Rate Fee Ordinance

ORDINANCE NO. 19:2024

AN ORDINANCE ESTABLISHING AN IMPACT FEE PROGRAM TO DEFRAY THE COST OF CAPITAL IMPROVEMENTS FOR WASTEWATER TREATMENT AND COLLECTION REQUIRED BY INCREASED DEMANDS UPON THE WASTEWATER SYSTEM.

WHEREAS, the City of Morehead Board of City Council establishes rates for utilities;

WHEREAS, the Morehead Utility Plant Board (MUPB) has recommended to the City of Morehead the implementation of an impact fee program related to waste water collection and treatment to equitably allocate the costof increased demand on MUPB wastewater system so as to not unduly burden existing MUPB customers;

WHEREAS, the City of Morehead has determined that is necessary and appropriate to establish an impact fee program to allocate the cost of capital improvements for wastewater treatment and collection upon the developments, or redevelopments, that create the need for or increase the demands upon MUPB’s wastewater facilities;

NOW, THEREFORE, BE IT ORDAINED by the City of Morehead, as follows;

That Title 5 of Morehead Code of Ordinances, Public Utilities, Chapter 52, Sewer Section be amended to include the following:

IMPACT FEE PROGRAM

SECTION 52.100. Purpose. The purpose of the impact fee program is to impose a portion of the cost of previous and future capital improvements for wastewater facilities upon those developments, redevelopments and new customers that create the need for or increase the demands upon MUPB wastewater facilities and provide equity with existing wastewater customers.

SECTION 52.101. Definitions. For purposes of this ordinance, the following terms shall mean:

1. “Capital Improvements” shall mean public facilities or assets used for wastewater collection, transmission, treatment or disposal, or any combination.
2. “Development” shall mean all improvements on a site, including buildings, other structures, parking andloading areas, landscaping, paved or graveled areas, and areas devoted to exterior display, storage or activities which have the effect of increasing the demands upon MUPB’s wastewater utility facilities. Development includes redevelopment of property which results in an increase in demand upon MUPB’s wastewater facilities. Development includes improved open areas such as plaza and walkways, but does not include natural geologic forms or unimproved lands.
3. “Existing Customer” shall mean a customer of MUPB wastewater facilities who has, for 36 consecutive months or a shorter timeframe if wastewater service has become available withinthe last 36 months, whichever is the least, paid wastewater rates and fees to MUPB and who is in good standing with regard to overdue balances.
4. “General Manager” shall mean the General Manager or designated staff
5. “Growth-Related Expansion” shall mean a capital project that has been deemed necessary for the expansion of the sewer system.
6. “Impact Fee” shall mean a charge comprised of a system wide improvements fee, a growth­ related expansion fee,or a combination thereof, assessed or collected at the time of increased usage of the wastewater facilities, at the time ofissuance of a development permit or building permit, or at the time of connection to the wastewater system.
7. An impact fee is not payment or reimbursement for MUPB’s average cost of inspecting and installing connections with wastewater facilities-that reimbursement is called a “tap fee” and constitutes a separate charge.
8. An impact fee does not include fees assessed or collected as part of a local improvement district or acharge in lieu of a local improvement district assessment, or the cost of complying with requirements or conditions imposed by a land use decision.
9. “Land Area” shall mean the area of a parcel of land as measured by projection of the parcel boundaries upon ahorizontal plane with the exception of a portion of the parcel within a recorded right-of-way or easement subject to a servitude for a public street or for a public scenic or preservation purpose.
10. “MUPB” shall mean Morehead Utility Plant
11. “Owner” shall mean the Owner or Owners of record title of real property or the purchaser or purchasers under arecorded land sales agreement, and other persons having an interest of record in the described real property.
12. “Parcel of Land” shall mean a lot, parcel, block or other tract of land that in accordance with applicable regulations is occupied or may be occupied by a structure or structures or other use, and that includes the yards and other open spaces required under the zoning, subdivision, or other development ordinances and regulations.
13. “Permittee” shall mean the person or entity to whom a building permit, development permit, a permit or plan approval to connect to MUPB’s wastewater facilities, or right-of-way access permit is issued.
14. “Program Administrator” shall mean the impact fee program administrator/coordinator. The General Manager for MUPB, or their designee, shall be the impact fee program administrator/coordinator.
15. “Qualified Public Improvements” shall mean a capital improvement that is:
16. required as a condition of development approval; or
17. identified in the plan adopted pursuant to Section 8 of this Ordinance and either
18. not located on or contiguous to a parcel of land that is the subject of the development approval; or
19. located in whole or in part on or contiguous to a parcel of land that is the subject of the development
20. for purposes of this definition, contiguous means in a public way which abuts the parcel.
21. “Redevelopment” shall mean repurposing an existing
22. “System wide Improvements Fee” shall mean a fee for costs associated with capital improvements constructed or under construction on the date the fee is adopted pursuant to Section 4 of this Ordinance, and for which the Councildetermines wastewater treatment capacity to
23. “Utility” shall mean the publicly-owned wastewater treatment and collection system of MUPB.

