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009-21 - Ordinance - Sewer Capital Facility Charges, Amending Sections 13.04.025 and 13.04.010 ORDINANCE NO. 009-21 AN ORDINANCE OF THE CITY OF PORT ORCHARD, WASHINGTON, RELATING TO SEWER CAPITAL FACILITY CHARGES; AMENDING PORT ORCHARD MUNICIPAL CODE SECTIONS 13.04.025 AND 13.04.040; PROVIDING FOR SEVERABILITY; AND ESTABLISHING AN EFFECTIVE DATE. WHEREAS, at Port Orchard Municipal Code 13.04.040, the City currently provides a means by which developers may obtain credit against the general facility charges owed to the City for new development and connections to the City’s sewerage system; and WHEREAS, the City Council desires to amend the codified language to allow for a credit where development has resulted in an upsizing capacity outside that needed for the development; and WHEREAS, at POMC 13.04.025, staff suggests an amendment to clarify the components of the sewer capital facility charge for consistency with POMC 13.04.040; and WHEREAS, a public hearing before the City Council on the proposed amendments was held on February 9, 2021; and WHEREAS, the City Council finds that the amendments herein to POMC 13.04.025 and 13.04.040 are consistent with goals and policies of the City’s Comprehensive Plan and related regulations, and serve the public health, safety, and general welfare of the citizens of Port Orchard; now, therefore, THE CITY COUNCIL OF THE CITY OF PORT ORCHARD, WASHINGTON, DO ORDAIN AS FOLLOWS: SECTION 1. Port Orchard Municipal Code 13.04.025 is hereby amended to read as attached at Exhibit A hereto. SECTION 2. Port Orchard Municipal Code 13.04.040 is hereby amended to read as attached at Exhibit A hereto. SECTION 3. If any section, sentence, clause or phrase of this ordinance should be held to be invalid or unconstitutional by a court of competent jurisdiction, such invalidity or unconstitutionality shall not affect the validity of constitutionality of any other section, sentence, clause or phrase of this ordinance. SECTION 3. This ordinance shall be in full force and effect five (5) days after posting and publication as required by law. A summary of this Ordinance may be published in lieu of the entire ordinance, as authorized by State Law. Ordinance No. 009-21 Page 2 of 9 PASSED by the City Council of the City of Port Orchard, APPROVED by the Mayor and attested by the Clerk in authentication of such passage this 23'd day of February 2020. Robert Pu u, Mayor ATTEST: ran R nearso n, MMC, City Clerk APPROVED AS TO FORM:Sponsored by Charlotte A. Archer, City Attorney Cindy Lucarelli, Councilmember PU BLISHED: February 26, 202I EFFECTIVE DATE: March 3,2O2L Ordinance No. 009-21 Page 3 of 9 Exhibit A 13.04.025 Fee Schedule. *** Sewer Capital Facility Charge, consisting of both: POMC 13.04.040 (2) Sewer Wastewater Treatment Facility Fee POMC 13.04.040 (2) Per ERU $3,597.37 McCormick Land Co. Div. 1-10 Per ERU $881.25 General Facility Fee POMC 13.04.040(2) Per ERU $8,525 *** 13.04.040 Sewer capital facility charge – Extension of sewer. (1) The sewer capital facility charge is designed to mitigate the impact of new demands on the existing sewer system and to require new users to pay their fair share of the value of the sanitary sewer system. The sewer capital facility charge applies to new construction, changes in use, and building modifications that increase the total number of equivalent residential units (ERUs). An ERU is 180 gallons per day for nonresidential connections. An ERU for residential connections is one single-family dwelling unit, whether detached or attached and configured as an apartment unit, condominium unit, townhouse unit or any other configuration. The ERU consumption is based upon metered water consumption or comparison to similar accounts when metered water consumption data is not readily available. (a) Sewer Capital Facility Charge – Exception. The following exception applies to the assessment of the sewer capital facility charge. All four elements of the below-listed requirements must be present to qualify for the exception: (i) A nonresidential account paid the sewer capital facility charge at the time the property connected to the city’s sewer system; (ii) Sometime after the original connection, the property owner decides to construct Ordinance No. 009-21 Page 4 of 9 a new building, change the original use, or modify the original building; (iii) After the building improvements are completed, the total sewer usage for the nonresidential account will be equal to or less than the usage at the time of the original connection; and (iv) The new construction, change in use, or building modification has not resulted in additional direct connection to the city’s sewer system or the establishment of an additional sewer account. (2) The sewer capital facility charge consists of two components: the general facility fee (GFF) and the wastewater treatment facility fee (WTFF). The general facility fee and the wastewater treatment facility fees are set forth in POMC 13.04.025. The properties within Divisions 1 through 10, inclusively, of the McCormick Woods Land Company shall have a wastewater treatment fee which is set forth in POMC 13.04.025. (3) The sewer capital facility charge shall be paid before connecting to the city sanitary sewer system, or before changing the use, or increasing the total ERU count above the amount for which a sewer capital facility charge has been paid, except where a sewer GFF agreement provides for a deferral of these fees. If work is to be done that requires a sewer capital facility charge, it shall be paid before a permit shall be issued. (4) If, after connection of a nonresidential service, the actual sewer usage has increased or the