SPECIAL UTILITY COMMITTEE
A Special Utility Committee meeting was held on December 3, 2007 at 5:00 p.m. with Chairman Ruane presiding. Members present were Mr. McGiffin, Mr. Cregar, and Mr. Snaman. Councilman Salters and Mayor Carey (departed at 6:22 p.m.) were also present.
AGENDA ADDITIONS/DELETIONS
Mr. Snaman moved for approval of the agenda, seconded by Mr. Cregar and unanimously carried.
Presentation - I & I (Inflow and Infiltration) Removal
Mr. Koenig, Director of Public Services, and Mrs. Duca, Assistant City Engineer of the Public Utilities Department, gave a presentation on the Sanitary Sewer Inflow and Infiltration (I & I) (Attachment #1). Members were advised that inflow and infiltration may be the result of cracked mains, storm sewer connections, cracked manholes, faulty manhole covers, roof drain connections from private properties, sump pump connections, broken laterals, etc. Mrs. Duca reminded members that an I & I Study was performed in fiscal years 2006 and 2007. As a result of the video inspection conducted, Mr. Koenig advised members of the various repairs that were identified. He also reviewed the results of the smoke testing that was conducted. In regards to the private property issue, he noted that there were actually 13 properties (rather than 21 as indicated in the presentation), identified through property maintenance inspections. Mr. Koenig advised members that the City has worked with the owners in removing the root drains from the sanitary sewer system. In reviewing this information, staff developed and reviewed future actions necessary for both the Public Utilities and the Public Services Departments.
Mr. Koenig explained that Kent County has authorized Impact Fee Credits for removal of inflow and infiltration ($1,430 / E.D.U.), which is a one time credit per removal. Staff recommended that the credit received by the City from Kent County for the removal of private property connections be passed on to the property owner.
In response to Mr. Ruane, Mr. DePrima expressed the importance of approaching property owners who are in violation in a customer service manner; therefore, to fix the problem, staff is recommending a cost incentive for property owners.
Responding to Mr. Salters, Mr. Koenig advised members that it is no longer standard practice to tie roof or area drains into the sanitary sewer system. Although there may not be a substantial amount of money saved by the City for providing a credit to customers, Mr. Koenig stated that the administrative burden of unhappy customers far outweigh the costs of the reimbursement proposed. He explained that the “dollars and cents” on paper is very small in the amount of time it takes to resolve some of these types of issues. He also explained that the City will continue to reap the benefits from the removal of the inflow and infiltration from the system year after year.
Mr. McGiffin moved to recommend approval of the impact fee credit proposal, as recommended by staff, seconded by Mr. Snaman.
Mayor Carey requested that the procedure for the credit provided to the customer be worded so it specifies that only the amount of expense would be reimbursed up to a maximum amount. Responding, Mr. Koenig expressed concern that people value their time differently and that it is difficult for staff to value someone’s time. The manner in which staff has proposed to calculate the credit is purely based on the area of removal, which is very defensible. If a customer spends more than the calculated credit, the customer will have an understanding of the amount that will be credited and if their costs are less, then they will have benefitted.
On a call for the question, the motion recommending approval of the impact fee credit proposal, as recommended by staff, was unanimously carried.
Mr. DePrima indicated that affected residents will be contacted and advised of a public meeting in order for staff to give this same presentation. He requested anyone with suggestions for improving the presentation to contact him after the meeting.
Proposed Ordinance - Chapter 110 - Utilities, Article III - Water Service, Division 7 - Water Impact Fees
Members considered a proposed ordinance that would establish water impact fees by creating Division 7 - Water Impact Fees in Chapter 110 - Utilities, Article III - Water Service, in the Dover Code. Mrs. Tieman, Senior City Administrator, reviewed a presentation on the water impact fee proposal, explaining that the impact fees would offer an efficient way to pay for infrastructure and ensure benefits to those who pay them. Without instituting impact fees, the City may not have the revenue necessary to support or sustain growth. She reminded members that the development of the water impact fee was based on projects taken from the City’s Water Master Plan prepared by Whitman, Requardt and Associates and the six-year Capital Investments Plan (CIP) for Fiscal Years 2008-2013.