SECTION 52.102. Impact Fee Established.

1. Unless otherwise exempted by the provisions of this ordinance or other local or state law, an impact fee is hereby imposed upon all development, redevelopment or new customer within MUPB’ s service area, upon the act of making a connection to MUPB’s wastewater facilities.
2. Impact Fee shall be established and may be revised by resolution ofMUPB. The resolution shall set the amountof the charge, the type of permit to which the fee applies, and, if the fee applies to a geographic area smaller than the entire wastewater service area, the geographic area subject to the charge.

SECTION 52.103. Methodology.

1. The Impact Fee shall be calculated as follows: system wide improvement fee (per gallon)

+ growth related expansion fee (per gallon)= total Impact Fee per gallon. The total Impact Fee per gallon shall be offset by existing outstanding debt credit resulting in a Net Impact Fee per gallon. Net Impact fee per gallon shall be multiplied by the average waste water usage per Equivalent Residential Unit (ERU) resulting in the Net Impact Fee per ERU. The Impact Fee is arrived by multiplying the Net Impact Fee per ERU by the ERU of the new development.

2. The methodology used to establish or modify the system wide improvements fee shall, where applicable, bebased on the current outstanding debt allocated to the facilities including without limitation design, financing and construction costs, prior contributions by then-existing users, gifts or grants from federal or state government or private persons, the volume of unused capacity available to future system users, rate-making principals employed to finance publicly­ owned capital improvements, and other relevant factors identified by MUPB. The methodology shall promote the objective that future system users shall contribute no more or less than an equitable share of the cost of then-existing facilities.
3. The methodology used to establish or modify the growth-related expansion fee shall, where applicable, demonstrate consideration of the estimated cost of projected capital improvements needed to increase the capacity of the systems to which the fee is The methodology shall be calculated to obtain the cost of capital improvements for the projected need for available system capacity for future system users.
4. Equivalent Residential Unit, with the acronym ERU, shall be the basis of assigning an impact fee TheERU shall be established on the basis of the average residential water usage in MUPB’s service area, and serves as anestimation of the gallons of wastewater discharged daily to MUPB’s wastewater facilities by a single-family residence. The impact fee is calculated by calculation of outstanding debt, future debt and administrative fees to establish the NET Impact Fee (per gallon). The Net Impact Fee (per gallon) is multiplied by the estimation of the average residential water usage (in gallons per day) equaling the Net Impact Fee (per ERU). The ERU shall be calculated specific to the Morehead Utility Plant Board. At a minimum, the ERU should be recalculated every 5 years.
5. The equation and factors used to establish or modify the system wide improvements fee, the growth-related expansion fee, or both, shall be contained in a resolution adopted by MUPB.

SECTION 52.104. Authorized Expenditures.

