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HomeMy WebLinkAboutResolution 09-20 06/01/2009 CITY OF SPRINGFIELD RESOLUTION 09- 20 A RESOLUTION OF THE CITY OF SPRINGFIELD COMMON COUNCIL MODIFYING A METHODOLOGY FOR THE CALCULATION OF LOCAL WASTEWATER SYSTEMS DEVELOPMENT CHARGES AND SETTING AN EFFECTIVE DATE WHEREAS, ORS 223.299 through 223.314 authorizes cities to establish and maintain Systems Development Charges including a reimbursement fee, an improvement fee or a combination thereof assessed or collected at the time of increased usage of a capital improvement or issuance of a development permit, building permit or connection to the capital improvement; and WHEREAS, ORS 223.304 requires that such fees be determined on the basis of a methodology which establishes how the charge will be determined; and WHEREAS, ORS 223. 304 (7)(a) requires that a city desiring to adopt or modify such a methodology give notice of intent to so not less than 90 days before the such action, to those persons who have requested such notice; and WHEREAS, on February 20, 2009, the City of Springfield gave notice of its intent to modify the existing methodology for the determination of Local Wastewater Systems Development Charges to those persons who had identified themselves as requesting such information pursuant to ORS 223.304(6); and WHEREAS, ORS 223.304 (7)(a) further requires that a city desiring to adopt or modify such a methodology shall make a copy of the proposed methodology available not less than 60 days before adopting the same; and WHEREAS, on or about March 25, 2009, the City gave notice that a copy of such methodology was available by posting an advertisement in the Eugene Register-Guard, a paper of general circulation in the Springfield area, and by sending a copy of such proposed methodology to the list of person who had identified themselves pursuant to ORS 223.304(6); and WHEREAS, a citizen advisory committee appointed by the Council has considered the methodology currently in use by the City and has recommended certain changes thereto; and WHEREAS, the citizen advisory committee requested that the Council consider, in the future, whether or not it is appropriate to consider, at the time of major changes to long-term planning assumptions, such as major refinement plans, or additions to land within the Urban Growth Boundary, whether geographical distinctions be drawn in the Methodology, and direct staff to provide regular updates to the Methodology to assure that it remains current; and Attachment 4 Page 1 of 2 WHEREAS, the City Manager has considered the recommendations of the Citizen Advisory Committee and has provided a copy of such recommendation to the Council accompanied by a draft of the proposed Methodology, bearing a date of February 26, 2009, and other information concerning the proposed methodology, and recommended that the changes in the methodology recommended by the Citizen Advisory Committee be adopted; and WHEREAS, the Council has caused the matter of an adoption of a Local Wastewater SDC Methodology to be scheduled for Public Hearing on June 1, 2009; and WHEREAS, the matter did come on for Public Hearing on June 1, 2009; and WHEREAS, the Council has considered the report and recommendation of the Citizen Advisory Committee, the report and recommendation of the City Manager, and the testimony at the public hearing; and WHEREAS, nothing herein shall affect, modify or amend the provisions of Section 3.400 through 3.420 of the Springfield Municipal Code; and WHEREAS, the Council having considered all of the testimony and facts, and being well- advised in the premises, finds and determines that it is in the public interest to modify the methodology for determining Local Wastewater Systems Development Charges: NOW THEREFORE, BE IT RESOLVED BY THE COMMON COUNCIL OF THE CITY OF SPRINGFIELD, that the Local Wastewater Systems Development Charge Methodology, as set forth in a draft document dated February 26,2009, is hereby adopted; and BE IT FURTHER RESOLVED, that nothing herein shall affect, modify or amend the provisions of Section 3.400 through 3.420 of the Springfield Municipal Code; and BE IT FURTHER RESOLVED, that this Resolution shall take effect upon adoption by the Council and approval by the Mayor. Adopted by the Common Council of the City of Springfield, Oregon, by a vote of ~ for and -L against, this 1st day of June, 2009. a.o.~ Mayor ATTEST: City Recorder ~[mlEV1E~ ~ n~~~~w[[[~ AS TO FORM Attachment 4 Page 2 of2 gAT~; OFFICE OF OITY ATTORNEY RESOLUTION NO. 09-20 Methodology Report Local Wastewater System Development Charges Prepared For City of Springfield SPRINGFIELD. ",,".",' ..',:,' OREGON February 26, 2009 GALARDI CONSULTING, LLC Attachment 2 PAGE 1 OF 11 SECTION 1 Introduction Oregon legislation establishes guidelines for the calculation of system development charges (SDCs). Within these guidelines, local governments have some latitude in selecting technical approaches and establishing policies related to the development and administration of SDCs. A discussion of this legislation follows, along with the recommended methodology for calculating local wastewater SDCs for the City of Springfield (the City), in accordance with state law. SDC Legislation