Mrs. Tieman indicated that the premise of the water impact fee is to establish equitable distribution of the costs associated with the City’s water system expansion related to growth. The City has had a sewer impact fee for 20 years. Recently, the Public Service Commission authorized Tidewater Utilities and Artesian Water to implement water impact fees. Mrs. Tieman stated that the proposed water impact fee ordinance would ensure that the cost of such expansion is proportionately borne by those who receive the benefits of the water system expansion.
Mrs. Tieman advised members that over the next six (6) years, the City’s capital plans include $25.5 million in projects and that $7.5 million is for expansion of our system due to growth. Members were provided detailed information regarding the proposed capital projects for the next six (6) years. If the City continues to subsidize growth the way they have in the past, the existing rate payers will be burdened with funding the $7.5 million for these projects. She stated that this increase would be in addition to any increases needed to maintain and improve the existing water system and its infrastructure and that the six-year plan proposes spending $18 million for improvements to the existing infrastructure.
Mrs. Tieman stated that the impact fee proposed in the ordinance was calculated by dividing the expanded capacity from capital projects, which is $1,900 per equivalent dwelling unit. The implementation of this fee is projected to generate approximately $665,000 per year, which was based on the revenue from the sewer impact fee charges (350 equivalent dwelling units). The total amount collected in each fiscal year should be equal to or greater than the funds that are necessary to cover the water expansion portion of all capital projects. She explained that all funds collected in excess of this amount are to be transferred to the Water Impact Fee Reserve Fund. All impact fees are proposed to be collected upon application for Certificate of Occupancy by the Planning and Inspections Department. Those entities with existing building permits or contracts of sale dated prior to February 1, 2008 would not be subject to the impact fees.
Staff recommended approval of the proposed Water Impact Fee Ordinance as submitted and that the Water Impact Fee be set at $1,900 per equivalent dwelling unit effective February 1, 2008.
Members were advised that on November 1, 2007, an informational meeting was held to present the proposed impact fees and that local builders, realtors, developers, the Central Delaware Economic Development Council, the Delaware Association of Realtors, the Delaware Home Builders Association, and the Chamber of Commerce were invited to attend. Those in attendance were requested to submit their comments, which were provided to members for their review. Mrs. Tieman noted that although several of the comments received reflect an understanding of the purpose and need for a water impact fee, it was suggested that the fees be phased in over time. Should City Council wish to phase in the fees, it was recommended that the Capital Projects plan be adjusted from a six-year implementation to an eight-year implementation plan and increase the final fee by $200. By doing this, staff felt that the fees could be phased in as follows: February 1, 2008 - $700 per EDU; February 1, 2009 - $1,400 per EDU; and February 1, 2010 - $2,100 per EDU. The $200 added in the third year would, within ten years, recoup the loss from the lower fees in the first two (2) years.
Mr. McGiffin moved to recommend approval of the phase in schedule for the water impact fees, as presented by staff, seconded by Mr. Snaman and unanimously carried.
Responding to Mr. Ruane, Mr. DePrima stated that the proposed ordinance will be revised to include the recommendations of the committee, such as the phase in schedule, prior to its consideration by Council.
Mrs. Tieman indicated that some of the other comments received on the implementation of Water Impact Fees referred to grandfathering issues. Staff recommended that sites meeting the following criteria be exempt from Water Impacts Fees upon enactment: 1) all sites issued a building permit as of the effective date; and 2) all sites which can produce proof of contract with the end user of the proposed facility executed as of the effective date. These exemptions would apply to all forms of development including residential, commercial, institutional and industrial.
Mr. McGiffin moved to recommend that the water impact fee be effective February 1, 2008 and that the fee not be imposed upon sites for which a building permit was issued before the effective date or for sites for which the owner has produced proof of contract with an end user of the proposed facility as of the effective date. The motion was seconded by Mr. Cregar and unanimously carried.
Mrs. Tieman noted that a sliding scale was also mentioned. This would change the charge per EDU based on the type of structure being built - a townhouse would be differentiated from a single family dwelling, etc. This concept would need to be discussed further and examined with Kent County since the City’s impact fees (both sewer and proposed water) are calculated based on Kent County’s formula. No further action was taken by the committee with regards to the sliding scale issue.