3. System wide Improvements fees shall be applied only to capital improvements associated with the system for which the fees are assessed, including expenditures relating to repayment of
4. Growth-Related Expansion fees shall be spent only on capacity-increasing capital improvements associated with the system for which the fee is assessed, including expenditures relating to repayment of future debt for the An increase in system capacity occurs if a capital improvement increases the level of performance or service provided by existing facilities or by providing new facilities.
   1. The portion of the capital improvements funded by growth-related expansion fees must be related to demands created by current or projected development. A capital improvement being funded wholly or in part from revenues derived from the growth-related expansion fee shall be included in the plan adopted by MUPB pursuant to Section 7 of this Ordinance.
5. Notwithstanding Subsections (1) and (2) of this section, impact fee revenues may be expended on the direct costs of complying with the provisions of this ordinance, including the costs of developing impact fee methodologies and providing an annual accounting of impact fee expenditures.
6. There shall be created a restricted account entitled the “Wastewater Impact Fee ” All monies derived from the wastewater impact fee shall be placed in the Wastewater Impact Fee Account. Funds in the Wastewater Impact Fee Account shall be used solely to provide the wastewater capital improvements plan (CIP) listed capacity increasing improvements according to the wastewater CIP as it currently exists or as hereinafter adopted and amended, and eligible administrative costs. In this regard, wastewater impact fee revenues may be used for purposes that include:
7. design and construction plan preparation;
8. permitting;
9. right-of-way acquisition, including any costs of acquisition and condemnation;
10. construction of new wastewater treatment facilities, including, but not limited to, sludge handling facilities;
11. construction of collection and interceptor lines;
12. construction of pumping and lift stations;
13. demolition that is part of the construction of any of the improvements on this list;
14. payment of principal and interest, necessary reserves and costs of issuance under any bonds or otherindebtedness issued by MUPB (including those issued by and through the City of Morehead) to provide money to construct or acquire wastewater facilities;
15. direct costs of complying with the provisions of the Kentucky Revised Statutes that allows or limits impact fees/SDCs, including the costs of developing impact fee methodologies and providing an annual accounting of impact fee expenditures.

SECTION 52.105. Expenditure Restrictions.

Impact fee charges shall not be expended for costs of the operation or routine maintenance of capital improvements.

SECTION 52.106. Capital Improvements Plan.

1. After the establishment of a wastewater Impact Fee, MUPB shall adopt a Capital Improvements Plan that includes a list of:
2. the capital improvements that MUPB intends to fund in whole or in part with impact fee revenues;
3. the estimated cost and beginning date of construction of each improvement and the percentage of that cost eligible to be funded with growth-related expansion fee revenues; and,
4. a description of the process for modifying the
5. In adopting this plan, MUPB may incorporate by reference all or a portion of any public facilities plan, masterplan, capital improvements plan or similar plan that contains the information required by this section.
6. MUPB may modify such plan and list at any time. If the impact fee will be increased by a proposed modification to the list, to include a capacity- increasing public improvement, MUPB will:
7. at least 30 days prior to adoption of the proposed modification, provide written notice to persons who have requested notice pursuant to Section 13 of this ordinance; and
8. hold a public hearing if a written request for a hearing is received within 7 days of the date of the proposed modification.
9. A change in the amount of a system wide improvements fee or a growth- related expansion fee is not a modification of the impact fee if the change in amount is based on the periodic application of the Engineering News-Record’s (ENR) Construction Cost Index or a modification to any of the factors related to the rate that are incorporatedin the established MUPB may elect to revise the impact fee, annually, based upon changes in the ENR Construction Cost Index.

SECTION 52.107. Collection of Wastewater Impact Fee Charge.

1. The wastewater impact fee is payable upon:
   1. MUPB Approval of Development Plat for development
   2. a request for wastewater service; or
2. at the time tap fee(s) are collected, whichever is
3. If no building, development, or connect permit is required, the impact fee is payable at the time the usage of thecapital improvement is increased based on changes in the use of the property unrelated to seasonal or orderly fluctuations in usage.
4. If development is commenced or connection is made to the wastewater facilities without an appropriate permit, the impact fee is immediately payable upon the earliest date that a permit was required.
5. If requested by the applicant, MUPB may provide the applicant an estimate of the impact fee when a permit that allows building or development of a parcel is
6. The impact fee program administrator shall not issue such permit or allow such connection until the fee has been paid in full, or until provision for installment payments has been made pursuant to Section 108 of thisOrdinance, or unless an exemption is granted pursuant to Section

52.109 of this Ordinance.

