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CITY COUNCIL SPECIAL MEETING
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Tuesday, September 29, 2009
6:30 p.m.
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oREGON
Council Chambers
2009 City Council City Hall
Jack Hoffman, Mayor 380 A Avenue
Donna Jordan, Council President
Roger Hennagin Also published on the Internet at: ci.oswego.or.us
Kristin Johnson Contact: Robyn Christie, City Recorder
Mary Olson E-Mail: rchristie@ci.oswego.or.us
Sally Moncrieff Phone: 503-675-3984
Bill Tierney
The meeting location is accessible to persons with disabilities. To request accommodations,
please contact Public Affairs at 503-635-0236, 48 hours before the meeting.
1. CALL TO ORDER
2. ROLL CALL
3. STUDY SESSION
3.1 System Development Charge Overview (no written report)
3.2 Water System Development Charges Update
4. ADJOURNMENT
CABLE VIEWERS: watch this meeting live on Channel 28, at 6:30 p.m.
The meeting will be rebroadcast at the following times on Channel 28:
Wednesday 7:30 p.m. Saturday 12:00 p.m.
Thursday 7:00 a.m. Sunday 4:00 p.m.
Friday 2:30 a.m. Monday 11:00 p.m.
Watch Council meetings live wherever you are via live streaming video at
mms:// .ci.oswego.ar.us/live.
CITY COUNCIL I LORA TENTATIVE SCHEDULE
DATE MEETING
Tuesday, Study Session, 6:30 p.m. Council Chambers
September 29 * Water System Development Charges Methodology
• System Development Charge Overview
October 1-3 League of Oregon Cities Conference
Monday, Study Session, 3.00 p.m., meet at City Hall
October 5 • Foothills/Streetcar Tour
Tuesday, Regular Meeting, 6:30 p.m. Council Chambers
October 6 • LOIS Update
• Watershed Hero Award to Palisades Girl Scout Troop 40447
• Fire Safety Week Proclamation
• Oregon Cultural Day Proclamation
• Urban Reserves and Stafford
• Clackamas County Commissioner, Ann Lininger
• Lake Grove Update, DIES
Public Hearing
• Supplemental Budget
• Executive Session: Labor Negotiations
Friday, • LOIS Launch, 11:45 a.m. — 1:00 p.m.
October 9
Monday, Study Session, 6 00 p.m. location tbd
October 12 • Transportation Advisory Board
• Natural Resources Advisory Board
Tuesday, Study Session, 6:30 p.m. Council Chambers
October 13 • Public Safety Practices/Accreditation Process
• Review of Infrastructure Master Plans
• WEB Refinance
Tuesday, Regular Meeting, 6:30 p.m. Council Chambers
October 20 • Quarterly Financial Update — 2009/20/0 Budget
Public Hearing
Redevelopment Agency Meeting, following Council,
Thursday, • Tour Luscher Farm and Stafford area, 4-6 p.m.
October 22
Monday, Study Session, 6:00 p.m. location tbd
October 26 • Historic Resources Advisory Board
• Development Review Commission
• Library Advisory Board
Tuesday, Study Session, 6:30 p.m. Council Chambers
October 27 • Annexation Approach
• Clean Streams
October 28- Railvolution Conference
November 1
BOLD ITEMS—New issues added to schedule
Items known as of 9/24/09
CITY COUNCIL I LORA TENTATIVE SCHEDULE
DATE MEETING
Tuesday, Regular Meeting, 6:30 p.m. Council Chambers
November 3 • LOIS Update
• Photo Contest Winners
® Assign Program manager for Tigard/LO Water project
• Master Fees and Charges Update (study session)
Public Hearing
Monday, Cancelled
November 9
Tuesday, cancelled
November 10
Tuesday, Regular Meeting, 6:30 p.m. Council Chambers
November 17
Public Hearing
• Clean Streams
Wednesday, Study Session, 6:00 p.m. location tbd
November 18 • City Design — Gordon Price, Simon Fraser University
Monday, Study Session, 6:30 p.m. location tbd
November 23 • Preparation for Goal Setting
Tuesday, Regular Meeting, 6:30 p.m. Council Chambers
December 1 • LOIS Update
• Unsung Hero Awards
Public Hearing
• Master Fees and Charges Update
Monday, Study Session, 6:00 p.m. location tbd
December 7 • Planning Commission
• Parks and Recreation Advisory Board
• Sustainability Advisory Board
• 50 + Advisory Board
Tuesday, Study Session, 6:30 p.m. Council Chambers
December 8 • Follow-up to Goal Setting Preparation
Monday, Study Session, 6:00 p.m. location tbd
December 14 • Real Estate Overview►Seminar(Bruce Wood/Will Denecke)
