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2. Extension of Services PlanjCity of Kalispell Public Works Department Post Office Box 1.9)7 'Kalispell, �lic�ar� 549ii3-I997-Telepi�c�z�e (406)758-7� 0 Fax (406)758_783I REPORT TO: Mayor and City Council FROM: dames C. Hansz, P.E., Director of Public Works I City Engineer SUBJECT: Work Session to Discuss Extension Agreement Philosophy MEETING DATE: 20 October 2003 BACKGROUND: The City's Extension of Services Plan includes a provision for developer extension agreements that allows developers to recover a part of their infrastructure costs from neighboring properties. The Plan is, in my opinion, very specific that developers are required to install at their expense all infrastructure required to serve their development. This requirement, while very clear to me, becomes somewhat less clear when set against the provision allowing reimbursement via extension agreements. The extension agreement provision has in the past been interpreter) in ways that have allowed a developer to recover portions of his infrastructure cost from parties bordering the development including infrastructure that was required to meet the basic needs of the development. 1 believe this was wrong and reflects an incorrect reading of the document. Since becoming Public Works Director 1 have interpreted the Plan different from past practice. My view is that past City Councils meant what they said when they adopted a Plan that requires development to pay its way. 1 further believe that past Councils did not intend that the legitimate cost of development infrastructure be transferred., either wholly or in part, to the developer's neighbors with the City being an accomplice to the imposition of these costs on the project's neighbors. Public Worms has interpreted the extension agreement provision in its most literal sense; it is one of several ways to compensate developers for the cost of infrastructure that exceeds the needs of their development. The simplest example of this involves over -sizing a utility main. If the City requires the enlargement of a main utility line above the size needed for the developer's project the added cast of the upgrade is considered eligible for reimbursement. We believe this growth -related cost should be paid by the City from system development funds. If the City does not have the funds, or simply chooses not to pay at the time, which is an option, then the developer should be able to recover the cost. This can be done via an extension agreement or alternatively by periodic payments by the City from SDCs as the project develops. Extension agreements are a regular topic of discussion with developers who share the common belief that extension agreements are an opportunity to get back some of what they spend on their project infrastructure from their neighbors. We have had several unproductive discussions with the Mountain View Plaza developer regarding his desire to be reimbursed for water and sewer improvements that were clearly agreed in the project PUD to be his responsibility. More recently we have worked with the developer of Blue Heron Estates. This development requires a ten -inch water line for its needs but we have directed a twelve -inch line be constructed. We propose to pay the differential from SDC funds, approximately $11,000. Nonetheless, the developer has indicated an expectation to have an extension agreement so that part of the remaining cost can be recovered from adjacent properties. We believe this would be improper and have made this point clear to the developer's engineer on more than one occasion. That said, we have no objection to developer groups joining together to install facilities of common interest, and have encouraged this line of thought for the Blue Heron project. We are unaware of any positive results so far. The City Extension of Service Flan will soon be revised. Our intent is to remedy the ambiguity of some of its language on extension agreements along the lines of our current understanding of the City Council's intent. We believe the changes to be necessary so that use of the extension agreement option remains available and fair to all parties, is not abused, and is not left subject to potential improper interpretation in the future. If. however; the City Council's present understanding of the issue is different from staff and more closely aligns with the prevailing view of the developer community, this is essential to know before revising the Plan. This issue should be discussed. RECOMMENDATION: Affirm the staffs interpretation of the City Council's intent regarding developer extension agreements. FISCAL EFFECTS: Potential expenditure of system development funds for growth related expenses when developer plans are changed at the City's direction to provide additional system capacity. ALTERNATIVES: As suggested by the City Council. Respectivel James C. Hansz, P.E. Director of Public Works / C October 2€1, 2003 Developer Extension Agreements.doe Chris A. Kukulski City Manager RECOMMENDED POLICIES FOR EXTENDING SERVICES General Policies The following general policies shall be pursued for all properties proposed to be developed with or without annexation into the City of Kalispell ("City"): 1. It is the responsibility of the developer or property owner to construct all, water lines, reservoirs, pump stations, culverts, drainage systems, sewer systems, roadways, sidewalks, curbs, gutters, street lighting, and rights -of -way in accordance to the Extension of Services Plans contained herein as well as the Subdivison Requirements of the City of Kalispell and the Standards for Design and Construction. The infrastructure improvements shall be of adequate size and design to accommodate the needs of the proposed development. In the event that a development creates impacts requiring off -site improvements, the City Council will determine whether the developer shall wholly or partially bear the costs of such improvements. I' 2. The developer or property owner shall be responsible for providing fire protection appurtenances and required water flow pressures, to the satisfaction of the City Fire Chief, based on the use of land and the type of construction employed. 3. Water systems and sewer systems shall be designed in such a manner as to avoid the provision of lift stations if feasible. All proposed lift stations shall receive the approval of the City Engineer. 4. Before a development beyond city limits is allowed to connect to a City -owned utility, a Consent to Annex/Notice of Withdrawal from Rural Fire District and a Petition Requesting Annexation shall be properly filed with the'City Attorney. PQLTCIES FOR THE EXTENSION OF SERVICES TO UNDEVELOPED AREAS Each development should be considered an integral part of the comprehensive services plan of the City. Therefore, any subdivision or development of property within the identified growth area should be designed in accordance with the current edition of the City's "Standards For Design And Construction". 1. Any subdivision or development of land beyond the Kalispell city limits, but within the urban growth boundary, should be reviewed and commented upon by the-City's Site Development Review Committee. The City shall recommend to the Board of County Commissioners that new development within the identified growth area be in accordance with the service plans contained herein. 