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  10.       
City Council Regular Meeting
Meeting Date: 02/22/2022  

BACKGROUND
HLH Development, LLC (HLH) is the developer of the Hallie's Cove development. Sewer service was not available to the Hallie's Cove property at the time. HLH elected to start development anyway and entered in to an agreement in 2017 with the City to construct a temporary pump and haul facility to provide sewer service to the development until the Woman Hollering Creek Trunk Line and Lift Station Project was complete. The original agreement established that all costs associated with installing and operating the pump and haul facility would be paid by HLH. A revision to the agreement was approved in 2019 stating that the City of Schertz would take over the expense of the pump and haul services beginning January 1, 2020. 

HLH is planning to relocate the temporary pump and haul facility to allow for further development of Hallie's Cove. As part of this relocation, the City has agreed to allow HLH to install the relocated pump and haul facility on dedicated parkland property to not encumber any buildable lots in the development.

As seen in the attached letter, HLH has submitted a request to Council to receive sewer impact fee credits to offset the costs associated with relocating the temporary pump and haul facility, to be reimbursed for the installation of a manhole, and for the City to take over the maintenance of the pump and haul facility. 

Sewer impact fees are only able to be credited or otherwise reimbursed for capital recovery fee eligible project work.  Provision, maintenance, operation, and relocation of the pump and haul system for the Hallie’s Cove Subdivision is not included in the City’s Capital Recovery Plan and is therefore not eligible for reimbursement or impact fee credits.  

The Woman Hollering Creek Wastewater Project is an eligible project.  Construction of a portion of that project may be eligible for reimbursement.  The City’s consulting engineer and the engineer for the Hallie’s Cove Subdivision are currently coordinating to determine if the manhole installed with the Hallie’s Cove Unit 4 collection system can be used as part of the Woman Hollering system.  If it can be made part of that system, staff will determine an appropriate amount of reimbursement. If it is found that the manhole in question cannot be used as part of the Woman Hollering system, then no reimbursement would be applicable.

Per the amended agreement in 2019, the City has incurred significant cost associated with the pump and haul service since 2020. In 2021, the City paid approximately $396,000 in pump and haul services, which averages to $33,000 per month in cost to the City.  Because of the significant cost the City is paying each month for the pump and haul services, staff believes that the operation and maintenance of the private pump and haul facility should remain with HLH until the offsite wastewater infrastructure is completed. HLH was aware of risks in the offsite wastewater infrastructure construction when the agreement was entered in to without a hard deadline for those facilities to exist, so the delay in those facilities or HLH’s desire to relocate the pump and haul facilities are not a trigger for the City to take over the maintenance and operation of the pump and haul facility. The City will continue to pay for the pump and haul services per the agreement. 
 
GOAL
To present the HLH request letter regarding Sewer Capital Recovery Fees and the maintenance of the Hallie's Cove Pump and Haul Facility. 
COMMUNITY BENEFIT
Consistently applying the rules for impact fee credits makes the Capital Recovery Plan work as designed. When credits are given for site related facilities that are not on the Capital Recovery Plan, it creates a funding deficit for the projects on the plan that eventually need to be funded using other sources. Taking on maintenance costs that should be paid by the developer takes funds away from other maintenance activities throughout the water and sewer systems. 
SUMMARY OF RECOMMENDED ACTION
Staff recommends denial of the Sewer Capital Recovery credit request and denial of the request to take over the maintenance of the Hallie's Cove Pump and Haul Facility.
FISCAL IMPACT
Granting an impact fee credit towards infrastructure that is not on the City's Capital Recovery Plan undermines the funding source for eligible projects. Taking on the maintenance of the pump and haul facility will increase the City's expenditures on this facility. The City is already spending approximately $33,000 per month to pay for the pump and haul services associated with the facility. 
RECOMMENDATION
Staff recommends denial of the Sewer Capital Recovery credit request and denial of the request to take over the maintenance of the Hallie's Cove Pump and Haul Facility as detailed in the staff report.
Attachments
HLH Development Hallies' Cove Pump and Haul Request Letter

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