Tuesday, Regular Meeting, 6:30 p.m. Council Chambers
December 15 ® Sustainability Update
Public Hearing
Tuesday, Cancelled
December 22
BOLD ITEMS—New issues added to schedule
Items known as of 9/24/09
CITY COUNCIL I LORA TENTATIVE SCHEDULE
To Be Scheduled
• Lake Grove Presentation (DKS)
• Streetcar Update (Doug (blitz— may be combined with tour)
O Joint meeting with the Planning Commission and DRC -Visioning
• Joint meeting with the Lake Corporation Board
® Meeting with Boards and Commissions
® Attainable Housing (Councilor Hennagin and Paul Lyons)
® Refer Congregate Care Housing Ord. to Planning Commission
▪ IGA with Portland for Tryon Creek Restoration
® Union contracts
• Review Draft Economic Development Strategy
O First and B Project
• Joint meeting with the School Board
O Emergency response Plan (before the end of the year)
O Report on Intergovernmental Relations Program
® Implementation of Matrix report (Spring 2010)
• HRAB Work Session re Iron Industry Heritage Trail Plan —request by HRAB - Schedule
on a Monday—Joint meeting with Boards & Commissions
® Preservation=Sustainability PowerPoint Presentation — Marylou Colver (Jack H and
Jonna P Request) - Schedule on a Monday—Joint meeting with Boards & Commissions
O Foothills Redevelopment Agreement
• Municipal Finance
• Wastewater Utility Rate Analysis
• IGA with the Bureau of Environmental Services for Tryon Creek (removed from 10/6)
BOLD ITEMS—New issues added to schedule
Items known as of 9/24/09
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411111 )111,1.. CITY OF LAKE .i.SWEGO
COUNCIL .1” EPORT
onG014
TO: Jack D. Hoffman, Mayor
Members of the City Council
Alex D. McIntyre, City Manager
FROM: Joel B. Komarek, P.E., Project Director- LOIS-1lt4
SUBJECT: Water Systems Development Charges Update
DATE: September 14, 2009
ACTION
Staff seeks direction from Council regarding the following issues first discussed with
Council at a Study Session held July 14, 2009:
I. Whether or not to move forward with implementation of a change in the current
methodology used to calculate water utility SDC's as recommended by staff in
the prior presentation;
2. Whether or not to phase in implementation of the staff recommended
methodology over a period of time greater than one year; and
3. Whether or not to initiate additional planning and financial analysis and public
outreach as may be necessary in order to implement a water utility SDC
methodology different than that proposed by staff and one that is intended to
promote certain types of development in the City.
INTRODUCTION/BACKGROUND
Please see the Council report attached as Exhibit 'A' for background and context on
information presented by Staff at the prior July 14, 2009 study session on this subject.
At the close of the prior meeting, the Council asked staff to conduct further research
into SDC methodologies and return at a future study session to present the findings of
its research. The attached Exhibit LB' reviews the direction given to Staff by Council at
its prior study session and provides a brief discussion on the findings of the additional
research.
1
Council Report
September 14, 2009
Page 2
This new information and a brief historical perspective on 8DC's in Oregon will be
presented by Staff in the upcoming September 29th study session through use of a
PowerPoint presentation.
RECOMMENDATION
It is recommended that Council direct staff to proceed with the required public noticing
of a proposed change to its existing water SDC that reflects the methodology as
presented by Staff at the July 14th study session (otherwise known as "Alternative 1") in
Exhibit 'A'.
ATTACHMENTS
1. Exhibit 'A' —Council report dated July 6, 2009.
2. Exhibit 'B' FCS Group Memorandum from John Ghilarducci to Joel Komarek,
dated September 10, 2009.
Reviewed by:
Department Director
Finance Director
City A ,orney
Ale D.
City Manager
2
44
I _ . OF ..: , KE • S.----EGO
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Wmr.
OUNCIL -.EPORT
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0104014 .
