Council Work Session

AGENDA Council Work Session Meeting 5:30 PM - Monday, December 2, 2024 Farmington City Hall, Conf Rm 170 Page 1. CALL TO ORDER 2. APPROVE AGENDA 3. DISCUSSION ITEMS 3.1. Surface Water Management Fees 2 - 11 Discuss the recommended change to the computation of Surface Water Management Fees and direct Staff accordingly such that it can be incorporated into the proposed 2025 Fee Schedule. The fees would not be changed from the 2024 rates, but Staff would apply the credit when preparing the Development Contract if this is approved. Agenda Item: Surface Water Management Fees - Pdf 4. CITY COUNCIL COMMITTEE UPDATE 5. CITY ADMINISTRATOR UPDATE 6. ADJOURN Page 1 of 11  COUNCIL WORK SESSION AGENDA MEMO To: Mayor, Councilmembers and City Administrator From: John Powell, Public Works Director Department: Engineering Subject: Surface Water Management Fees Meeting: Council Work Session - Dec 02 2024 INTRODUCTION: Surface Water Management (SWM) Fees are collected at the time the development contract is executed for new subdivisions. As part of the agreement process, the area-based fee is computed based on the type of land use. As listed in the 2024 Fee Schedule, this fee “funds the trunk storm water improvements identified in the City’s Surface Water Management Plan” and the 2024 rates are as follows: Land Use Rate Residential, Low Density $12,744 per acre Residential, High Density $21,169 per acre Commercial/Industrial/Institutional $25,484 per acre Attached is chart showing the rates from 1997, 1998, and 2005 through 2024. SWM fees are a significant cost to developers and a significant cost to future residents and business. They need to be applied consistently and at rates that reflect the original intent of the fees. To this end, Staff has reviewed background on the basis and assumptions for the fees. DISCUSSION: Trunk vs Lateral Costs Like the sanitary sewer and water systems, there are two parts to the storm sewer system, the trunk and the laterals. The City’s assessment policy dated May 19, 2024 includes the following definitions: Storm Sewer Lateral: Storm sewer mains 21" or less in diameter and buried to a depth of 8' or less, 4' diameter or less manholes, catch basins, leads, and all appropriate appurtenances, or equivalent costs of oversized main. Storm Sewer Trunk: Storm sewer costs that are not considered storm sewer lateral costs. So pipes larger than 21” in diameter and structures greater than 4’ in diameter, which are designed to convey higher flows, are trunk improvements. Also considered trunk improvements are ditch cleaning, larger box culverts, storm sewer required to convey flow from outside development Page 2 of 11 boundaries, connections between ponds, etc. 1985 Comprehensive Storm Drainage Plan To consider the full context of the current charges to developers and residents for storm water, we reviewed previous planning documents. The Comprehensive Storm Drainage Plan prepared for the City in 1985 identified the long-term plan for the City drainage system. It also attempted to determine the total cost of the system and an “equitable means of assessing these costs to residents of the City.” At that time, it was envisioned that the City would undertake significant trunk storm sewer and pond development and construction costs. The 1985 plan breaks estimated a total cost of $23,217,747 for citywide trunk storm sewer and pond improvements. Of note, the 1985 plan notes that “If storm water treatment is ever required to improve water quality, the quality of runoff will also be a factor to consider in assessment rates.” This reflects the focus at that time of controlling the rate of runoff from the site to pre-development conditions, not focusing on water quality. Currently, ponds and other surface storm water features are routinely designed to improve water quality. These water quality costs were not considered in the 1985 plan. 1997 Surface Water Management Plan A major update to the City’s Surface Water Management Plan was completed in September of 1997. One stated objective of the update was to determine the cost of completing the recommendations and proposed facilities found in the plan. Similar to the 1985 study, cost estimates focused on the trunk conveyance system and ponding needs. The appendices of the report indicate that the total estimated cost of the Trunk Conveyance System to be $16,919,372 and the Pond Cost to be $11,348,133; for a total cost of $28,267,505. Please note that these cost estimates included 