MEMORANDUM 07-182

To: Walt Wrede, City Manager

From: Carey Meyer, Public Works Director

Date: November 20, 2007

Subject: Final Project Cost and Establishment of Assessments

Kachemak Drive (Phase I) Sewer LID

Kachemak Drive (Phase I) Water LID

The Kachemak Drive (Phase I) Sewer and Water LID’s are complete and Public Works has accepted the projects. Below is an overview of the costs of the projects. Below are the original project costs (as estimated in 2003/2004) and our determination of actual project costs:

Original Estimated Actual

Project Total Project Cost Total Project Cost

Kachemak Drive (Phase I) Sewer LID $ 644,800 $ 808,160

Kachemak Drive (Phase I) Water LID $ 397,210 $ 346,580

$ 1,042,010 $ 1,171,224*

* - The City Clerk and the Finance Department will establish the official final assessment amounts.

Based on these costs, the per lot assessment estimates would be as shown below:

Original # Original Est. Actual # Actual Lot

Project of Lots Assessment of Lots Assessment

Kachemak Drive (Phase I) Sewer LID 39 $ 12,400.00 35 $ 17,317.71

Kachemak Drive (Phase I) Water LID 16 $ 18,619.22 14 $ 18,566.79

The cost of the sewer project was higher than originally estimated and the number of lots has decreased. This has resulted in a significant increase in the projected per lot assessments for sewer.

The cost of the water project was lower than originally expected, but the number of lots has decreased. This results in the projected assessments being about what was expected.

The platting, which reduced the number of lots within the LID’s, occurred prior to the time that the City Council passed an ordinance that eliminated the potential for lot number reductions after the creation of a LID.

The construction of the water and sewer project was completed under one construction contract. When LID was created, the combined work was estimated to be $890,000 ($573,940 for sewer; $316,060) for water). The combined project was awarded in the amount of $967,769 (approximately 9% higher than the original estimate).

The actual cost of construction for the combined project was $1,006,561.70, a 13% increase over the original estimate. The actual sewer portion of the project ($684,657.90) represents an increase of 19% over the original construction estimates. The actual water portion of the project ($321,903.80) represents an increase of 2% over the original construction estimates.

Based on the actual sewer project cost, the projected assessments for the sewer LID will be 40% higher than originally estimated. If the number of lots in the sewer LID had stayed the same, the assessments would be 25% higher than the original estimate.

Based on the actual water project cost, the projected assessments for the water LID will be approx-imately the same as originally estimated. If the number of lots in the water LID had stayed the same, the assessments would be 15% lower than the original estimate.

Recommendation: The Council schedule public hearings and create the assessments for this project based on final calculations by the City Clerk and the Finance Department.

The Council may want to consider, at the scheduled public hearings, making adjustments to the assessment amounts for the sewer LID by:

Reducing sewer project costs assessable to property owners to no more than 25% of the original estimate. This would reduce sewer project costs by approximately $103,000 and establish per lot sewer assessments at $15,500. The HAWSP program would absorb the un-assessable costs.
Calculate actual per lot assessments based on the original number of lots. This would reduce lot assessments to $15,541. The HASWP program would absorb the assessments for the four lots that no longer exist.