TO: Jack D. Hoffman, Mayor
Members of the City Council
Alex D. McIntyre, City Manager
IL-
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FROM: Joel B. Komarek, P.E, Project Director- LOIS
SUBJECT: Water Systems Development Charges Update
DATE: July 6, 2009
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ACTION
Council is requested to concur with Staff recommendations regarding modifications to
existing methodology for the Citys water utility Systems Development Charges ("SDC").
These modifications would result in a change in the fees collected at the time new
connections are made to the Citys water system. The adoption of a new methodology
for water Sars is a Council Goal.
INTRODUCTION/BACKGROUND
LOC 39.02.011 —'The purpose of the system development charge is to impose a
portion of the cost of capital improvements for water, wastewater' g
draina e streets,
flood control, and parks and recreation upon those developments that create the need
for or increase the demands on capital improvements?
ORS 223.299(4)(a)—"System development charge"means a reimbursement fee,
an
improvement fee or a combination thereof assessed or collected at the time of
increased usage()f a capital improvement or issuance of a development permit,
buildingor connection to the capital improvement. "System development
charge" includes
that portion of a sewer or water system connection charge that is
greater than the amount necessary to reimburse the local government forits average
cost of inspecting and installing connections with water and sewer facilities
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3
Council Report
July 6, 2009.
Page 2
DISCUSSION
The last time Systems Development Charges ("SDC")for the water utility underwent
review and updating was in 1998. At that time, staff did not have sufficient knowledge
of the capacity of the existing system to determine whether a change to the
reimbursement portion of the SDC was appropriate and so focused only on updating
the improvement portion of the SDC based upon the then current 1988 Water Master
Plan ("WMP").
In early 2008,. Council established a goal and directed staff undertake a review and
update of all SDC'6 for its enterprise utilities. Because the water utility had the most
current master plan (2001 and updated through 2007), staff proceeded to undertake a
review and update of water SOC's first. In May 2008, the technical analysis was
complete, but concurrently the..City.was negotiating an Intergovernmental Agreement
with the City of Tigard wherein Tigard would jointly plan, fund and own a portion of the
City's water supply system. The water SDC technical analysis was conducted for two
scenarios—"with"and "without"Tigard. Until an agreement with Tigard was finalized,
the water SOC. analysis could not be completed and thus, staff took possession of the .
consultant's work products completed to date and terminated the contract.
In August 2008, the City executed an agreement with Tigard forming a water supply
partnership. In February 2009" the City retained FCS Group, a municipal finance
consulting firm to resume and complete the water SDC update effort. In May 2009. FCS
Group completed the technical.work. The basis for the SOC alternatives and fiscal
impacts discussed below will be explained in detail as part of Staff's presentation on
July 14th.
ORS 223.304 requires local government desiring to establish or modify a
reimbursement fee or improvement fee to do so pursuant to resolution or ordinance. At
its July 14, 2009. study session., staff will present the findings of the technical analysis to
Council along with recommendations for modifications to the existing SDC methodology
and applicable City Code. The proposed modifications are based on:
• Rate making principles;
• Prior contributions of existing users of the system;
• The value of unused capacity available to future users of the system.
• Recognition of grants, gifts or other contributions toward development of the
system by federal.or state government or private persons;
• The projected.cost olcapitai improvements identified in the plan and.list
adopted pursuant to ORS:223.309 that are needed to increase the capacity
of the systems for which the fee is related; and
* The need for increased capacity in the system to served demands placed on
the system by future users.
4
Council Report
July 6, 2009.
Page 3
Before-a local government can establish.or modify a.SDC..any:pprsons..that..:have made
written request for.notification prior to.adoption or amendment:of a methodology for a
WC.must be provided written notice at least 90 days prior to the first hearing to
establish or modify a system development charge. The methodology supporting the
system development charge must be available at least 60 days prior to the first hearing..
Legal action contesting the methodology used for calculating a'SDC may not be filed
after 60 days following adoption or modification of the system development charge
ordinance or resolution by the local government.
ALTERNATIVES.
At the July 14th study session, Staff will seek:
1. Council direction to proceed with the statutory.noticing of the proposed change in
water SOC.methodology and make available the proposed methodology to
interested parties. The proposed water SDC methodology is based on the
following:
a. The construction of the expanded facilities for the Lake Oswego/Tigard
water supply partnership as recommended in the"Joint Water Supply
System Analysis", Carollo Engineers, July 2007 ("Carollo Report");
b. A policy that the City will not attempt to recover future debt service costs
as a component of the proposed new water SDC;
c. Construction of the capital improvements as currently recommended in
the approved 2001 (updated through 2007)Water Master Plan;
d. Customer growth based on demand forecasts as contained in the Caron°
Report; .
e. Inclusion of administrative costs in the SDC;
f. Meter equivalent based on standard 3/4-inch residential service; and
g. Full cost recovery and impact based SDC.
