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HomeMy WebLinkAbout2008-04-29 - MinutesCity Council Water & Sewer Meeting Minutes April 29, 2008 Page I of 6 Member Aldermen Mayor Dan Coady Ward 1 Position 1 — Adella Gray V10 Ward 2 Position l - Kyle rt Cook CityAttorney Kit Williams � 1 Ward 3 Position 2—Robert Ferrell Ward 4 Position 2 - Lioneld Jordan City Clerk Sondra Smith ARKANSAS City of Fayetteville Arkansas City Council Water & Sewer Committee Meeting Minutes April 29, 2008 A meeting of the Fayetteville City Council Water & Sewer Committee was held on April 29, 2008 at 5:45 p.m. in Room 326 of the City Administration Building located at 113 West Mountain Street, Fayetteville, Arkansas. MEMBERS PRESENT: Alderman Kyle Cook, Chair; Alderman Lioneld Jordan; Alderman Robert Ferrell; Alderwoman Adella Gray STAFF PRESENT: Gary Dumas; Tim Conklin; Paul Becker; Ron Petrie OTHERS PRESENT: Steve Davis, Davis Business Planning (representing the cities of Farmington and Elkins) 1. Approve Minutes (Minutes were not approved at this meeting.) 2. Impact Fee Discussion Alderman Cook opened the discussion of impact fees. He said additional information that was requested by this Committee has been provided. Paul Becker said part of the water & sewer impact fee study is predicated on the capital improvement plan. The discussion of the water & sewer rate study just completed was also predicated on the CIP. He said no projects will overlap. There may be partial funding for some of the projects between the two but nothing that was anticipated to be done in the water & sewer rate study is impacting the impact fee study. Alderman Cook asked if the committee had any questions for the staff. In response to a question from Alderman Ferrell, Tim Conklin said the increase in fees for the wastewater treatment plant and collections system from the 2002 study is because the 2002 study was based on constructing a ten -million -gallon -a -day plant at around $42.5 million. This did not include the collection system. This study looked at trying to recoup the cost of constructing the treatment plant (around $60 million) and allocating portions of the collection system that add new capacity for new developments. 113 West Mountain 72701 (479) 521-7700 (479) 575-8257 (Fax) accessfayetteville.org City Council Water & Sewer Meeting Minutes April 29, 2008 Page 2 of 6 Alderman Ferrell said he understands that we give the consultant the information about what we need to get and the consultant does the calculations and tells us how to get it. He is wondering if we were heavy, medium or light on what we told the consultant we needed. Gary Dumas said the projects listed in both the impact fee and the rate studies were necessary for proper maintenance of the system. He reminded the committee that the rate consultant did suggest a specific rate structure when we started out six months ago. We whittled that down and pushed off some of those increases to minimize the impact to the customer. Paul Becker also reminded the Committee that when we looked at capital projects an entire list was deferred until 2011. He said the ones listed in the study are valid capital improvements that will have to be addressed but how quickly they are addressed will be determined by what the Council does with regard to the water & sewer impact fee. Alderman Ferrell said his question really was addressed to the cost estimates of the projects rather than the validity of the projects. Gary Dumas said we all learned with the existing WSIP that we need to forecast a little better on what the costs of a project are going to be. Alderman Ferrell asked if staff could estimate an amount or percentage increase (for the current WSIP) that was the result of the cost of deferring the wastewater treatment plant from the time of the vote. Gary Dumas said he believes all the delays in the project should reasonably have been expected due to permitting and design. He said he believes the documents prepared in 1998 and 1999 were overly optimistic on how long it would take to design the sewer plant and get the permits. As soon as design and permitting were done, the project was bid. There were no unusual delays in the three or four year process of design and permitting. Alderman Ferrell asked then if the inflationary rise in the cost of goods and services is the reason for the extra cost of the plant. Gary Dumas said in his opinion that is the case. In response to a question from Alderman Ferrell, Gary Dumas said an impact fee is going to increase the ultimate cost of a house or commercial building. This will result in a windfall for currently existing houses when they are sold because those homeowners will not have paid these impact fees. Impact fees will indeed adjust the market. Alderman Ferrell said that the new home owner would not only be paying the impact fees but would in all probability pay more property taxes. Gary Dumas said he isn't sure you could make that link. Over time you are going to adjust the value of the home. Alderwoman Gray said that both houses (existing and those built after this fee is in affect) will be appreciating in value. 