20% for engineering and administration, 10% for interest, design contingency costs of 20%, and construction contingency costs of 10%, resulting in estimated cost totals 60% higher than the construction-only cost. This total cost is about 22% higher than the total cost estimated in the 1985 plan. The “soft cost” assumptions are not stated in the 1985 study. As noted in the attached historical rate table, after preparation of the 1997 Surface Water Management Plan, SWM fees were increased significantly, between about 20% and 31% depending on the land use. Staff reviewed the status of trunk storm sewer and ponds identified in the 1997 plan where development has occurred since 1997. Based on this review, we found that some improvements identified in the 1997 plan will no longer be needed as they were addressed as part of the site development process. For this reason, it is recommended that credits be applied to the area-based development SWM fees for trunk storm water improvements, including ponding, with a limitation of fee 50% credit. The credit value would be based on the construction cost only of the trunk storm water improvements, not including engineering, property value, permitting, interest, or any administrative costs. Based on a review of the previous surface water management planning documents, this appears consistent with the original intent of the fees. 2018 Local Surface Water Management Plan The most recent update to the City Local Water Management Plan occurred in 2018 and did not include nearly the level of detail related to costs as the 1997 plan. Tables 5.1 and 5.2 of the 2018 plan are attached; capital improvement identified in Table 5.1 primarily at pond maintenance activities and storm water system improvements related to future road reconstruction projects. From a funding perspective, the 2018 plan indicates “The City will periodically review and update the schedule of utility fees and area charges for development, to maintain adequate funding to support the stormwater management program.” Page 3 of 11 Precedent By defining the storm system as including both trunk elements, as well as laterals elements, the past studies have broken down the drainage system into improvements benefiting the system as a whole and those with local benefits. The storm water management fees are intended to focus on the trunk elements of the drainage system. If an improvement is constructed by a development which was envisioned as a trunk improvement, a credit should be provided. The City regularly provides credits to developments which install oversized watermain and oversized or over-deepened sanitary sewer. These trunk credits are computed and identified in the Development Contract, typically as part of Exhibit B of the contract. The City has also provided credits for storm water work within subdivisions. For the Fairhill development, the 2008 and subsequent Planned Unit Development (PUD) contracts include the following under Article 8.4 SURFACE WATER MANAGEMENT FEE: “Based on the cost of actual improvements made within the SUBJECT PROPERTY, including DEVELOPER’s voluntary financial contribution of $100,000 to the stream meandering project within the SUBJECT PROPERTY, the CITY shall provide a credit against or waive surface water management fees to the DEVELOPER for the construction of storm sewer improvements within the SUBJECT PROPERTY. No additional surface water management fee will be imposed against the SUBJECT PROPERTY. CITY shall assess the $100,000 amount against the SUBJECT PROPERTY without interest and DEVELOPER shall pay a proportional amount of the assessments based on gross acreage at the time of final approval of subsequent PHASES.” A breakdown of Surface Water Management fees paid by recent developments is attached. To date, less the $100,000 contribution, Fairhill would have paid $497,320 in Surface Water Management fees but not for the credit provided in the PUD. While this is a PUD and not a Development Contract, the approach of providing credits to a development for storm sewer improvements remains. Other Communities Like Farmington, nearby Cities have a variety of funding sources related to storm water. For this reason, it is difficult to make direct comparisons to their rates. A survey of the 2024 storm sewer related development fees and utility rates for nearby communities is attached. Based solely on area-based storm water charges, Farmington is generally higher than the rates in the surveyed communities. Storm Water Utility Charges As part of this process, Staff also reviewed the current Storm Water Utility charges. Primary questions and concerns regarding this charge expressed to Staff include:  They have little or no runoff leaving their site under most conditions, so why the need to pay any utility charges?  