property use expanded so that there are a greater number of ERUs being used on the property than for which the sewer capital facility charge was paid, the property owner shall pay to the city an additional sewer capital facility charge based upon the new or expanded use. The additional sewer capital facility charge shall be based upon the charge rate in effect at the time the increased use is requested and/or detected, whichever first occurs. (5) A credit against the sewer capital facility charge may be applied for those property owners that paid their assessments in full through a local improvement district formed by the city, where such local improvement district is formed to finance the construction of any of the improvements that are a basis for calculating the value of the sewer capital facility charge. The credit shall be equal to the amount of the property owner’s principal assessment, not including interest and penalties. The credit shall be applied at the time of payment of the sewer capital facility charge and shall not be used to reduce any assessments in the local improvement district. (6) Upon petition to the city engineer by the property owner or developer, a credit against the sewer general facility fee (GFF) may be applied for those developers that construct at their own expense and with the City’s advance agreement any of the improvements that are a basis for calculating the value of the sewer general facility fee and result in upsized capacity over that required to serve their development, or for those property owners that pay a latecomer’s fee Ordinance No. 009-21 Page 5 of 9 toward those same improvements. The credit shall be memorialized in a GFF credit agreement approved by the City Council. The value of the credit shall be determined by the city engineer and shall be based on (1) conformance of the work with the General Sewer Plan of the city, and (2) shall be proportional to the additional capacity provided by the planned capital improvement. The credit shall be limited to the development identified in the initial credit request that installed the upsized or additional infrastructure. The agreement may allow for phased projects. Alternatively, the value of the credit shall be the amount paid as a latecomer fee towards the improvement(s). The total credit, if any, as provided in this subsection shall not exceed the amount of the total general facility fee due and payable to the sewer utility. The full actual costs of drafting and processing the GFF agreement shall be reimbursed by the owner or applicant prior to final City Council action on the agreement, to such extent that the actual costs exceed the initial application fee. Nothing in a GFF credit agreement shall limit the City’s ability to adjust the GFF due at the time of building permit issuance. The process for approving a GFF credit shall be as follows: (a) The developer shall request a credit in writing in conjunction with permit submittal or a pending permit application and include the following eligibility information in their request: i. Identification of the project proposed for construction as listed in the City’s sewer general facility fee calculation and the cost for that project as it appears in the GFF study. ii. Identification of the sizing requirements for the proposed facility is at the City’s sole discretion, based on (1) the City’s adopted General Sewer Plan or (2) a technical design analysis prepared by the City’s engineers confirming the sizing requirements for the facility to be constructed. If the City determines in its sole discretion that a technical design analysis is required, then the analysis shall be prepared at the applicant’s expense. iii. Identification of the size of the facility to be constructed in ERUs as described in section ii. above as well as share of the facility in ERUs to be used by the proposed development. (b) The City may create an application form to accompany credit requests. Ordinance No. 009-21 Page 6 of 9 (c) The Director shall verify the information provided under section (a) above and may seek peer review at the requestor’s expense of any technical reports submitted to justify proposed credit amounts or proportionate shares. (d) Upon verification of eligibility, the Director shall prepare a GFF credit agreement for City Council consideration and approval. (e) The GFF credit agreement may allow the deferral of GFF charges pending completion of the facility to be constructed by the developer in exchange for credit in rare circumstances (such as when building construction subject to GFF payment/credit and sewer facility construction occur concurrently), at the sole discretion of the City. In such cases, the agreement shall stipulate that no certificates of occupancy shall be granted prior to substantial completion of the facility and/or payment of the GFF. This deferral is allowed because the total amount of GFFs owed to the City may not be known prior to project completion and verification of construction costs. Where credit amounts are anticipated to be less that the total GFFs owed to the city, the agreement shall stipulate that a partial payment be made towards the GFFs owed for a project. The City Council may require a performance bond if deferral is allowed. (f) Credit shall not be granted until the Director has deemed the capital project as completed. (g) Project completion shall not occur until: i. The City deems it substantially complete; and ii. All punch list items are finished; and iii. The facility passes final inspection; and iv. The Developer has put a 2-year warranty and maintenance bond in place; and v. The City releases the performance bond (if applicable); and vi. The Developer has completed