113 West Mountain 72701 (479) 521-7700 (479) 575-8257 (Fax) accessfayetteville.org City Council Water & Sewer Meeting Minutes April 29, 2008 Page 3 of 6 Alderman Jordan said on page 7 of the study it talks about impact fee money being spent to do work in the same area it is collected. He asked if impact fee money is collected in Greenland, for instance, would they (Greenland) do the work or would we (Fayetteville) do the work. Gary Dumas said Greenland will have an impact fee and they will spend their money there. If they collect an impact fee, it's their money to spend on their system. Alderman Jordan asked what determines the local impact fee versus the system's impact fee. Gary Dumas said the Fayetteville impact fee will have a local and a system portion. Alderman Jordan asked if lines between eight and fourteen inches are considered local and anything larger is considered system. Gary Dumas said that is the definition; if it affects the overall system capacity. Alderman Jordan asked if Greenland has a line larger than fourteen inches if that would be under the system or if it would be local. Gary Dumas said if there is a fourteen inch line in Greenland that is part of our network which gets water to Greenland and other places that would be system money. We would collect it and we would pay for that. In response to a question from Steve Davis, Alderman Cook said the audience could participate in this discussion. He said anyone with a comment or question should just get his attention and he would recognize them to speak. Steve Davis asked for clarification regarding whether there might be other criteria for a system improvement (for a fourteen inch or larger pipe) funded with system impact fees, such as the need to connect with another system pipe. He said some portions of the Fayetteville system, as well as portions of the Farmington and Greenland systems could have dead-end runs serving a remote area of their city that might get up to 14 inches. Gary Dumas asked Tim Conklin if there is a definite definition of what is a part of the "system" and what is not in water. Tim Conklin said we will need to further clarify it for the ordinance. In order to calculate impact fees, meetings were held with the communities and there were discussions of what is local and what is a part of the system. Greenland and other communities fed the consultant projects that they considered to be needed in their communities. When we get to the point of amending the ordinance and allocating these funds we will need to clarify that definition. Gary Dumas gave the example of the line that runs from Fayetteville to Goshen to the water tank. He said that is a system line because it feeds that water tank which is a part of the distribution system. Now there may be equal size lines that go from there that serve a part of Goshen which would not be classified as system. The function is more important than the size. 113 West Mountain 72701 (479) 521-7700 (479) 575-8257 (Fax) accessfayetteville.org City Council Water & Sewer Meeting Minutes April 29, 2008 Page 4 of 6 In response to a question from Alderman Jordan, Gary Dumas said in some circumstances a line might be less than fourteen inches and still be classified as a system line. We will need to work on the definition and make sure it is very tight. Alderman Jordan asked for an explanation of the differences between "plan -based analysis" and "incremental expansion fee" (page 9 of the study). Tim Conklin said each city (including Fayetteville) was asked what is the plan to serve "x" number of people in the future. We gave information to the consultant defining how much water storage and what size lines would be needed. He said the discussion he recalled having regarding "incremental expansion" was that we know that there is a cost to add, for example, a new pump to a lift station as we continue to grow - it is those incremental costs of adding capacity as we have growth. In response to a further question from Alderman Jordan, Paul Becker said the plan -based analysis encompasses what your build -out plan or plan for expansion will be. The other method (incremental analysis) is to take how much it costs to expand (or in the case of sewer, how much is will take to treat one gallon) and if the impact is "x" amount of gallons, you divide that up. You don't take into consideration what the city's master plan is. It is strictly a calculation of the incremental cost to treat one more gallon based on historical costs. Ron Petrie said with the "plan -based" approach you use the future number of residents and future costs. With incremental expansion you use the existing costs and existing units. Gary Dumas said there is a big difference in the two approaches. Alderman Ferrell presented a scenario in which lines are run to a new subdivision for which impact fees will be paid. On the way out there you have an adjacent older subdivision that has not paid impact fees but which needs some relief. He wondered if there is a discount if you take some of the capacity and give it to an existing subdivision. Gary Dumas said no, that is existing capacity and that is the responsibility of the system to provide (through rate revenue). The impact fee revenue is only for additional capacity. You can't use impact fees to fix the old system. Tim Conklin said on the wastewater end the fee is calculated to recoup the cost of the capacity. But we have a very good understanding of what it costs to treat a gallon of water created by a land use (single family home, a Wendy's or whatever). Alderman Ferrell asked if the staff agrees with the projected population increase provided by Northwest Arkansas Planning for these surrounding communities. He said it seems low to him. Gary Dumas said it is very low. But population projections are never going to be right. They will either be too low or too high. With the growth rate we have been experiencing in the last eight years, the population projections are questionable. But the plan is designed for a maximum population, not a maximum year. He said over the last ten years there was a certain development pattern created by a variety of things. A lot of those things have changed the development patterns that we experience over the next decade are likely going to be substantially different. 