Mr. McGiffin moved to recommend adoption of the proposed ordinance, as amended, that would establish water impact fees by creating Division 7 - Water Impact Fees in Chapter 110 - Utilities, Article III - Water Service, of the Dover Code (Attachment #2). The motion was seconded by Mr. Snaman and unanimously carried.
Dark Fiber Lease Policy
Members were advised that the City owns and operates a fiber optic loop around the perimeter of the City. This loop is used as part of the electric transmission protection system, two-way radio communications system, and data/telephone transmission for utility facilities. Mr. Lunt, Public Utilities Director, advised members that within this fiber network, there are spare fibers that are not utilized or planned to be utilized in the near future. Bayhealth Medical Center approached the City with a request to install their own fiber optic lines on the City’s utility poles or lease dark fiber from the City. In considering this request, staff felt that it would be mutually beneficial to lease the current assets rather than install new facilities. As a result, staff developed the Dark Fiber Leasing Standard Operating Policy to govern this arrangement. He advised members that this policy was reviewed by Bayhealth and they concur that it is fair and acceptable.
Mr. Lunt advised members that the policy would be the governing document regarding the operation, ownership, and pricing for this service. He noted that the policy includes the following: 1) requires a five (5) or 10 year lease with annual escalation fees; 2) new extensions require a total cost recovery and include a 5% annual maintenance fee plus an 8.5% rate of return; 3) existing fiber lease is $0.0009541/fiber strand/foot/month which includes the 5% maintenance fee and an 8.5% rate of return; 4) includes an annual cost of living escalation fee; 5) includes a $200 engineering fee per splice location to recover expenses related to fiber documentation and design; 6) electric service restoration is a priority over fiber restoration; and 7) the City does not guarantee service and will not be liable for any interruption of service.
Staff recommended approval of the Dark Fiber Leasing Standard Operating Policy.
In response to concerns of Mr. Ruane, Mr. DePrima assured members that staff would request a legal review of the policy prior to this matter being presented to Council for consideration.
Mr. McGiffin moved to recommend approval of staff’s recommendation, with the understanding that the policy will be legally reviewed prior to its consideration by Council (Attachment #3). The motion was seconded by Mr. Snaman and unanimously carried.
(City Clerk’s Office Note: The policy was reviewed by City Solicitor Rodriguez and it was his opinion that the policy was well written and; therefore, no changes were recommended.)
PACE/NAES Monthly Report (September and October)
Mr. DePrima provided the PACE/NAES Monthly Reports for September and October 2007. He reminded members that the reports are being provided to give members the opportunity to monitor what is being sold in electric and the revenues received, which will allow members to have a better understanding of any fluctuations and make improvements if deemed necessary. It is not his intent to make a presentation of the report; however, he welcomed any questions.
Responding to Mr. Ruane with regards to the City’s plan to comply with Delaware Regulation 1146, Mr. DePrima stated that in June, DNREC accepted the City’s plan to comply with Delaware Regulation 1146 and that there is an agreement for this to occur by a specific date. As a result of recent meetings with Mr. Blaha, NAES Division Director, Mr. DePrima stated that although they continue to make strides to make the deadline, it was agreed that once it is felt that the City may not meet the deadline, they would approach DNREC. It was his feeling that as long as the City is showing due diligence and making a good effort to locate engineering firms to meet this requirement, DNREC will be reasonable in this regard.
Mr. Snaman moved for adjournment, seconded by Mr. McGiffin and unanimously carried.
Meeting Adjourned at 6:31 P.M.
Respectfully submitted,
Eugene B. Ruane
Chairman
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Attachments
Attachment #1 - Presentation of Sanitary Sewer Inflow and Infiltration (I & I) (Attached to Original Minutes and File Copy)
Attachment #2 - Proposed Ordinance to Establish Water Impact Fees (Division 7 - Water Impact Fees in Chapter 110 - Utilities, Article III - Water Service, of the Dover Code)
Attachment #3 - Dark Fiber Leasing Standard Operating Policy.