Staff recommends the City Council approve the Compensation Agreement with Daniel Properties, LLC.

In order to obtain water service, Daniel Properties, LLC will extend a public water main from the intersection of Rimrock Road and 62nd Street West along the frontage of Tule Ridge Subdivision.  A short section of 20-inch water main will be constructed within the limits of the proposed MDT roundabout improvements and a 12-inch main will be continued further south for the majority of the property frontage.  Tule Ridge Subdivision is located at the southeast corner of Rimrock Road and 62nd Street West.  The property on the west side of 62nd Street West is owned by the City of Billings.  This water main is considered a general benefit facility that benefits a large number of customers and/or provides service to large areas.  Per City Code (BMCC 26-502, 26-504, and 26-506), general benefit facilities are defined as water lines greater than 8-inches in diameter for residential developments and are eligible for compensation.  The public main will be larger than 8-inch diameter and the City's policy is to compensate and pay for oversizing of a water main above 8-inches in diameter.  Also, the City is compensating for one-half of the construction of the water main due to the fact that the property on the west side is owned by the City.  Compensation is estimated to be $206,333.  The compensation amount could be higher or lower depending on actual construction costs.  This project also serves the purpose of extending the water main out of the intersection of 62nd Street West and Rimrock Road ahead of MDT constructing a roundabout at the intersection.  

The Council may:

• Approve a Compensation Agreement with Daniel Properties, LLC; or 
• Not approve an Agreement for compensation.  This would be inconsistent with current City practice of compensating for oversizing utility extensions that have general benefit and for compensating along City property.

Based on review of the quantity of pipe to be installed and information provided by the Developer's agent, staff estimated the oversizing cost of the of water main to be $206,333.00. The extent and timing of the City’s participation in the project costs is determined in conformance with the FY24 budget approved by City Council and based on actual quantities installed.  The funds are budgeted annually from water funds specific to compensation agreements.