2.. Council Direction to propose at a future public hearing, certain amendments to
Lake Oswego Code, Chapter 39 regarding SDC credits.
Alternatives for Council consideration include:
1.. Accepting the proposed new water SDC methodology as recommended by Staff;
2. Rejecting the proposed new water SDC methodology and directing Staff to
modify the proposed methodology to:
a. Include future debt service costs in the proposed water SDC and/or;
b. Remove certain projects from the CIP as recommended in the 2001
Water Master Plan (as updated) and/or;
c. Exclude recovery of expenses associated with administering the SDC
program.
5
Council Report
July 6, 2009
Page 4
a Accepting the proposed new water SOC methodology as recommended by Staff
but phasing the new fees in over a period of two calendar years beginning.
January 1, 2010.
FISCAL IMPACTS
The fiscal impacts of the various alternatives enumerated above are:
Alternative...1
Fees for each new 314-inch water service would increase January 1, 2010 from $2„485
to $6„404. Existing rate payers would no longer subsidize new development in the City.
Instead, new growth would reimburse those residents who contributed to the
construction of the water system now serving new growth and would contribute their
proportionate share to construct new facilities to serve future growth. •
Alternative.. .
2.a. —Fees for each new 3/4-inch water service would increase January 1, 2010. from
$2,486 to$.9,168. It is not knowable with certainty whether this SOC would over or
under collect relative to future debt service costs,
2.b. —The fiscal impact of this sub-altemative is unknown and depends upon which CIP
projects were removed from the approved list. Assuming any project associated with
the Lake Oswego/Tigard partnership is not subject to such action, remaining projects
primarily are focused at addressing existing deficiencies in the.City's water supply
system. It is assumed that recommended CIP projects to serve future growth could be
eliminated, thus creating a defacto moratorium on future growth.
2..c. —Selecting this alternative would reduce the proposed new SOC fee for a 3/4-inch
service from $6,404 to $5,988 and would not recover costs to administer the SOC
program.
Alternative 3
Fees for each new 314-inch water service would increase January 1, 2010 from $2,485
to$4,445. On January 1, 2011, the fee would increase again to the proposed kill SOC
amount of$6,404. During the first year of implementation, existing rate payers would
continue to subsidize new growth albeit at a smaller scale than currently is the case.
6
Council Report
July 6, 2009
Page 5
RECOMMENDATION
It is recommended that Council direct staff to proceed with the required public noticing
of a proposed change to its existing water SDC that reflects the methodology of
Alternative 1.
Reviewed by:
partment Director
Finance Director
City Attorney
Alex D. McIntyre
City Manager
7
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To: Joel Komarek Date: September io,2009
From:John Ghilarducci
RE: July 14 Council meeting follow-up
As stated in your e-mail dated July 15, 2009, the following points summarize City staffs
understanding of Councirs direction following the SDC presentation and discussion on July 14,
2009. A response is included after each item.
1. Staff understands we are not to publish the 90-day notice until further discussion with the
Council takes place at a study session to be scheduled in September;
The 9o4kty notice has not been published to date and nll be..published only as directed by
Council.
2. Staff understands the Council is interested in being presented with information in September
about what other municipalities are doing regarding adopting and implementing technical vs
policy-based SDC's for their enterprise utilities;
litr(found that t,Yery few if any ater uhlities offer what could be called poticy..-based St:Cs or
sixT:adjustments. fltre researched Portland, Gresham, TiVest Linn,Milwattkie,Eugene and
the League .of Oregon. Cities' This comiusion was coryirrned in our meeting with „Metro,
1.1,there it was noted that most policy-based SDC adjustments are providedfbr stormuvto
ibr varying levels and ivies of on-site mitigation. Some on-site mitigation can be
documented to reduce the need,fin' system,,facilities, a technic:Fat-based actiustment. Sonic
on sit mitigation low-impact development,etc.„ reduces local impacts in non-storm.et,7e.nts
but does little to reduce system needs and costs. Such on-site facilities / activities are
sometimes rewarded by policy-based Snr agiust.m.ents.