in Oregon In the 1989 Oregon state legislative session, a bill was passed that created a uniform framework for the imposition of SDCs statewide. This legislation (Oregon Revised Statute [ORS] 223.297-223.314), which became effective on July 1, 1991, (with subsequent amendments), authorizes local governments to assess SDCs for the following types of capital improvements: . Drainage and flood control . Wate~ supply, treatment, and distribution · Wastewater collection, transmission, treatment, and disposal . Transportation . Parks and recreation The legislation provides guidelines on the calculation and modification of SDCs, accounting requirements to track SDC revenues, and the adoption of administrative review procedures. SDC Structure SDCs can be developed around two concepts: (1) a reimbursement fee, and (2) an improvement fee, or a combination of the two. The reimbursement fee is based on the costs of capital improvements already constructed or under construction. The legislation requires the reimbursement fee to be established or modified by an ordinance or resolution setting forth the methodology used to calculate the charge. This methodology must consider the cost of existing facilities, prior contributions by existing users, gifts or grants from federal or state government or private persons, the value of unused capacity available for future system users, rate-making principles employed to finance the capital improvements, and other relevant factors. The objective of the methodology must be that future system users contribute no more than an equitable share of the capital costs of existing facilities. Reimbursement fee revenues are restricted only to capital expenditures for the specific system which they are assessed, including debt service. The methodology for establishing or modifying an improvement fee must be specified in an ordinance or resolution that demonstrates consideration of the projected costs of capital improvements identified in an adopted plan and list, that are needed to increase capacity in the Attachment 2 PAGE 2 OF 11 system to meet the demands of new development. Revenues generated through improve- ment fees are dedicated to capacity-increasing capital improvements or the repayment of debt on such improvements. An increase in capacity is established if an improvement increases the level of service provided by existing facilities or provides new facilities. In many systems, growth needs will be met through a combination of existing available capacity and future capacity-enhancing improvements. Therefore, the law provides for a combined fee (reimbursement plus improvement component). However, when such a fee is developed, the methodology must demonstrate that the charge is not based on providing the same system capacity. Credits The legislation requires that a credit be provided against the improvement fee for the construction of "qualified public improvements." Qualified public improvements are improvements that are required as a condition of development approval, identified in the system's capital improvement program, and either (1) not located on or contiguous to the property being developed, or (2) located in whole or in part, on or contiguous to, property that is the subject of development approval and required to be built larger or with greater capacity than is necessary for the particular development project to which the improvement fee is related. Update and Review The mefl:lodology for establishing or modifying improvement or reimbursement fees shall be available for public inspection. The local government must maintain a list of persons who have made a written request for notification prior to the adoption or amendment of such fees. Periodic application of an adopted specific cost index or modification to any of the factors related to the rate that are incorporated in the established methodology are not considered "modifications" to the SDC. As such, the local government is not required to adhere to the notification provisions. Adjustments to the SDC rate, which do not constitute a change in the methodology, are as follows: · "Factors related to the rate" are limited to changes to costs in materials, labor, or real property as applied to projects in the required project list. · The cost index must consider average change in costs in materials, labor, or real property and must be an index published for purposes other than SDC rate setting. The notification requirements for changes to the fees that do represent a modification to the methodology are 90-day written notice prior to first public hearing, with the SDC methodology available for review 60 days prior to public hearing. Other Provisions Other provisions of the legislation require: · Preparation of a capital improvement program or comparable plan (prior to the establishment of a SDC), that includes a list of the improvements that the jurisdiction intends to fund with improvement fee revenues and the estimated timing, cost, and eligible portion of each improvement. . The list may be updated at any time. However, Attachment 2 PAGE 3 OF 11 the City must comply with specific notification requirements (30 day notice) if the SDC is to be increased based on the revised project list. . Deposit