SECTION 52.108. Installment Payment.

1. When an impact fee based on an ERU number exceeding 150 units or more is due and collectible, the owner of the parcel of land subject to the impact fee may apply for payment in 6 semi-annual installments, to include interest (at2 points above the prime rate at the time of request) on the unpaid balance which shall be secured by a lien on the parcel subject to the impact fee and/or other collateral, guarantee or surety approved by MUPB.
2. The impact fee program administrator shall provide application forms for installment payments, which shall include a waiver of all rights to contest validity of the lien, except for the correction of computational errors.
3. An applicant for installment payments shall have the burden of demonstrating the applicant’s authority toassent to the imposition of a lien on the parcel and that the property interest of the applicant and/or other collateral, guarantee, or surety is adequate and enforceable to secure payment of the lien.
4. MUPB shall record the lien for the unpaid portion of the impact fee From that time MUPB shall have alien upon the described parcel for the amount of the impact fee charge, together with interest on the unpaid balance atthe rate established by MUPB. The lien shall be enforceable in all manner permitted by law including but not limited to contract and/or KRS 376.265.
5. For property that has been subject to a cancellation of assessment of impact fees, a new installment payment contract shall be subject to the code provisions applicable to impact fees and installment payment contracts on file on the date the new contract is received by MUPB.

SECTION 52.109. Exemptions.

1. MUPB shall have the authority in its discretion to waive, reduce or fully enforce the impact fee for any entity or person.
2. Additions to single-family dwellings that do not constitute the addition of a dwelling unit, as defined by theKentucky Uniform Building Code, are exempt from all portions of the wastewater impact fee.
3. An alteration, addition, replacement or change in use that does not increase the use of the wastewater utility and its facilities are exempt from all portions of the impact fee charge.
4. Existing customers located within a development that have a current wastewater service at the time of the adoption of this ordinance by MUPB.
5. All new residential dwellings not defined as being a part of a development per local planning and zoning,subdivision regulations or local ordinances in the jurisdiction of the

SECTION 52.110. Credits.

2. When a redevelopment occurs that is subject to an impact fee, the impact fee for the existing use, if applicable, shall be calculated and if it ts less than the impact fee for the use that will result from the development, the difference between the impact fee for the existing use and the impact fee for the proposed use shall be the impact fee charged. If the change in the use results in the impact fee for the proposed use being less than the impact fee for the existing use, no impact fee shall be required. No refund or credit shall be given unless provided for by another subsection of this section.
3. A credit shall be given to the permittee for the cost of a qualified public improvement upon acceptance by MUPB. The credit shall not exceed the growth-related expansion fee even if the cost of the capital improvement exceeds the applicable growth-related expansion fee and shall only be for the growth-related expansion portion of theimpact fee charged for the type of improvement being constructed.
4. If a qualified public improvement is located in whole or in part on or contiguous to the property that is the subject of the development approval and is required by the General Manager to be built larger or with greater capacity than is necessary for the particular development project, a credit shall be given for the cost of the portion of the improvement that exceeds the City of Morehead’s or any other governmental or regulatory body’s minimum standard facility size or capacity needed to serve the particular development project or The applicant shall have the burden of demonstrating that a particular improvement qualifies for credit under this subsection. The request for creditshall be filed in writing no later than 60 days after acceptance of the improvement plans by MUPB. MUPB may denythe credit provided for in this section ifMUPB demonstrates that the application does not meet the requirements of this section or if the improvement for which the credit is sought was not included in the improvement plan pursuant to Section 7 of this Ordinance.
5. When the construction of a qualified public improvement located in whole or in part or contiguous to theproperty that is the subject of development approval gives rise to a credit amount greater than the growth-related expansion fee that would otherwise be levied against the project, the credit in excess of the growth-related expansion fee for the original development project may be applied against growth- related expansion fees that accrue insubsequent phases of the original development project.
6. When an existing customer, as defined in Section 2 of this ordinance, constructs, or causes to be constructed, a new development within MUPB’ s wastewater utility service area, and abandons their existing residence or establishment that is also located within MUPB’s wastewater utility service area, that customer may be granted a “buy-in” credit on their impact fee The buy-in credit serves to acknowledge the equity that the existing customer has amassed in the wastewater utility. The credit is determined by calculating only the system wide improvements portion of the impact fee using the factors in place at the time of the customer’s request for the  credit. The amount of the system wide improvements fee constitutes the amount of the buy-in credit. To qualify for the buy-in credit:
7. The ERU serving the new development must be equal to or less than the ERU serving the existing account;
8. The purpose of the new development must be essentially the same as that of the existing account, i.e., single-family residence versus an existing account assigned to a single­ family residence;
9. The ex1stmg water and wastewater account serving the existing residence of establishment must be closed by request of the customer; and
10. The customer must request the buy-in
11. Notwithstanding Subsections 1 through 3 above, when establishing a methodology for a wastewater impact fee charge, MUPB may provide for a credit against the growth-related expansion fee, the system wide improvements fee,or both, for capital improvements constructed as part of the development which reduce the development’s demand upon existing capital improvements and/or the need for future capital improvements, or a credit based upon any other rationale MUPB finds reasonable.
12. Credits shall not be transferable from one development to
13. Credits shall not be transferable from type (system wide improvement or growth-related expansion) of impact fee to another.
14. Credits shall be used within 5 years from the date the credit is