.For exam pie. the aty of Gresham authorizes the awned to establish an. SI...7C credit to
litrth.er the objective of promoting low impact treatment best management practices, as
(*.scribed by the Water Quality Manual, that will minimize or eliminate the discharge of
stormwater carried pollutiOnfrom developed property
The most common adjustment allowed for transportation SDes authorizes a new customer.
to provide a traffic study documenting estimated trip gewration ,,cuperseditig the Institute
of Transportation Engineers (1177.E) Trip Generation Manual hip generation statistics,
commonly used to calculate transportation system impact arid associated SIX.s. This is a
technical-based SIX:adjustment,however. An example of a policy-based agiustment would
be providing an SDC reduction for the implementation of traffic demand tnanagement We
did no!find any examples of such an approach.
3. Staff.understands Council is interested in exploring other implementation alternatives e.g.,
phasing in over a longer period of time say 3 or 4 years instead of two in an attempt to delay
941 0,1 •
9
9/1.0/2009 FCS GROUP Memorandum
Joel Komarek
Council meeting follow-up
the full cost impact on new development and time that full impact with improved economic
conditions;
We have developed a 3-yea7-phasing scenario fir consideration (below). In addition to
showing the phased charges, the table provides estimated cost ree,overy / revenue tosses
under low (5%/year), meditan (73%/year), and high 0%,/year,' growth.of projected
revenue lost ranges from $2a7,536 under low growth to$414,855 unfkr high growth, due
to phasing.
WATER SOC PHASE-1N SCHEDULE&FORECASTED REVENUE LOSS
A " • f4 /R. k h,
FY 2009 FY 2010 FY 2011 FY 2012 Total
Projected Revenues with No Phasing
Low Growth(0.50%1 year) $ 488,845 $ 489,279 $ 491,726 $ 1,467,850
Medium Growth(0,73%/year) $ 710,794 $ 715,982 $ 721,209 $ 2,147,985
High Growth(1,00%1 year) $ 973,690 $ 983,427 $ 993,261 $ 2,950,378
3-Year Phase In
Adopted Water SOC $ 2,485 $ 3,989 $ 5,494 $ 6,998
Low Growth $ 303,273 $ 419,719 $ 537,322 $ 1,260,313
Medium Growth $ 442,778 $ 614,192 $ 788,085 $ 1,845,055
High Growth $ 606,545 $ 843,614 $ 1,085,363 $ 2,535,523
- • „ •
Revenue Difference Over Proposed SIX
Low Growth(0.50%/year) $ (183,572) $ (69,560) $ 46,596 $ (207,536)
Medium Growth(0.73% year) $ (268,016) $ (101,791). $ 66,876 $ (302,931)
High Growth(1,00% year) $ (367,145) $ (139,813) $ 92,102 $ (414,855)
4. Staff understands Council is interested in understanding what the fiscal implications are of
various implementation alternatives on rate payers and the development community,
Under a 3-year phased implementation, the current charge of $2,485 per sir meter
equivalent(ME) u)ouki ine7-ease to $3,989 for the remainder gfrit2010 then to $5494 for
FI-P2on, and finally to ,$6,998 per for 11-2012_ The r(xenue losses detailed above
would be made up by rates, but the 1mi-eases would not be dollar for dollar. In fact the lost
revenue in the next three years would likely require larger debt issues later% The resulting
annual rate impacts would be minimal.
5. Staff understands the Mayor would like us to have a conversation with Dorothy Atwood
regarding the information contained on pg. 21 of the Metro SDC report,that relates to impact
based SDCs;
City staff and the consultant met with Metro staff(Chris Affebach and Miranda Batesehell)
to discuss the recommendations provided in "Promoting Vibrant Communities with System
Development Charges"and opportunities to incorporate their recommendations into the
Water SDC analysis.
6. Staff will provide the Council with the UP projects list from the 2001 Water Master Plan(this
will be forthcoming in hardcopy to each councilor due to the law file size that makes
si Fr'' )
P ,
10
9/10/2009 FCS GROUP Memorandum
Joel Komarek
Council meeting follow-up
emailing impractical), a copy of last evening's presentation (attached) and the listing of the
1,0/Tigard partnership projects(also attached to this email). For those interested in more in-
depth review of the Camila report,let me know and I can provide it to you on CD;
Staff has provided the requested information to the Council.
P
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