time the master plan update is adopted.
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Storm Water Trust Fund, contd.
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• To identify an interim storm water acreage fee, staff considered the
approach of identifying capital improvement costs for a master drainage
channel, then dividing that amount by the land area served by that
master channel.
• The ongoing Master Channel 27 project was used in these calculations
as a matter of convenience. Cost data for this project is based on actual
bids within a recent time frame.
• Total costs for the Master Channel 27 project are estimated at
$14,400,000. The area "served" by Master Channel 27 is estimated to
be 1,028 acres. Simple arithmetic yields a per acre cost of
approximately $14,000.
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Storm Water Trust Fund, contd.
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• Considering that existing water and wastewater acreage fees combined
are less than $2,700 per acre, the $14,000 per acre figure appears
unreasonable.
• Ensuring funding for future master drainage facilities will require either
the adoption of true impact fees, or some degree of city funding, based
on a more detailed analysis of cost estimates for master plan facilities
identified in the pending storm water master plan update.
• Staff recommends that initial storm water acreage fees, if adopted, not
exceed the combined total of current water and wastewater acreage
fees.
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Requested Council Action
• Motion directing staff to develop ordinance amendments and
procedures to increase the current storm water acreage fee from
$0 to an amount not to exceed the combined total of current water
and wastewater acreage fees; and to initiate discussion of this
proposal with the development community.
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Comments and/or Questions
on Presentation Part 3 and Final
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Utility
Alternative
Financing
Study
Presentation to Corpus Christi City Council
December 19, 2006
Consultant Personnel
James B. Duncan, FAICP
• 45 years planning and infrastructure financing experience
• Former Director, Austin, Hollywood and Broward County
• Manager, nation's first multi - facility development fee system
• Co- Author, nation's first irnpact fee enabling act
0 Clancy J. Mullen
• 20 years planning and impact fee experience
• Infrastructure financing specialist, Duncan Associates
• Author of over 200 impact fee studies and ordinances
• • Speaker, NIFR and APA conferences and workshops
Eric Damian Kelly, J.D., FAICP
• 30 Years land use law and planning experience
• Senior legal advisor, Duncan Associates
• Editor, Mathew Bender "Zoning and Land Use Controls'
• Author, Numerous books and reports on adequate facilities
1
Infrastructure Finance Experience
Purpose of Project
• Explore alternative methods for securing fair
developer participation in the cost of expanding
the wastewater collection system and storm
water drainage system to accommodate the
demands of growth.
2
Order of Presentation
• Alternative Financing Methods
• Survey of Similar Texas Cities
• Wastewater Facilities
• Current financing, issues, alternatives,
recommendations
• Storm Water Facilities
• Current financing, issues, alternatives,
recommendations
• Summary of Recommendations
Alternative Financing Methods
• Utility Rate
• Monthly charge based on water consumption paid by utility customer
• Storm Water Utility Fee
• Monthly charge based on pervious area paid by utility customer
• Acreage Fee
• One -time assessment per acre/lot at time of subdivision paid by developer
• Pro Rata Charge
• One -time pro rata charge for oversized lines paid by developer to another developer
• Connection Surcharge
ms's, • One -time flat fee assessment at time of connection to utility paid by builder
• ,Impact Fee
\,• One -time proportionate fair share fee at time of building permit paid by builder
3
Survey: Capital Facility Financing
2005 Growth
City Population Hate' Wastewater
Water
Storm Water
Austin 690,262 0.79% Rates//Impact Fee Ratewlmpact Fee Storm Water UdlitwTee -in -Lieu
Fort Worth 624.067 2.78% Retesrlmpact Fee Rates/impact Fee Gen. Fund:Storm Water Utility
El Paao 598,590 1.16% Rates/impact Fee Raree/Impect Fee General Fund (Property Tex)
Arlington 382,805 1.62% Rates/Impact Fee Rates/Impact Fee Storm Water Utility Fee
Corpus Christi 283.474 0.44% Utility Rates Utility Rates Water Utility Rates
Plano 250.098 2.22% Retea,mpact Fee Ratewlmpact Fee Storm Water Utility Fee
Garland 218,348 0.03% Utility Rates Reresilmpaet Fee Gen. Fund/Storm Water Utility
Lubbock 209,737 0.98% Utility Rates Utility Rates Storm Water Utility Fee
Laredo 208,754 3.11% Utility Rates Utility Rates Storm Water Utility Fee
Irving 193.849 0.17% Utility Rates Utility Rates Gen. Fund /Storm Water Utility
Amarillo 183,021 1.02% Utilit Rates 1Aili Rates General FundiSales Tax
Survey: Utility Rate Comparison
RESIDENTIAL UTILITY RATE COMPARISON
City
COMMERCIAL UTILITY RATE COMPARISON
. Wastewater Water Storm Water
Population Rate Rote Utility Fee
Wastewater
Impact Fee
Austin
690,252
..53331
541.55
$406.32
519,200
Fort Worth
.624,087
523.00
560.16
$111.53
53,219
El Paso
598,590
5126.72
530.74
rile
55,405
Arlington
362.805