of SDC revenues into dedicated accounts and annual accounting of revenues and expenditures, including a list of the amount spent on each project funded, in whole or in part, by SDC revenues. . Creation of an administrative appeals procedure, in accordance with the legislation, whereby a citizen or other interested party may challenge an expenditure of SDC revenues. The provisions of the legislation are invalidated if they are construed to impair the local government's bond obligations or the ability of the local government to issue new bonds or other financing. Attachment 2 PAGE 4 OF 11 SECTION 2 Local Wastewater SDe Methodology The proposed SDC methodology is based on a combined reimbursement and improvement structure, and consists of the following elements: . Determine capacity needs . Develop cost basis . Develop SDC schedule Each element of the methodology is discussed below. Determine Capacity Needs The 200S Wastewater Master Plan (CH2M HILL, June 200S) is the source of information related to future capacity needs and improvements. Based on future population growth and land use conditions, wastewater flows are projected. Flows are converted to equivalent dwelling units (EDUs) based on the typical dwelling unit flow contribution of 236 gallons per day (gpd). The flow estimates contained in the Master Plan for existing and future conditions yield 36,902 arid 51,642 EDUs respectively; therefore, growth in the system represents 14,740 EDUs (2S.5 percent of future system EDUs). Develop Cost Basis The reimbursement fee is intended to recover the costs associated with the available capacity in the existing system that will serve new development; the improvement fee is based on the costs of capacity-:-increasing future improvements needed to meet the requirements of growth. The value of capacity needed to serve growth in aggregate within the planning period, adjusted for assessments and other contributions, is referred to as the " cost basis" . Reimbursement Fee Cost Basis System Valuation The reimbursement fee calculation is based on the depreciated replacement cost of the existing system facilities. Estimating the depreciated replacement value begins with itemization of the existing system trunk sewers and pump stations. The City's Geographic Information System (GIS) is used to identify the linear feet of sewers by size (measured by diameter) and the individual pump stations and their capacity. Current construction unit costs, adjusted for engineering, legal, contingencies, and other mark-ups are then applied to each component of the asset inventory to determine the estimated replacement cost of the system. The City's policy for assessing the S-inch Attachment 2 PAGE 5 OF 11 equivalent pipe cost to property owners is then applied to estimate the portion of pipe costs funded through assessments. Under this policy, the entire cost of pipes that are 8-inches in diameter or smaller, are assessable to property owners. One exception is that the 2- and 3- inch pressure lines that connect pump stations to the gravity system were assumed to be funded 50 percent by the City and 50 percent by developers who paid for installation of some of the pump stations. For pipes between 8-inch and 16-inches in diameter, the cost of an 8-inch equivalent pipe is assumed to have been funded by assessments. For pipes between 16- and 24-inches in diameter, 50 percent of the 8-inch equivalent is subtracted, as assessments are not recovered from every parcel for these larger pipes. None of the costs for pipes larger than 24-inches are assumed assessable. In addition to assessments, the City has also received grants and other funding contributions in the past to help pay for the cost of the system. These funds are also deducted from the replacement value for purposes of determining the SDC-eligible reimbursement cost, consistent with State law. The final step in the reimbursement valuation process is adjustement of the replacement value to reflect accumulated depreciation of the assets in the system. The City's fixed asset records are used to estimate the accumulated depreciation percent, which is then deducted from the replacement cost. Financing Adjustments The City has used some debt to finance local wastewater facilities. Outstanding debt principal is deducted from the existing system value, as it does not represent current equity in the system. However, existing users have paid interest costs on debt used to finance improvements which will help meet the needs of future growth. Therefore, historical financing costs are added to the system value, for purposes of developing the reimbursement fee. Available Capacity Determination The existing system facilities - in conjunction with the planned improvements (which include upgrades to the existing system to address deficiencies and extend the system) will provide the needed capacity to serve existing and future development within the planning period. Therefore, the existing system costs are apportioned to existing and future system users, based on the relative contribution to the future system capacity requirements, as estimated by the number of EDUs. Based on the Master Plan, future growth is responsible for 28.5 percent of future EDUs, and is therefore