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Carver dodges $300,000 bullet
by Nick Mason
Jan 27, 2012 | 2367 views | 0 0 comments | 5 5 recommendations | email to a friend | print
Carver city officials saved $294,360 of city sewer funds by standing up to a regional government agency and sticking to their guns.

Metropolitan Council Environmental Services (MCES) last week retreated from its adversarial position and accepted the city’s stance that the city does not owe MCES sewer connection charges for some Carver properties under development.

MCES is part of Metropolitan Council, the regional planning agency based in St. Paul that also provides a variety of services to residents of Carver County and six other counties in the Twin Cities metro area.

The disagreement started last month when MCES and Carver city officials met to begin the roughly year-long transition process of MCES taking over treatment of Carver’s sewage. Large sewer pipes are being installed now so Carver’s sewage will flow to a MCES regional wastewater treatment plant.

City officials said the disputed amount wound up being a hefty $294,360, mostly because of sewer connection charges totaling $225,230 that MCES wanted to collect from Carver city government for the Mills Fleet Farm, Mills Gas Mart convenience store and Mills Car Wash being built northwest of Highway 212 and Jonathan Carver Parkway.

MCES informed city officials Dec. 6, 2011 that the city would be liable starting that day to pay sewer system connection charges (also called Sewer Availability Charges, or SAC) to MCES for all new sewer customers.

No payment to MCES was required for any existing customer connected to the city’s sewer system prior to Dec. 6.

The key issue quickly became interpretation of a rule published in the MCES Sewer Availability Charge procedures manual about when a developer’s project is considered connected to the city’s sewer system. The manual contains no definition of its term “hook-up.”

City Administrator Brent Mareck and City Planner Cindy Nash contended the city did not owe MCES connection charges for the Mills project and 31 residences because those developers physically connected, or “hooked up,” their new sewer pipes on their properties to the city’s sewer network of pipes prior to Dec. 6.

MCES Finance Director Jason Willett initially disagreed and contended that a new customer is not “hooked up” until the cus-tomer receives a utility bill for sewer service. The Mills property and 31 unoccupied residences were not producing sewage or being issued utility bills for sewer service prior to Dec. 6.

“I don’t know the answer. I probably need legal advice to see what that means,” Willett told the Chaska Herald on Jan. 13 when he was asked the definition of hook-up. “Generally, it means existing customers who are paying.”

REACHING AGREEMENT

But Willett changed his mind and agreed Jan. 19 with city officials that any development with sewer pipes physically connected to the city’s sewer system before Dec. 6 will be granted “grandparented” status as an existing customer and the city will not be liable to pay MCES connection charges.

“We needed to work through how some of the rules apply to their situation, and we did that. We understand each other now,” Willett said. “If it’s hooked up and available for sewage, they will be grandparented. That is the literal interpretation of our rules.”

Sewage pipes for the Mills Fleet Farm and Mills Car Wash were connected to the city’s sewer network of pipes on Sept. 28, 2011, according to Nash. The sewage pipe for Mills Gas Mart was connected to the city’s system on Sept. 12, 2011.

When asked specifically about the Mills property, Willett said once the September connection dates are verified by MCES, “They will all be grandparented in. The city does not have to pay us.”

Willett said he did not remember having any conversation with any other city during his 10 years as MCES finance director about the definition of sewer “hook-up” for determining liability for MCES sewer connection charges.

“I don’t recall that coming up anywhere,” Willett said. “In recent years, there has not been a lot of [construction] activity. Carver is lucky enough to have things going on there.”

Gary Van Eyll, the Metropolitan Council governing board member representing all of Carver County, most of Scott County and part of Hennepin County, was monitoring the disagreement and pleased to have it resolved.

“I had asked our staff what was going on. I’m glad they worked this out with the city,” Van Eyll said. “It doesn’t make any sense for us to be fighting with them.”

Mareck said there are no hard feelings toward Metropolitan Council Environmental Services.

“There is no animosity between the city and MCES,” Mareck said. “They are great to work with. Jason was open to taking in our ideas. I don’t want this portrayed as the city and MCES were at odds. We worked it out and will move on.”

MCES does not wind up empty-handed. The city does not dispute that MCES is entitled to sewer connection fees totaling $31,220 and potentially $9,460 more later this year for five properties that did not have sewer pipes physically connected to the city’s sewer system prior to Dec. 6, 2011.

“There are some properties that were not connected [by Dec. 6]. Those we will have to pay the fees,” Mareck said.

CITY COUNCIL ALERTED

The dispute became public Jan. 3 when Nash gave verbal and written summaries during a Carver City Council meeting.

“On December 21st, MCES staff sent the city an e-mail that states that the city would need to remit MCES SAC to the Met Council for any structure based on whether or not it was generating a utility bill on the [Dec. 6] trigger date,” Nash wrote.

“Upon reviewing the MCES SAC Procedures Manual and other relevant documents and statutes, staff is of the opinion that struc-tures that were hooked-up by the SAC trigger date are grandfathered as a part of the city system.”

Nash alerted councilors that “preliminary estimates” were that $300,000 to $350,000 was at stake and involved structures under construction at the Mills complex, Minnesota Department of Transportation truck station and Spring Creek and Lylewood Glen housing subdivisions.

If the city lost its argument, the city would have been obligated to pay MCES connection charges from the city’s sewer capital fund because the city cannot impose new MCES charges on those property owners, Nash explained.

“The city does not have a mechanism for collecting those MCES SAC fees for these properties from their owners, who previously paid city SAC fees between 2007 and November 2011,” Nash wrote.

Nash answered “yes” when Councilor Mike Webb asked whether the city had a sound legal basis to take the position that proper-ties previously physically connected to the city sewer system were entitled to grandfathering. She said the issue was reviewed with City Attorney Larry Harris.
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