SECTION 52.111. Notice.

1. MUPB shall maintain a list of persons who have made a written request for notification prior to adoption or modification of a methodology for any impact fee. Written notice shall be mailed to persons on the list at least 90 days prior to the first hearing to establish or modify an impact fee The methodology supporting the impact fee shall be available at least 30 days prior to the first hearing to adopt or amend an impact fee. The failure of a person on the list to receive a notice that was mailed does not invalidate the action ofMUPB.
2. MUPB may periodically delete names from the list, but at least 30 days prior to removing a name from the list,MUPB must notify the person whose name is to be deleted that a new written request for notification is required if the person wishes to remain on the notification

 

SECTION 52.112. Segregation and Use of Revenue.

1. All funds derived from the wastewater impact fee are to be segregated by accounting practices from all other funds of MUPB. That portion of the impact fee calculated and collected on account of the wastewater system shall beused for no purpose other than set forth in Section 6 of this ordinance.
2. MUPB shall provide the City Council with an annual accounting, by July 1 of each year, for impact feesshowing the total and the projects funded from each account in the previous fiscal year. A list of the amount spent on each project funded, in whole or in part, with impact fee revenues shall be included in the annual accounting.

SECTION 52.113. Refunds.

1. Refunds may be given by the impact fee program administrator upon finding that there was a clerical error in the calculation of the impact fee.
2. Refunds shall not be allowed for failure to timely claim credit or for failure to timely seek an alternative impact fee rate calculation at the time of submission of an application for a building

SECTION 52.114. Implementing Regulations; Amendments

The City Council hereby delegates authority to the General Manager ofMUPB to adopt necessary procedures to implement and enforce the provisions of this ordinance including the appointment of an impact fee programadministrator. All rules adopted pursuant to this delegated authority shall be available for public inspection.

SECTION 52.115. Appeal Procedure.

1. A person challenging the propriety of an expenditure of impact fee revenues may appeal the decision or the expenditure to MUPB by filing a written request with the General Manager describing, with particularity, the decision of MUPB and the expenditure of which the person appeals. An appeal of expenditure must be filed within 6 months after the date of the alleged improper expenditure.
2. Appeals of any other decision required or permitted to be made by MUPB under this ordinance must be filed in writing with the General Manager within 10 days of the decision.
3. After providing notice to the appellant, the MUPB Board shall determine whether MUPB’ s decision or the expenditure is in accordance with this ordinance and may affirm, modify, or overrule the decision(s). If the MUPB Board determines that there has been an improper expenditure of impact fee revenues, the MUPB Board shall directthat a sum equal to the misspent amount shall be deposited within one year to the credit of the account or fund from which it was
4. A legal action challenging the methodology adopted by the Council and MUPB pursuant to Section 4 of this ordinance shall not be filed later than 60 days after adoption of such methodology. A person shall contest themethodology used for calculating an impact fee only as provided in Subsection 4, and not otherwise.
5. A person who wishes to challenge an impact fee must make a written challenge to the fee and file the challenge with the General Manager within 10 days of receiving the notification of charge. The written challenge must describe with particularity the calculation that the person
   1. The written challenge shall state:
   2. the name and address of the appellant; and
   3. the nature of the appeal.