allocated 28.5 percent of existing facility costs. Improvement Fee Cost Basis Cost Allocations Each improvement in the Master Plan is reviewed to determine the portion of costs that expand capacity specifically for growth. The Master Plan identifies three types of projects: 1. Existing deficiencies 2. Future deficiencies, and . Attachment 2 PAGE 6 OF 11 3. Future expansions The majority of existing deficieny costs are the responsibility of existing development, as the projects are needed to restore capacity for existing users. However, if the costs include up sizing facilities to meet future growth needs, then that portion of costs are included in the improvement SDC cost basis. Costs are apportioned based on hydraulic modeling data that shows existing and future development flow contributions for planned pipe segments and pump stations. Future deficiency projects also include an existing development cost co~ponent, assuming the existing facilities (which currently serve existing users) are also being replaced. Flow data from the hydraulic model is used in this case also to determine the cost allocations. Future expansion costs arp primarily growth-related, as these are new facilities needed to extend the system to newly developing areas. However, for these improvements, the City's assessment policy (described earlier) is applied in order to determine the SDC-eligible amount (i.e., estimated assessments are deducted from the growth cost to determine the SDC cost basis). Financing Adjustments The City will likely use future debt to finance a portion of the planned improvements. At the time that financing costs are known for individual projects, the City will update the local wastewater project list and incorporate those costs into the construction costs of the improvements. At that time, the cost basis and SDCs will be updated. Develop SDC Schedule System-wide unit costs of capacity are determined by dividing the reimbursement fee and improvement fee cost bases, by the aggregate growth-related capacity requirements stated in EDUs. The EDU rate is then scaled up or down for each development, based on the number of drainage fixture units (DFUs). The cost per EDU is converted to a cost per DFU based on the average number of DFUs for a typical single family dwelling unit. A typical single family dwelling is assumed to have 20 DFUs, so the cost per EDU is divided by 20. The SDC for each development is estimated based on the cost per DFU and the specific number of DFUs for that development. The number of DFUs is a function of the fixture count for that development and DFU equivalencies for each fixture type identified in the State of Oregon Plumbing Specialty Code. Attachment 2 PAGE 7 OF 11 Table 1 Existing Trunk System Inventory (May 2008) Project U~it Grants and Pipe System Wide Construction Cost (94% Replacement Assessable Other SDC Diameter Quantity Unit Unit Cost Mark-up) Value Cost Contributions Eligible 2 1,135 Lineal Feet $152 $295 $334,689 $167,344 $0 $167,344 3 600 Lineal Feet $152 $295 $176,928 $88,464 $0 $88,464 4 3,398 Lineal Feet $152 $295 $1,002,002 $1,002,002 $0 $0 5 2,186 Lineal Feet $152 $295 $644,608 $644,608 $0 $0 6 83,154 Liheal Feet $152 $295 $24,520,472 $24,520,472 $0 $0 8 834,045 Lineal Feet $173 $336 $279,922,304 $279,922,304 $0 $0 9 60 Lineal Feet $180 $349 $20,952 $10,380 $0 $10,572 10 83,343 Lineal Feet $186 $361 $30,073,477 $14,418,334 $0 $15,655,143 12 50,443 Lineal Feet $212 $411 $20,746,156 $8,726,622 $0 $12,019,534 15 28,771 Lineal Feet $229 $444 $12,781,804 $4,977,383 $0 $7,804,421 18 28,949 Lineal Feet $252 $489 $14,152,587 $2,504,089 $0 $11,648,499 20 1,973 Lineal Feet $271 $526 $1,037,285 $170,665 $0 $866,621 21 13,933 Lineal Feet $271 '$526 $7,325,135 $1,205,205 $116,189 $6,003,742 24 27,041 Lineal Feet $287 $557 $15,055,665 $2,339,012 $2,691,475 $10,025,179 27 24,952 Lineal Feet $360 $698 $17,426,477 $0 $0 $17,426,477 30 12,117 Lineal Feet $460 $892 $10,813,211 $0 $1,574,194 $9,239,017 36 6,764 Lineal Feet $590 $1,145 $7,742,074 $0 $6,129,333 $1,612,741 42 21,075 Lineal Feet $710 $1,377 $29,028,705 $0 $0 $29,028,705 48 28,564 Lineal Feet $830 $1,610 $45,993,753 $0 $8,791,692 $37,202,061 60 5,379 Lineal Feet $948 $1,839 $9,892,626 $0 $0 $9,892,626 Total 1,257,882 $528,690,911 $340,696,882 $19,302,882 $168,691,148 Note: Size and quantity of each pipe size derived from GIS and Hansen IMS, discounting MWMC pipes Note: per GIS, no pipes were built over 12" since 1999, except for 2,867 ft of 30" Attachment 2 PAGE 8 OF 11 Attachment 2 PAGE 9 OF 11 Table 3 Reimbursement Cost Basis Total Accumulated Depreciation Cost Basis SDC Eligible Trunks Pump Stations Total $168,691,148 $11,214,000 $179,905,148 28% 5% 74% $121,872,495 $10,660,446 $132,532,940 Financing Adjustments Outstanding principal Historical interest Adjusted Total ($1,194,000) $1,261,394 $132,600,334 Growth Capacity allocation Cost EDUs 28.5% $37,847,661 Reimbursement Cost per EDU 14,740 $2,567.68 Attachment 2 PAGE 10 OF 11 Table 4 Combined SDC Reim bursement Improvement Total Cost Basis $37,847,661 $12,090,223 $49,937,884 Capacity (EDUs) 14,740 14,740 14,740 Unit Cost ($/EDU) $2,567.68 $820.23 $3,387.92 DFUs per EDU 20 20 20 Cost per DFU $128.38 $41.01 $169.40 Attachment 2 PAGE 11 OF 11