Title
7841 Redondo Lane, Laguna Woods Subd. - Engel Connection Request
History
The unincorporated property at 7841 Redondo Lane, Lot 25, is requesting annexation into the Village. This property was recently purchased by Mr. Russ Engel. An aerial image (Exhibit A) highlighting the subject property is attached for your reference.
Circa 1993, special assessments were established for participating homeowners in Laguna Woods to annex and receive Orland Park sewer and water service. The property owner in 1993 chose not to participate at that time- six properties initially opted out of the assessment. These six non-participating properties prompted the Village to pass ordinances for the required costs to connect to Village sewer and water, should any of them choose to annex in the future.
The proposed costs associated with the utility work were memorialized via the attached ordinances in order to recover estimated construction costs per residence for future annexations who did not originally participate in the special assessments. The ordinances establish a cost for water service(Exhibit B) equal to $15,768.84 plus inflation adjustment, as specifically defined in the ordinance, and a cost for sewer service (Exhibit C) equal to $8,024.89 plus inflation adjustment, for a combined total of $23,793.73. Per the attached Bureau of Labor Statistics data (Exhibit D), for Chicago Urban Wage Earners and Clerical Workers (CPI-W), the Chicago CPI-W has risen 49.75% since 1993. Therefore the total amount required by ordinance for utility hook-up in April 2011 would be $23,793.73 x 1.4975 = $35,631.11.
However, the property owner is requesting consideration for a reduced amount as follows (a copy of the formal request is attached for your reference- Exhibit E)
1. Pay connection fees equal to the same principal charged to original participating properties, which equal $19,844.73. This amount has been confirmed by our Finance Department in Exhibit F. Surprisingly, actual construction costs were less than anticipated and therefore a revised final cost per residence was indeed revised to $19,844.73. Note again that the ordinances state a combined cost of $23,793.73, which is NOT the principal amount the original participants actually paid. Correspondence for the revised total cost is within Exhibit F, using the adjoining neighbor at 7851 Redondo Lane as an example.
2. Instead of the ordinance-required CPI-W inflation adjustment, a 12% cost of living increase would be applied to the final amount.
3. Repay the amount in 120 equal installments billed monthly, or alternatively billed quarterly via water billing method, over a period of 10 years.
4. Building Permit costs be waived, as was apparently done for the original participating properties- see attached letter within Exhibit E from Building Dept. Director Bill Crabbe dated March 2, 1993.
Typical current day annexation and water meter fees would still apply. The property would still be required to petition for annexation and comply with all required public hearings, which would occur separately. The payment of terms associated with the water and sewer connections would be outlined in a separate annexation agreement.
It should be noted that the residence in question will also pay accordingly for a licensed plumbing contractor to perform the actual connection of sewer and water service lines to the 7841 Redondo residence. It appears that the service line for the sewer will be somewhat lengthy due to the location at which the Village’s sewer main line on Redondo Lane was constructed.
Staff Recommendation
After reviewing the property owner’s proposal, staff recommends one change to the proposal. If the property owner desires to repay over a ten year period, than an interest rate at 5.7% should be applied, consistent with the agreement made with the original participants. The motion reflected below includes this interest provision.
Financial Impact
Based upon the original special assessment ordinances and actual construction costs, the property owner would be required to pay $19,844.73 (borrowed by original special assessment participants), times 1.4975 which equals $29,717.48. In comparison, the final amount received by the Village from the original participating properties over a period of ten years is $25,337.64 per residence- $19,844.73 principal at 5.7% interest annually over ten years. Additionally, within Exhibit F is a 2001 memo from Finance for Lot 42; this shows the cost was calculated as a one-time payment of $24,448.70 in that instance.
be allowed until the property was formally annexed into the Village.
Follow Up - Development Services Committee Meeting
At the April Development Services Committee Meeting, Trustees requested that staff research what the going interest rate for the Village would be today for this type of project. It was believed that perhaps the interest rate had decreased from the previously set rate of 5.7%. The Finance Department has verified the existing rate today would be over 7%, for a special assessment bond. Therefore, staff recommends to keep the 5.7% annual interest to be paid over ten years, as a condition of approval.
The Development Services Committee recommended approval (3-0) of the proposed sewer and water main connection fees subject to annexation as outlined below.
Recommended Action/Motion
I move to approve the proposed sewer and water main connection fees subject to annexation:
1. Base sewer and water combined connection fees equal to $19,844.73, which is the same as the original special assessment participants paid.
2. Instead of the CPI inflation adjustment, a 12% cost of living increase shall be applied to the connection fee.
3. Repay the amount in 120 installments billed monthly, or alternatively billed quarterly via water billing method, over a period of 10 years. The interest on the installments shall be determined annual interest paid by original participants.
4. Building Permit costs be waived, current annexation and meter fees shall apply.
5. The Village Attorney record in the Cook County Recorders Office Ordinances 2379 & 2380.
6. The Village Attorney in conjunction with the Village Manager prepare an agreement memorializing the arrangements with regards to water and sewer service for 7841 Redondo Lane and that a memorandum of that agreement be recorded in the Cook County Recorders Office.