Staff recommends that City Council approve the attached Compensation Agreement.

In order to obtain water and sanitary sewer service, Alkali Timbers, LLC will be extending a water main and sanitary sewer main through the Timbers Subdivision located along Alkali Creek Road.  These two pipes will be oversized to serve additional properties further along Alkali Creek Road and the Inner Belt Loop.  Therefore, due to oversizing, these pipes will be considered general benefit facilities.  Per City Code (BMCC 26-502, 26-504 and 26-506), general benefit facilities are water and sewer lines larger than 8-inches in diameter for residential developments and are eligible for compensation for the difference between the diameters of the general benefit facilities and 8-inch water and sewer mains.  The water main is proposed to be 12-inch diameter, and the sewer main is proposed to be 21-inch diameter.  These pipe sizes are necessary in order to serve future development beyond The Timbers Subdivision.  Compensation for the oversizing of the water and sanitary sewer mains are estimated to be $275,000.  The compensation amount could be higher or lower depending on actual costs.  

The Council may:

• Approve an Agreement for compensation; or
• Not approve an Agreement for compensation.  This would be inconsistent with current City policy of compensating for oversizing of utility extensions.

Based on review of the quantities to be installed, staff estimated that $200,000 of sanitary sewer main and $75,000 of water main will be eligible to be recovered through compensation by the Developer. The extent and timing of the City’s participation in the project costs is determined in conformance with the CIP approved by City Council and based on actual quantities installed.  The funds are budgeted annually from water and sewer funds specific to compensation agreements.