Title
An Ordinance to Amend and Replace Sections 1:271, 1:272, 1:273, 1:274, 1:275, 1:277, and 1:278 of Chapter 12 (Financing Local Public Improvements) of Title I, Sections 1:281, 1:282, 1:284, 1:286, 1:292, 1:293, 1:295, 1:299, 1:300 and 1:301 of Chapter 13 (Special Assessments) of Title I, Sections 2:21, 2:22b, 2:22c and 2:23 of Chapter 27 (Water Capital Recovery Charges) of Title II, and Sections 2:41.2f and 2:42.4 of Chapter 28 (Sanitary Sewer Capital Recovery Charges) of Title II of the Code of the City of Ann Arbor (Ordinance No. ORD-16-03)
Memorandum
The purpose of the proposed code amendments is to provide an equitable, understandable, defensible cost recovery philosophy and charge structure for customers connecting to the City's water main and/or sanitary sewer systems. Often called by different names (development fees, connection fees, system development charges, improvement charges, and capacity charges), utility capital cost recovery charges are one-time payments used to distribute the proportional share for capital improvements previously made that resulted in available capacity for future demand. The proposed charge structure is based on common industry standards and professional best practices for establishing capital recovery charges.
In 2013, concerns were raised by City Council regarding the improvement charges being charged under Chapter 12 of City Code for new connections to the water and sanitary sewer systems. Although the underlying principle of those charges-to make sure appropriate costs are recovered from new customers so that current rate payers are not improperly burdened-were understood, the formula in effect at that time raised concerns about the dollar amounts calculated for these improvement charges. On June 3, 2013, City Council adopted an amendment to Chapter 12 (ORD-13-06) which amended the calculation of the water and sanitary improvement charges for properties connecting to City water mains or sanitary sewers. This...
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