all property dedications; and vii. The Developer has provided the City with a Bill of Sale for the improvements containing the certified construction costs (stamped by licensed engineer) to the City for determination of the maximum credits available under this Agreement. The Director shall have the authority to approve or reject project cost estimates and may request additional information in support of certified construction cost estimates. viii. The City Council accepts the project as public. (h) The City will confirm completeness of the Project by issuing a Final Notice of Completeness to the Developer. (i) Upon certification of completeness, the developer shall pay any balance owed for GFFs within 90 days or prior to the city’s issuance of a certificate of occupancy, whichever occurs Ordinance No. 009-21 Page 7 of 9 first. For illustrative purpose only, a GFF credit is calculated as depicted below: Data needed to establish the credit value: 1) Verify the proposed project was included in the Sewer General Facility Fee Amount 2) Identify the project cost established for this project in the Sewer General Facility Fee 3) Identify the ERU’s for the Facility a. Number of ERU’s for Developer needs of the total facility b. Percentage ERU’s for Developer needs of the total facility c. Number of ERU’s for Excess Capacity of the total facility d. Percentage ERU’s for Excess Capacity of the total facility 4) Identify the Certified Construction Cost 5) Identify current Sewer General Facility Fee at time of agreement Calculation needed to establish the credit value: a) Sewer General Facility Fee Method available for credit (#2 multiplied by 3d) b) Certified Project Cost Method available for credit: (#4 multiplied by 3d) c) Total Sewer General Facility Fee owed by Developer: (#5 multiplied by 3a) The credit is the lowest value of a, b, or c. For illustrative purposes only, a GFF credit is depicted in the following example: EXAMPLE Data needed to establish the credit value: 1) Verified 2) $1,000,000 3) 1000 ERU’s a. 250 ERU’s b. 25% c. 750 ERU’s d. 75% 4) $900,000 5) $8,525 Calculated Credit Value: a) Sewer General Facility Fee Method available for credit: $750,000 $1,000,000 x 75% = $750,000 b) Certified Project Cost Method available for credit: $675,000 $900,000 x 75% = $675,000 c) Total Sewer General Facility Fee owed by Developer: $2,131,250 Ordinance No. 009-21 Page 8 of 9 $8,525 x 250 = $2,131,250 The credit is the lowest value of a, b, or c. The maximum Credit is $675,000 (7) The City Council may require the GFF credit agreement to prorate GFF credits across all lots or units in a development when the amount of GFFs owed by the developer exceeds the amount of credit requested. (8) The above provisions notwithstanding, the amount of credit shall not exceed the amount of the sewer general facility fee for the property to which the credit is being applied. (9) At the time the sewer general facility charge is paid, a sewer inspection fee shall be paid per lateral connection to the main. The sewer inspection fee is set forth in POMC 13.04.025. (10) All materials shall comply with the requirements of the city. If the city supplies any materials, the cost of these plus overhead and sales tax will be paid by the customer. (11) Extension of Sewer to Property Contiguous to the City Shall Annex – Exception. Property lying within the urban growth boundary and contiguous to the Port Orchard city limits shall annex to the city as a condition of sewer connection. In the alternative, the city may elect to defer annexation and require the owner to execute a utility extension agreement as described in subsection (11) of this section. (12) Requirement for Utility Extension Agreement. (a) Property lying within the urban growth area which is not contiguous to the Port Orchard city limits shall be permitted water and/or sewer connection only upon entering into an appropriate agreement with the city containing a waiver of protest to annexation/limited power of attorney authorizing annexation at such time as the city determines the property should be annexed to the city. Application for extension of utilities is subject to the following provisions: (i) Application fees as established by the city council shall be paid upon the submittal of a signed utility extension agreement (UEA) requesting water and/or sewer for property outside the city, but located within the urban growth area; (ii) The applicant will bear the entire cost of water and/or sewer connection pursuant to this chapter, as written or hereafter amended, subject to any provision in effect at the time of connection for latecomer reimbursement; (iii) The applicant will be subject to all applicable provisions of this chapter, as written or Ordinance No. 009-21 Page 9 of 9 hereafter amended, for extension of city utilities, the payment therefor, and all enforcement provisions therein; and (iv) The UEA shall not be executed prior to the time formal application is made for approval of the project for which utilities are requested. The term of said agreement shall terminate at the time any project application or approval expires or is revoked for any reason. A new agreement shall also be required for any extension of project application or approvals or when the director of planning determines that a substantial change or addition has been made to the project. (b) The city may disconnect the utilities for failure of the applicant or his/her successors or assigns, for violation of this chapter, or for violation of the terms and conditions of the UEA. (c) Following execution, such agreement shall be recorded by the city clerk in the chain of title for such property in the records of the Kitsap County auditor.