The property has standing water for prolonged periods of time.  Other larger properties are not paying an equitable amount. We are not recommending any changes to how the Storm Water Utility charges are applied, or the rates identified by the most recent Utility Rate Study. BUDGET IMPACT: This change would significantly reduce the City revenue via the Surface Water Management fees but, based on the review presented, is not expected to impair the City in completing improvements necessary to build, maintain, and operate the storm water system. The Finance Director was notified in advance that this review of the SWM fees was in process and that Staff may be Page 4 of 11 recommending a change that may reduce our SWM revenue by up to 50%. ACTION REQUESTED: Discuss the recommended change to the computation of Surface Water Management Fees and direct Staff accordingly such that it can be incorporated into the proposed 2025 Fee Schedule. The fees would not be changed from the 2024 rates, but Staff would apply the credit when preparing the Development Contract if this is approved. ATTACHMENTS: Stormwater Fee Chart Subdivision SWM payments 2018 LSWMP tables 5.1 and 5.2 2024 City Fee Survey Page 5 of 11  Surface Water Management Fees Year Land Use Rate Unit Comment Residential $ 0.09300 Square Foot Mixed Code $ 0.10600 Square Foot 1997 High Density Residential $ 0.15200 Square Foot Commercial/Industrial $ 0.18200 Square Foot Residential, Low Density $ 0.11170 Square Foot 20.11% increase in accordance with 1997 Surface Water Management Plan 1998 Residential, High Density $ 0.19800 Square Foot 30.26% increase in accordance with 1997 Surface Water Management Plan Commercial/Industrial $ 0.23840 Square Foot 30.99% increase in accordance with 1997 Surface Water Management Plan Residential, Low Density $ 0.13367 Square Foot Equivalent to $5,822.67 per acre 2005 Residential, High Density $ 0.23700 Square Foot Commercial/Industrial/Institutional $ 0.28530 Square Foot Residential, Low Density $ 0.13770 Square Foot Equivalent to $5,998.21 per acre 2006 Residential, High Density $ 0.22441 Square Foot Commercial/Industrial/Institutional $ 0.29390 Square Foot Residential, Low Density $ 0.14280 Square Foot Equivalent to $6,220.37 per acre 2007 Residential, High Density $ 0.25310 Square Foot Commercial/Industrial/Institutional $ 0.30480 Square Foot Residential, Low Density $ 0.14580 Square Foot Equivalent to $6,351.05 per acre 2008 Residential, High Density $ 0.25840 Square Foot Commercial/Industrial/Institutional $ 0.31120 Square Foot Residential, Low Density Rates not listed in fee schedule 2009 Residential, High Density Rates not listed in fee schedule Commercial/Industrial/Institutional Rates not listed in fee schedule Residential, Low Density $ 7,841.00 Acre Rates approved 6/21/2010 2010 Residential, High Density $ 12,719.00 Acre Rates approved 6/21/2010 Commercial/Industrial/Institutional $ 15,330.00 Acre Rates approved 6/21/2010 Residential, Low Density $ 7,841.00 Acre 2011 Residential, High Density $ 12,719.00 Acre Commercial/Industrial/Institutional $ 15,330.00 Acre Residential, Low Density $ 9,577.00 Acre 22.14% increase 2012 Residential, High Density $ 13,285.00 Acre 4.45% increase Commercial/Industrial/Institutional $ 16,012.00 Acre 4.45% increase Residential, Low Density $ 10,497.00 Acre 9.61% increase 2013 Residential, High Density $ 13,898.00 Acre 4.61% increase Commercial/Industrial/Institutional $ 16,745.00 Acre 4.58% increase Residential, Low Density $ 11,453.00 Acre 9.11% increase 2014 Residential, High Density $ 15,409.00 Acre 10.87% increase Commercial/Industrial/Institutional $ 18,561.00 Acre 10.85% increase Residential, Low Density $ 11,705.00 Acre 2.20% increase 2015 Residential, High Density $ 16,979.00 Acre 10.19% increase Commercial/Industrial/Institutional $ 20,448.00 Acre 10.17% increase Residential, Low Density $ 11,962.00 Acre 2.20% increase 2016 Residential, High Density $ 18,611.00 Acre 9.61% increase Commercial/Industrial/Institutional $ 22,408.00 Acre 9.59% increase Residential, Low Density $ 12,225.00 Acre 2.20% increase 2017 Residential, High Density $ 20,307.00 Acre 9.11% increase Commercial/Industrial/Institutional $ 24,446.00 Acre 9.09% increase