Discuss Updates to the City's Comprehensive Sanitary Sewer and Water Plans

On August 23, 2011 staff met with the City Council in work session to review the City's 2011 development cost study.  This was a comprehensive review of where the City currently stands in relation to other municipalities with regard to development costs (utility trunk fees, building permit fees, escrows, etc.).  During that meeting utility rates were discussed; particularly how those rates are determined.  Rates are determined by taking a comprehensive look at the City's utility system, projecting future growth, and then determining the infrastructure needs to support such growth.  A plan is then developed that outlines potential timelines and costs for infrastructure improvements.  The ultimate costs to construct and maintain that utility system is then evaluated to determine the appropriate funding mechanism to distribute those costs to users.  Revisions to those rates are then adjusted annually, with the adoption of the annual rates and charges, and are based on the construction index related to inflation and construction costs.

On November 15, 2011 the topic of comprehensive utility plan updates, and corresponding rate studies, were discussed by the Public Works Committee.  This conversation was timely, in that the City Council wanted to understand how updates to these plans may impact adoption of the City's annual rates and charges.  The Council wanted to delay action on adopting rates and charges for 2012 until these utility plan updates were completed.  Since that time the 2012 rates and charges were adopted by the City Council in December, with the idea that the utility fees could be revised (if necessary) once the studies were updated and the results of the rate study completed.  On January 10, 2012 the City Council awarded contracts to Bolton & Menk (in the amount of $28,000) and Landform (in the amount of $1,000/month) to undertake this study, which was last completed in 2004.

As stated earlier, the first order of business in advancing these plan updates is to review growth projections, which is the focus of this case.  Without first understanding the assumptions related to how the City intends to grow, updates to these plans are extremely difficult.  We cannot begin delving into the infrastructure needs of the future (and associated costs) if we do not have clear direction on how you believe the City will grow.  Staff is looking for direction on what assumptions should be used to calculate future growth in the City; including:

• Growth and population projections
  • Since we have not realized growth consistent with either the 2030 Comprehensive Plan (average of 455 units/year through 2030) or the 2004 Comprehensive Utility Plans (average of 360 units/year through 2020), any revisions to growth projections would affect the amount of service connections (users) and ultimately rates and fees.
• Density assumptions
  • Understanding where more dense growth will occur assists is developing a plan for appropriately sized and located infrastructure.  It allows us to implement a program that will fund capital expenditures only where they are needed, and eliminates the potential for unnecessary extensions and/or oversizing.
• Ultimate service area
  • This may be the most critical decision to be made with respect to ultimate City growth.  This information will allow us to evaluate where growth is envisioned in the City, and the timing and sequencing for future development.  Do we want to grow in an orderly fashion with progressive stages expanded from existing service areas, or are we open to "leap frog" development where a developer or the City need to expend large amounts of capital to serve a somewhat isolated area that may not support additional future growth?
  • Determining ultimate service area allows for the development of a plan with a known build out scenario, from which costs can be determined and then distributed appropriately to fund the needed improvements.
•  Service to or from adjacent communities

Attached is a memo prepared by Bolton & Menk that discusses each of these assumptions.  All of this information will assist us in determining the number of new service connections for each growth area throughout the 20 year study period.  We can then evaluate the City's existing infrastructure for deficiencies and needed improvements/extensions to support this growth, and develop a Capital Improvement Program (CIP) to outline the future costs and timing to construct the ultimate system.  The CIP then becomes the basis for completing a rate study that will determine how the required improvements will be funded.

This is only the first step in the process; there will be several additional meetings scheduled, at both the staff and Council level, to get a firm understanding of the technical requirements of the system and policy direction related to assumptions and distribution of costs.  The Planning Commission will be discussing the topic of future City growth at their regular meeting on February 2, 2012, and their input will be brought forward to the City Council as additional information at the work session discussion.

As the first phase of completing these comprehensive plan updates includes future growth of the City, staff wanted to receive direction from the Council on where they see City growth in the future.  Future City growth projections are currently outlined in Chapter 4 of the 2030 Comprehensive Plan (attached); including population, households, employment forecasts, and the general assumptions related to these growth patterns.  During the development and review process for completing the 2030 Comprehensive Plan Update, concerns were raised by several individuals regarding the forecasts.  In essence, the forecasts showed that all future growth outlined on the attached Future Land Use Map could occur by 2030; however, based on current market conditions, it seemed unlikely that this would become a reality.  It should also be noted that the City has processed multiple Comprehensive Plan Amendments that have changed the forecasts published in Chapter 4, and staff will present updated information at the meeting.

A few growth assumptions contained within the City's existing 2030 Comprehensive plan deserve discussion:

• Due to the nature of soils in the City (the Anoka sandplain) rural residential development can be supported indefinitely with on-site sewage treatment systems, provided sufficient land is available to accommodate two drain fields.  Ultimately, such areas may require public water service.
  • Do you still agree with this assumption?  Should there be some investment made for infrastructure expansion to/through these rural areas, or do you still consider these large lot rural areas as a mainstay in the City?
  • Considerations still need to be factored in for ultimate water distribution into these areas in case groundwater supplies become compromised, or future municipal source wells are restricted.
• Northwest Ramsey will not be allowed to connect to Elk River’s public utility systems.
• Metropolitan sewers will not be extended northerly through Ramsey to provide services to City of Nowthen.
  • Do we want to revisit these cross-jurisdictional options?  Financial considerations may factor into this decision, as extensions into adjacent communities would provide for cost sharing opportunities on infrastructure investment and add additional users to the system, and utilizing adjacent community service would allow for potential future tax base in Ramsey without the capital expenditure of infrastructure.

Staff has had discussions with the Metropolitan Council, who agree amendments will likely be needed to the forecasts, with the City experiencing ultimate build-out of the Future Land Use Map beyond 2030.   The Metropolitan Council has begun working on the 2040 Framework, which will provide the City an official opportunity to comment on these forecasts, among other items.  It is expected that the Metropolitan Council will begin providing communities with updates on the process in October or November of this year, and the official comment periods will begin in 2013.

Funding for these comprehensive utility plan updates are being financed through the corresponding City enterprise funds.

Provide staff with feedback on City growth assumptions that will serve as the foundation for comprehensive utility plan updates.