19 2. Where construction of a sewerage system is being considered, the future drainage basin of the system should be identified and lines sized accordingly. The cost and construction of all sewerage systems are the responsibility of the developer or property owner. Under certain circumstances, the City Council will determine whether the City will participate in financing the oversizing of infrastructure. 3. It is the responsibility of the developer or property owner to have designed and constructed water mains and lines of adequate size to provide the required flows for the intended land use and fire protection. 4. It is the responsibility of the developer or property owner to provide all required infrastructure improvements, including rights - of -way, roadways, and easements. POLICIES FOR SERVICES IN EXISTING DEVELOPED AREAS As a general policy, properties within the service area that have existing utilities and facilities shall be required to upgrade those improvements to City standards and specifications as a prerequisite to receiving City services or additional City utility services. In such situations, the following policies shall apply: 1. Prior to making the municipal service(s) available to an, existing developed area within the service area, the City may require a report describing the following: a. The approximate year or period in which the existing area was developed. b.. The location, size and condition of existing water lines or systems. C. The location and condition of the existing sewer system, including the size, material and grades of all pipe. d. The size, location and legal purpose of all existing rights -of - way and easements. e. The surface type, condition and width of all roadways. f. The existing storm drainage into and out of the area. The report shall also include the estimated costs associated with correcting the deficiencies and bringing the utility or improvement to City standards. The City may require such a report to be prepared by a professional engineer, with the cost of the report borne by the developer or property owner. 2. If the property is to be annexed, the City's annexation ordinance or resolution shall specifically state the method and time frame for bringing the existing conditions into compliance with City standards, and shall identify the parties responsible for the improvements. 3. If City services are to be extended without concurrent annexation, the property owner shall sign a Consent to Annex/Notice of Withdrawal from Rural Fire District and a Petition Requesting Annexation. Both the petition and the waiver shall be recorded with the County Clerk and Recorder's Office. The property owner shall also sign, and the City shall record, a waiver of the right to protest participation in and the formation of any speci5TI improvement district that may be formed to improve the existing services, utilities, streets or other improvements. POLICIES OF MEETING THE COST OF SERVICES 1. For the purpose of setting components of the physical plant, as the estimated life of each of a. Structures -- 30 Years b. Pipelines - 30 Years C. Stationary Equipment (motors, - 20 Years d. Asphalt Surfaces: Local Streets - 20 Years Collector St. - 15 Years Arterial St. - 10 Years aside adequate funds to replace the following shall be considered the components: pumps, conveyors, etc.) The amount to be set aside each year for the replacement of municipal infrastructure components shall be the cost of construction, if new, or the total estimated replacement cost divided by the remaining- number of years of the life of the component. 2. It shah, be the responsibility/of the developer or property'I owner to extend all roadways and tilities from the existing City facilities to the site of deve pment in accordance with all City standards and specifications ot,provide appropriate easements. It shall further be the respon i`]ility of the developer or property owner to construct all streets and utilities to the furthest boundary of the property to be developed in order to facilitate future development. 3. The ability of the City to increase existing utility line capacities to meet the demands of growth is dependent upon the availability of funding. If the City's ability to finance the necessary enlargement cannot keep pace with development, or if the improvements schedule does not mesh with that of the developer, it 21 shall be the responsibility of the developer to finance and` construct City -approved alterations to the existing infrastructure sufficient to accommodate the development. In the event of this occurrence, the developer may be reimbursed by the City through utility service connection fees for said development. Said reimbursement shall not exceed the cost, including interest, of the improvements to the existing City system, nor shall the reimbursement exceed the value of the connection fees collected from the specific development. 4. If the developer bears the costs of extending services and/or utilities, a Developer's Extension Agreement may be entered into between the developer and the City. This agreement, with a term not to exceed ten (10) years, allows the developer to recoup costs associated with the extension of services or utilities by charging future entities wishing to connect to or use the extended service or utility a "Latecomer's Fee". The Developer's Extension Agreement shall set forth the specific parcels which could benefit from the extension (those within a described "design area") and specify the amount to be assessed to each parcel. The specific parcels and assessments to be included in the Developer's Extension Agreement are subject to approval by the City Council. The late -coming customer shall pay the extender a pro-rata share of the extension costs, including design and inspection fees. The pro-rata share may be based on lot area, front footage, or other means agreeable to both the City Council and the developer which is equitable to both parties as well as future customers. 5. If the City requires the customer or developer extending a sewer or water line to install a larger size than that required by City standards for a particular project, the City shall pay the difference in cost between the two lines. 6. The City reserves the right to further extend sewer or water, MAINS installed by the preceding developer or property owner without paying compensation. The City also reserves the right -to charge future sewer or water utility users beyond those areas identified in the Developer's Extension Agreement, if applicable, for their pro -rated share of the City's cost for the overs.izing of the line. This in no way shall diminish the preceding developer's right to collect SERVICE LINE connection fees within the limits of a Developer's Extension Agreement. In the case of water lines, the pro-rata cost shall be based on the domestic capacity plus fire flow capacity existing at the point of extension as opposed to the domestic plus fire flow capacities required by the development. 7. Financing the construction of new streets in a proposed development, or the upgrading of streets in an existing developed area, shall be accomplished in one, or a combination of, the following methods: 22