Residential, Low Density $ 12,494.00 Acre 2.20% increase 2018 Residential, High Density $ 20,754.00 Acre 2.20% increase Commercial/Industrial/Institutional $ 24,984.00 Acre 2.20% increase Residential, Low Density $ 12,494.00 Acre 2019 Residential, High Density $ 20,754.00 Acre Commercial/Industrial/Institutional $ 24,984.00 Acre Residential, Low Density $ 12,494.00 Acre 2020 Residential, High Density $ 20,754.00 Acre Commercial/Industrial/Institutional $ 24,984.00 Acre Residential, Low Density $ 12,744.00 Acre 2.00% increase 2021 Residential, High Density $ 21,169.00 Acre 2.00% increase Commercial/Industrial/Institutional $ 25,484.00 Acre 2.00% increase Residential, Low Density $ 12,744.00 Acre 2022 Residential, High Density $ 21,169.00 Acre Commercial/Industrial/Institutional $ 25,484.00 Acre Residential, Low Density $ 12,744.00 Acre 2023 Residential, High Density $ 21,169.00 Acre Commercial/Industrial/Institutional $ 25,484.00 Acre Residential, Low Density $ 12,744.00 Acre 2024 Residential, High Density $ 21,169.00 Acre Commercial/Industrial/Institutional $ 25,484.00 Acre Page 6 of 11  Surface Water Management Fees for Recent Developments Subdivision Execution Land Use SWM Charge Computation SWM charges Date Acres Rate per acre Amount Paid Denmark Housing Addition 1/17/2023 5.4 $ 21,169 $ 114,313 $ 114,313 Fairhill Estates at North Creek 6/19/2019 Residential, low density 17.57 $ 12,494 $ 219,507 $ - Fairhill Estates at North Creek 2nd Addition 6/18/2020 Residential, low density 6.57 $ 12,494 $ 82,048 $ - Fairhill Estates at North Creek 3rd Addition 8/4/2020 Residential, low density 5.50 $ 12,494 $ 68,679 $ - Fairhill Estates at North Creek 4th Addition 7/28/2021 Residential, low density 5.31 $ 12,744 $ 67,645 $ - Fairhill Estates at North Creek 5th Addition 8/2/2021 Residential, low density 3.24 $ 12,744 $ 41,303 $ - Fairhill Estates at North Creek 6th Addition 8/1/2022 Residential, low density 9.27 $ 12,744 $ 118,137 $ - Meadowview Preserve 3/4/2024 Residential, low density 23.85 $ 12,744 $ 303,944 $ 303,944 Sapphire Lake 1st Addition 4/1/2019 Residential, low density 7.18 $ 12,494 $ 89,707 $ 89,707 Sapphire Lake 2nd Addition 2/18/2020 Residential, low density 6.33 $ 12,494 $ 79,043 $ 79,043 Sapphire Lake 3rd Addition 4/5/2021 Residential, low density 5.93 $ 12,744 $ 75,619 $ 75,619 Sapphire Lake 4th Addition 2/22/2022 Residential, low density 5.92 $ 12,744 $ 75,444 $ 75,444 Vita Attiva at South Creek First Addition 9/29/2021 Residential, low density 4.20 $ 12,744 $ 53,476 $ 53,476 Vita Attiva at South Creek First Addition 9/29/2021 Residential, high density 3.05 $ 21,169 $ 64,581 $ 64,581 Vita Attiva at South Creek Third Addition 8/1/2022 Residential, low density 7.64 $ 12,744 $ 97,385 $ 97,385 Vita Attiva at South Creek Third Addition 8/1/2022 Residential, high density 1.59 $ 21,169 $ 33,664 $ 33,664 Whispering Fields 6/10/2021 Residential, low density 11.49 $ 12,744 $ 146,429 $ 146,429 Whispering Fields 2nd Addition 4/18/2022 Residential, low density 10.21 $ 12,744 $ 130,116 $ 130,116 Vermillion Commons 6/6/2022 Residential, high density 10.98 $ 21,169 $ 232,436 $ 232,436 Vermillion Commons 2nd Addition 6/5/2023 Residential, high density 6.94 $ 21,169 $ 146,913 $ 146,913 Vermillion Commons 3rd Addition 5/2024 Residential, high density 20.51 $ 21,169 $ 434,176 $ 434,176 Source: Final Executed Development Contracts Total: $ 2,077,246 Page 7 of 11  Table 5-1 10 Year Implementation Program – Capital Improvements and Programs Estimated Expenses by Year Project Description 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Notes Pond Capacity Improvements $150,000 $150,000 $150,000 $200,000 $50,000 $200,000 1 Vegetation Management $10,000 $10,000 $10,000 $15,000 $15,000 $15,000 $15,000 $15,000 $20,000 2 Storm Sewer Improvements: Westview Acres Street Reconstruction $391,000 3,4,5 Storm Sewer Improvements: Spruce Street Reconstruction $629,000 3,4,5 Storm Sewer Improvements: Willow Street and Linden Street Reconstruction $340,000 3,4,5 Storm Sewer Improvements: 2nd Street and Honeysuckle Street Reconstruction $494,000 3,4,5 Storm Sewer Improvements: $291,000 4,5,6 Update Ordinances to Ensure Consistency with VRWJPO Standards N/A 1) Expansion and dredging when feasible 2) Management of natural areas and pond buffers 3) Lies within the Middle Mainstem subwatershed 4) Water quality and quantity projects as part of road reconstructions 5) Includes studies 6) Specific street reconstruction locations have not been defined beyond 2024 Page 8 of 11 5-4  