1. Whitefish Stage Sewer Interceptor` City of Kalispell Public Works Department
Post Office Box 1997, Kalispell, Montana 59903-1997 - Telephone (406)758-7720, Fax (406)758-7831
REPORT TO: Mayor and City Council
FROM: James C. Hansz, P.E., Director of Public Works
SUBJECT: Whitefish Stage Road Sewer Extension - Potential Cost Recovery
MEETING DATE: Work Session 28 February 2005
At the meeting of 20 December 2004 City Council approved Resolution 4965 directing
staff to conduct preliminary engineering for extension of sewer north along Whitefish Stage
Road to Rose Crossing. The intent of the extension is to serve development in the area of the
proposed Two Rivers Master flan Amendment currently under review by Flathead County. The
resulting analysis defined a potential service area for this sewer extension that encompasses
approximately 2,000 acres and that is primarily above and west of the Whitefish River. This area
includes approximately 60% of the Two Rivers plan area and all of the Wolford Mall project
plus additional land not included in either proposal but that could be developed to a
contemporary urban standard if public sewer is available.
The report identified three options for extending a 15-inch diameter sewer from the
vicinity of West Evergreen Drive and Whitefish Stage Road north to Rose Crossing. The
recommended alternative is to extend sewer north along the easterly edge of the north -bound
travel lane of Whitefish Stage Road to Rose Crossing. The estimated construction cost of this
alternative is $1,841,000.00, which includes a 20% contingency. The new sewer will have the
capacity to serve over 4,760 equivalent residential units when the area is ultimately built out.
Annual population growth curves were not developed, but projections were made that
approximately 2,460 units would be on line by 2025 at the latest. These numbers are derived
from the study area populations projected in Chapter 2 of the report and the current census data
that indicates there 2.2 persons per residential unit in the Kalispell area. Based on current growth
rates, which we do not see changing for the foreseeable future, we believe it is reasonable to
expect this growth to occur much earlier than 2025. This belief is based on current experience.
The new water line on Three Mile Drive, installed by the Lapps and others to serve their
February 28 2005 Whitefish Stage Sewer Cost Recovery (2)
developments (it currently ends at Blue Herron Estates) was determined to have a capacity for an
additional 583 units when completed approximately 15 months ago. Since then an additional 333
units have been approved with another 170 poised for approval. The remaining capacity in this
15-month old water line is 90 units.
With an estimated construction cost of $1,841.000.00 and a total service capability of
approximately 4,760 equivalent residential units, a unit rate of construction cost recovery,
expressed as a surcharge per residential unit, can be calculated as follows:
Surcharge: $1,841,00014,760 units = $386.761residential unit (ERU)
This amount would need to be collected from each new residential unit served by these
facilities and would be in addition to the regular SDC for each unit ultimately developed.
However, it would only need to be collected if there is an investment of City funds in the project
and would only be collected from the properties served by facilities (or capacity) related to that
direct City investment. The example above assumes full City funding of the project. The
surcharge would not be collected from lots served by capacity investments made by partners; i.e.
a development partner would invest an amount necessary to secure his desired capacity and
therefore no surcharge is needed or collected from his lots for the amount he invested. But, the
City would need to collect the surcharge from other lots not included in the developer's project
for which the City invested its SDC funds to provide the capacity. Further, any investment made
by a partner that exceeds his needs (i.e. like done by Owl Corporation in Section 36) would
involve a reimbursement agreement where other latecomers would reimburse the developer his
excess cost. If the project is fully funded by partners, then no surcharges would be required.
If we assume the most conservative numbers and that only the aforementioned 2,460
residential units are likely to be on-line by 2025, and that the project is fully City funded without
any partners to share the construction costs, then the total share of invested costs recovered by
2025 would be:
Recovered Costs by 2025: 2,460 units X $386.76/unit = $951,429.60
This would leave approximately $889,570.40 to be collected later, assuming development
is not complete and continues beyond 2025.
In addition to the $951,429.60 in surcharges, regular SDC fees would be collected. The
current 2005 SDC for a residential unit is $2,132 with $891 of the SDC fee reserved for
collection systems. The total of these regular collection system SDCs that would be collected is:
February 28 2005 Whitefish stage sewer Cost Recovery (2)
Regular Collection System SDCs: 2,460 units X $8911unit = $2,191,860
Therefore, the total collection system. SDC and facility surcharge revenues potentially to
be collected is approximately:
Total Revenue from 2,460 units: $951,429.60 + $2,191,860=$3,143,289.60
In addition to these amounts, approximately $3,052,860 more would be collected and
reserved separately for WWTP expansion. Again, all this is based on current SDC rates and the
assumption that only 2,460 of a potential 4,760 units are developed.
If all potential units are developed there is substantial additional revenue that will flow
into the City's SDC accounts. The total of these revenues is calculated as follows:
Total of Recovered Costs: 4,760 units X $386.761unit =
Total Collection System SDCs: 4,760 units X $891/unit =
Total WW Treatment Plant SDCs: 4,760 units X $1,241.unit =
Total of all Revenues at full development:
February 28 2005 Whitefish Stage Sewer Cost Recovery (2)
$1,841,000
$4,241,160
$5,907,160
$11,989,320