664.67
5117,30
519.50
510,720
Corpus Christi
283,474
831.90
8182.76
nie
, n/a
Plano
250,096
5113.14
5181.59
556.00
$3,519
Garland
216,346
$21.50
538.25
560.00
We
Lubbock
209,737
570.17
5145.21
533.12
n/a
^�\
Laredo
208.754
514.25
$24.78
570.00
Ne
Irving
193,649
$22.75
512.48
573 .75
We
Amarillo
183,021
513.27
579.48
rile
Ns
Avers, a
347 345
548.51
;1.30
103.78
5853
4
Current Wastewater Financing
• Ratepayers fund treatment plant expansion
• Most large cities charge impact fees for treatment costs
• Developers fund trunk/collection line expansion
• Developers install lines to serve their subdivision plus
adjacent property, and are reimbursed for oversizing
• Developers who don't oversize pay a variety of fees
used to reimburse developers who do (see next slide)
Trunk /Collection Line Financing
• Acreage fee ($1,331 /acre or $332/lot)
• Goes into trunk line reimbursement fund
• Connection surcharge ($234 /connection)
• 75% to trunk line fund /25% to collection line fund
• Pro rata fee ($9.91 /1inear foot of <15" line)
• Goes into collection line reimbursement fund
\ • Flat rate different from most pro rata systems
5
Wastewater Financing Issues
• Trunk fund reimbursement expanded to
include lift stations /force mains in 2003
• City loaned $3.5 million to trunk line fund and
froze new applications and reimbursements
in 2005 — Ban on new applications lifted in
October 2006
N. Need funding to repay loan and meet
anticipated future reimbursements
Wastewater Financing Issues, cont'd
• Major planned capital expenditures
• $124 million total over three years
• $34 million growth- related needs (30% of total)
• $28.3 million treatment plant expansion
• $5.5 million collection system expansion
• Recent utility rate increases (6 % /yr)
6
Wastewater Alternatives
• Impact Fees
• Feasible now for treatment plant expansion costs
• Not feasible now for trunk/collection line system
(master plans to be completed early next year)
• Would not solve trunk line fund problem ($3.5m)
• Acreage Fees
• Not impact fee — detailed study not required
• Could be increased to level needed to repay $3.5m
trunk line fund loan and keep fund solvent
Wastewater Alternatives, cont'd
• "True" Pro Rata Fees
• Current pro rata fee is "flat" fee charged developers
connecting to 15" or smaller lines; goes into City
trust fund to reimburse developers for oversizing
• "True" pro rata fee is based on actual cost to
oversize line and is paid directly to original developer
• Problems with current pro rata fee approach:
• Flat fee does not recognize actual line costs, which vary
• As middleman, City risks collecting inadequate funds
7
Wastewater Recommendations
• Increase Acreage Fee
• Impact fee not feasible for lines; true pro rata fee
won't repay $3.5 million loan
• Once loan and reimbursements repaid, consider
converting to impact fee and /or pro rata fee system
• Convert Pro Rata Fee to True Pro Rata Fee
• Avoid repeat of trunk line funding problem
• Consider Impact Fee for Treatment Expansion
• Shift growth cost from ratepayers to new customers
Current Storm Water Financing
• No separate storm water fund
• Capital and O &M funded out of water utility rates
• Previous efforts to form storm water utility fee:
• 1993 Council adopts resolution to establish utility fee
• 1995 Staff drafts proposed utility fee and holds public hearings
• 1996 Drainage ad hoc committee recommends against utility fee
• 1997 Storm Water Management Advisory Committee created
• 1999 Council identifies creation of utility fee as priority issue
• 1999 Staff prepares action plan calling for utility fees by 2000
• 1999 Council extends committee existence to advise on fee
• 2002 Committee recommends against fee and for higher rates
• Council defers action pending completion of storm water master plan
• Master plan delayed by level of protection and funding role issues
8
Storm Water Financing Issues
• Extensive Improvement Needs
• $212 million in CIP (mostly unfunded deficiencies)
• $48m in next 3 years ($2.3m growth or 5 %)
• $164m beyond 3 years ($5.5m growth or 3 %)
• Master plan will identify growth needs (no costs)
• Relatively High Water Rates
• Rates have been increasing 6% annually
• Commercial rates are twice survey average
Storm Water Financing Alternatives
• Drainage Impact Fees
• Feasible after re- scoped master plan completed
• Acreage Fees
• Oversizing costs cannot be calculated in advance
• Pro Rata Fees
• Calculated for each line oversizing with funds used
to directly reimburse original developer
Storm Water Utility Fees
;• Dedicated funding for both capital and O &M costs
for existing development and growth- related needs
9
Storm Water Recommendations
• Consider Storm Water Utility Fee (Again)
• Lack of dedicated funding leads to under - funding
existing problems and O &M
• Consider Future Drainage Impact Fee
• Re -scope master plan to support fee (project costs,
portion attributable to growth)
• Define class of improvements covered by fee
Summary of Recommendations
• Wastewater
• Increase acreage fees to adequately cover force
mains, trunk lines and lift stations now
• Convert pro rata fee from "flat- rate" to "true" now
• Consider future treatment plant impact fee
• Storm Water
• Consider storm water drainage utility fee (again)
• Consider future drainage impact fee (after plan)
10
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