Table 5-2 Vermillion River Watershed WRAPS Implementation Strategies where Farmington holds a Primary Responsibility Watersheds Strategies Strategy Types Interim 10-year Milestones Primary Entities Restore/enhance Connect re-constructed area in reach 670 Vermillion River JPO; DNR; City North Creek channel (IBI, DO) upstream of 195th Street. Connect within 3 years of Farmington; Explore opportunities for channel re- Develop plans and construction to increase meandering, riffles, funding (5 years), large woody features, and overall complete 1 re- Restore/enhance complexity. Target continuously flowing construction project (10 Vermillion River JPO; DNR; City South Creek channel (IBI, DO) reaches downstream of Cedar Ave years) in watershed of Farmington; Buffers must be in place by 2017 for public waters, and 2018 for North Creek, public drainage systems; Middle additionally target 5 Creek, South buffer improvement Creek, Improve riparian Increase riparian buffers and enforce buffer projects on public land Vermillion vegetation initiative on 100% of streams and tributaries. (5 years) in watershed , River Middle (E. coli, IBI, Target riparian buffers and plantings in urban 10 projects in 10 years Vermillion River JPO; City of Main Stem protection) areas upstream of Pilot Knob Rd throughout watershed Lakeville; City of Farmington; Dedicate some of headwater streams (upstream of 195th St) to SW retention/detention. Work with farmers, new developers on projects. Make small Improve drainage land purchases for SW basins and retention Implement 2-3 retention Vermillion River JPO; City of All management projects projects (10 years) Lakeville; City of Farmington; Page 9 of 11 5-5 City Fee Survey 8/30/2024 APPLE VALLEY 2024 Proposed Fee Schedule (ci.apple-valley.mn.us) Storm Sewer Connection Fees Cost/Acre Single-Family Detached Trunk $7,508 Multiple Residential Trunk $9,380 Commercial/Industrial Trunk $11,268 Lateral Charge Project Cost BURNSVILLE 2024 Budget (burnsvillemn.gov) Storm Sewer Area Charges Cost/Sqft Cost/Acre Single Family & Two Family (All R-1 & R-2 Zoning) $0.28 $12,197 Multiple (All R-3 Zoning)(Mixed Use) $0.38 $16,553 Commercial-Industrial (All B & I Zoning) $0.41 $17,860 HOC 1 & 2 $0.40 $17,424 HASTINGS Municipal Code (municipalcodeonline.com) Stormwater Utility Rates per Quarter Low Density Residential $22.41/lot Medium Density Residential $12.32/lot High Density Residential $87.36/acre Manufactured Housing $67.20/acre Commercial/Office $107.52/acre Industrial $94.07/acre Public/Institutional Exempt INVER GROVE HEIGHTS City Ordinance No. 1467 (ighmn.gov) Stormwater Plat Connection Fee (Land Outside the Cost/Acre Northwest Area) Zoning District R-1 and R-2 $7,182 Zoning District R-3A, R-3B, and R-3C $9,337 All Other Zoning Districts (B, I and P) $16,519 Mixed Use Zoning Districts Pro-rated LAKEVILLE 2024 Fee Schedule (lakevillemn.gov) Storm Sewer Charge (Stormwater Management Cost/Sqft Cost/Acre Infrastructure) Residential (Single-Family) $0.178 $7,754 Residential (Multi-Family) $0.198 $8,625 Commercial and Industrial $0.250 $10,890 PRIOR LAKE 2024 Fee Schedule (priorlakemn.gov) Trunk Stormwater Acreage Charge Cost/Acre Low Density Residential (R1 & R2) $4,582 High Density Residential (R3) $7,563 Commercial/Industrial $9,456 $21.31 (residential) / $63.93 Stormwater Management Fee Page 10 of 11 acre per billing cycle City Fee Survey 8/30/2024 ROSEMOUNT SCHEDULE OF RATES AND FEES FOR 2024 (rosemountmn.gov) Connection Charges (STAAC) Trunk Area Assessments to be collected with the Building Stormwater Charges collected from Developers on Permit on all newly developed all newly developed properties properties Single-Family $6,865/acre $770/lot Multi-Family $6,865/acre $290/housing unit Public/Institutional $6,865/acre $2,270/acre Commercial and Industrial $6,865/acre $2,270/acre SAVAGE 2024 FEE SCHEDULE (cityofsavage.com) Storm Drainage Fee Cost/Sqft Cost/Acre Single-Family Developments $0.32 $13,939 Multiple-Family Developments $0.38 $16,553 Commmercial and Industrial (< 30% impervious) $0.31 $13,504 Commercial and Industrial (30% to 55% $16,988 impervious) $0.39 Commercial and Industrial (> 55% impervious) $0.47 $20,473 Stormwater Drainage Utility Monthly Fee Single-Family Residential $5.75/unit Townhome/Duplex $5.00/unit Multi-Family, Churches, Govt. $44.04/acre Commercial/Industrial (< 35% impervious) $23.34/acre Commercial and Industrial (35% to 65% impervious) $43.39/acre Commercial and Industrial (> 65% impervious) $66.73/acre Page 11 of 11