A Connection Charges vs Acreage Charges
CITY OF
CHANHASSEN
7700 Market Boulevard
PO Box 147
Chanhassen, MN 55317
Administration
Phone: 952.227.1100
Fax: 952.227.1110
Building Inspections
Phone: 952.227.1180
Fax: 952.227.1190
Engineering
Phone: 952.227.1160
Fax: 952.227.1170
Finance
Phone: 952.227.1140
Fax: 952.227.1110
Park & Recreation
Phone: 952.227.1120
Fax: 952.227.1110
Recreation Center
2310 Coulter Boulevard
Phone: 952.227.1400
Fax: 952.227.1404
Planning &
Natural Resources
Phone: 952.227.1130
Fax: 952.227.1110
Public Works
1591 Park Road
Phone: 952.227.1300
Fax: 952.227.1310
Senior Center
Phone: 952.227.1125
Fax: 952.227.1110
Web Site
WINI.ci. chan hassen.mn. us
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MEMORANDUM
TO:
Mayor
City Council Members
FROM:
~11/A .
tJ~LJ
Greg Sticha, Finance Director
DATE:
June 25, 2007
SUBJ:
Connection Charges versus Acreage Charges
BACKGROUND
As part of our KFS goals for 2007, the City Council saw some value in collecting
an acreage charge versus a connection charge for water and sanitary sewer
services. Currently the City only charges a flat connection charge for each unit
hooking up to our water and/or sanitary sewer system. Some communities are
diversifying the way these charges are collected by using a platting charge.
We asked our financial advisors at Ehlers & Associates to provide us some
feedback on what options may be available to the city. After researching the
topic, Ehlers suggested we have two separate fees, one called a "plat fee" that
'Would be collected at the time the preliminary plat is filed, and also continue to
charge a "connection fee" collected at the time the unit is hooked up to our
system. The plat fee being suggested by staff and Ehlers is 30% of the total
current connection charge; therefore the connection charge will now be 30% less
than it is currently. It is not the intention of staff to collect a higher amount of
revenues, rather to collect a portion of the total fee earlier in the development
process (preliminary plat time).
In attendance at the work session meeting will be representatives from Ehlers to
discuss several of the advantages of collecting two separate fees and the result of
collecting a portion of the fee earlier.
RECOMMENDA TION
Staff recommends that the City Council review the information provided by
Ehlers and Associates and advise staff as to whether they want to proceed with a
"preliminary plat fee" and determine the fee amount.
ATTACHMENT
1. Ehlers Study
The City 01 Chanhassen · A growing community with clean lakes, quality schools, a channing downtown, thriving businesses, winding trails, and beautiful parks. A great place to live, work, and play.
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EHLERS
& ASSOCIATES INC
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To: Honorable Mayor and Council Members
From: Jessica Cook and Mark Ruff
Subject: Updated Water and Sewer Rate Study
Date: May 8, 2007
The City has requested that Ehlers & Associates study the option of collecting platting
fees for sewer and water infrastructure. A platting fee is collected from new development
to pay for water treatment, wells, storage, trunk lines, lift stations and other infrastructure
built to serve growth. The platting fee is collected at the time or preliminary plat, and is
based on the expected type and density of development.
The discussion of platting fees arose last fall when the Council considered setting new
utility rates and fees for water and sewer. The rates established by the Council for 2007
are adequate. By introducing platting fees, the City would change its fee structure.
Overall, the City would not collect more revenue from developers or rate payers.
Rationale for Platting Fees
The City currently collects a sewer and water connection fee when a building permit is
pulled. At this point, the City has already committed to provide sewer and water service
to the development, and installed the necessary trunks, wells, and other infrastructure.
The new homeowner or business is essentially paying the City back for its share of the
improvement costs. Last fall, the City Council directed staff to consider collecting some
of the sewer and water fees earlier in the development process.
We recommend that 30% of the City's costs be recovered at the time of plat, and the
remaining 70% recovered when the building permit is pulled. This would result in a fee
structure that includes both a platting fee and a connection fee.
Proposed Fee Structure
The proposed platting fee would be calculated based on the number of residential units in
the preliminary plat, or in the case of commercial property, on historical development
density for similarly zoned property.
3060 Centre Pointe Drive
Roseville, MN 55113-1105
(651) 697-8546 Fax: (651) 697-8555
jcook@ehlers-inc.com
http://www.ehlers-inc.com
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The current 2007 connection fees are $4,485 per unit for water and $1,669 per unit for
sewer. Under the proposed fee structure, the new fees would be:
Water Sewer
Platting Fee $1,345/unit $ 500/unit
Connection Fee $3, 140/unit $1,169/unit
Total $4,485/unit $1,669/unit
Sample Development Fee Scenarios
It is helpful to look at how a new rate structure might impact various landowners and
developers. Four sample scenarios are provided on Exhibit A. They all assume that the
land is platted and the building permit is pulled in the same year.
Transition Issues
Staff has discussed how the City will transition to a new fee structure, should the Council
choose to do so. The staff suggests that property that has already been platted will
continue to pay the existing connection fee, adjusted annually in future years.
Consequently, during the transition period there would be two established connection fee
rates. The higher rate will apply to property that did not pay a platting fee. The lower
rate will be charged on property that did pay the platting fee.
Next Steps
If the Council wishes to collect a platting fee for water and sewer, the next steps would be
to direct staff and the City attorney to draft an ordinance for Council consideration.
l'
3060 Centre Pointe Drive
Roseville, MN 55113-1 105
(651) 697-8546 Fax: (651) 697-8555
jcook@ehlers-inc.com
http://www.ehlers-inc.com
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