113 West Mountain 72701 (479) 521-7700 (479) 575-8257 (Fax) accessfayetteville.org City Council Water & Sewer Meeting Minutes April 29, 2008 Page 5 of 6 But there will still be population growth. It's just a matter of where that growth is. And the sewer system is designed for a certain amount of people, whether it's in Farmington or inside I-540 Alderman Jordan read a portion of page 11 regarding wastewater fees and asked for an explanation of what this section means. Gary Dumas said Fayetteville will collect all the fees except in Elkins. We will distribute the local fees to the appropriate community. He asked Steve Davis if it is accurate that Elkins will collect both the local and system fee and remit the system fee to Fayetteville. Steve Davis said that has yet to be determined. He said because Elkins does the billing he had envisioned that Elkins would collect both parts and then remit to Fayetteville its part. Gary Dumas said whoever the billing agency is will collect the fee. Typically that is Fayetteville except in the case of Elkins. Alderman Jordan asked for an explanation of the numbers on the chart on page 14 of the study. Tim Conklin said his understanding is that this chart is calibrated to one unit of capacity, a single -family -equivalent dwelling unit. In response to a question from Alderman Jordan, Tim Conklin said the $116.4 million mentioned on page 16 is for capacity available for new development. He said on Table 49 in the Index it attributes capacity for the components of the system. In response to a further question from Alderman Jordan, Paul Becker said the bonds we did by referendum which are outstanding are going to be paid already by new sales tax so a credit is given for that. However, that part of the cost that has already been paid can be factored into the impact fee calculation. Alderman Cook asked the Committee if they would like the consultant to come back and answer more questions. Alderwoman Gray asked Tim Conklin if he feels that would help the Committee. Tim Conklin said the study calculates the maximum fee and now it becomes a policy issue. As the consultant said, the Committee's decisions are whether or not we want to do system and local and what percentage of increase to adopt. He said this is calculated at a variable rate. Currently we don't have a variable rate based on house size. He said he and John Coleman have talked about whether or not LEED certified buildings should get a credit. We do have an affordable housing exemption in our current ordinance. Steve Davis wondered if Fayetteville intended for the affordable housing waiver to apply to Elkins also for the system portion of the impact fee. He said the same question would apply to Greenland and Farmington. Tim Conklin said he thinks we need to clarify that. He said he also wanted to clarify that the affordable housing waiver applies not to the price of the house but to the qualification of the home buyer. It will be the home buyer that determines the exemption. 113 West Mountain 72701 (479) 521-7700 (479) 575-8257 (Fax) accessfayetteville.org City Council Water & Sewer Meeting Minutes April 29, 2008 Page 6 of 6 Gary Dumas said he believes you would have to be in a program in order to get the impact fee waived (under the affordable housing waiver). We need to make sure as we write the ordinance that it is about the home buyer and not the value of the house. He believes the policy question Mr. Davis asked is whether we want to provide a waiver of the Fayetteville system impact fee for that same kind of program outside of Fayetteville. He said that is a larger policy discussion. Alderman Jordan said we need to have that discussion. Gary Dumas said it might be a good thing to have Yolanda Fields (Community Resources Director) talk to the Council in a study session about how this works. Alderman Ferrell said he agrees with Tim Conklin that the Committee is now charged with making a policy decision and he doesn't believe the consultant needs to come back. Alderman Cook agreed. He said the only thing we are doing differently from the last round is expanding the scope of what we are looking at as far as impact fees. That expansion comes with a higher price. He said he believes all the projects listed in the study are valid. Many have been in the unfunded CIP forever. It's a matter of timing and how quickly we want them to happen. He suggested that at the next meeting the Committee should discuss more specifically how we want to tackle the money issues. Tim Conklin said if the Committee has any further questions for the consultant, he can email them to Duncan and Associates for a response. Alderman Ferrell said if you look at the environment in our area today and the fact that we already have a lot of infrastructure run to an inventory of a couple of thousand undeveloped lots, he would like to ask if we need to consider the competitive situation we are in geographically. He added that a city has to either grow or stagnate. Tim Conklin said he believes it is natural to look at what other communities are charging within the region. It's a policy issue of who pays for growth. 3. Water/Sewer Committee Meetin¢ The next meeting of the Water & Sewer Committee is scheduled for Tuesday, May 13, 2008 at 5:15 p. m. (or following the Council Agenda Session) in Room 326. There being no further business, the meeting was adjourned. 113 West Mountain 72701 (479) 521-7700 (479) 575-8257 (Fax) accessfayetteville.org