Failure to file such written challenge within the time permitted shall be considered a waiver of any objections to the charge.

1. After providing timely notice to the challenger, the General Manager shall determine whether the charge is in accordance with the resolution containing the methodology used to establish or modify the impact fee adopted by MUPB.
2. Unless the challenger and MUPB agree to a longer period, a written challenge to the impact fee shall beheard by the General Manager within 10 working days of the receipt of the written At least 5 working daysprior to the hearing, MUPB shall mail notice of the time and location thereof to the person who made the written challenge.
3. The General Manager shall hear and determine the challenge on the basis of the person’s written challenge and any additional evidence he/she deems appropriate. At the hearing the challenger may present testimony and oral argument personally or by counsel. The Kentucky Rules of Evidence as used by courts oflaw shall not apply.
4. After exhausting the MUPB’s administrative review procedure pursuant to Section 16 (5) of this ordinance, the person challenging the impact fee may then petition for the Rowan Circuit Court to review of the final determination within thirty days after the mailing of written notice of such

SECTION 52.116. Change in ERU unit(s).

If any customer of MUPB wastewater utility increases the ERU classification of a property utilized to determine thecustomer’s impact fee, that customer is subject to a revised impact fee. The revised impact fee shall be the difference in the fees associated with the existing and new ERU unit(s). This section applies to any customer of the wastewater utility, not only those who have previously paid an impact fee.

SECTION 52.117. Prohibited Connection.

No person may connect to the water or wastewater systems ofMUPB unless the appropriate impact fee has been paid or the lien or installment payment method has been applied for and applied.

SECTION 52.118. Penalty.

Violation of the Impact Fee Program is punishable by a fine not to exceed$ 5,000.00. SECTION 52.119. Construction.

For the purposes of administration and enforcement of this Ordinance, unless otherwise stated in this Ordinance, the following rules of construction shall apply:

1. In case of any difference of meaning or implication between the text of this ordinance and any caption, illustration, summary table, or illustrative table, the text shall control.
2. The word “shall” is always mandatory and not discretionary; the word “may” is
3. Words used in the present tense shall include the future; and words used in the singular number shall includethe plural and the plural the singular, unless the context clearly indicates the
4. The phrase “used for” includes “arranged for,” “designed for,” “maintained for,” or “occupied for.”
5. Where a regulation involves 2 or more connected items, conditions, provisions, or events:
   1. “And” indicates that all the connected terms, conditions, provisions or events shall apply;

1. “Or” indicates that the connected items, conditions, provisions or events may apply singly or in any combination.
2. The word “includes” shall not limit a term to the specific example, but is intended to extend its meaning to all other instances oflike kind or character.

 

SECTION 52.120. Severability.

The provisions of this ordinance are severable, and it is the intention to confer the whole or any part of the powers herein provided for. If any clause, section or provision of this ordinance shall be declared unconstitutional or invalid for any reason or cause, the remaining portion of this ordinance shall be in full force and effect and be valid as if such invalid portion thereof had not been incorporated herein. It is hereby declared to be the Council’s intent that thisordinance would have been adopted had such an unconstitutional provision not been included herein.

SECTION 52.121. Classification.

The City Council determines that any fee, rates or charges imposed by this Ordinance are not a tax subject to the property tax limitations ofKRS 132.027.

All other provisions of the Morehead Code of Ordinances shall remain in full force and effect.

This Ordinance shall become effective July 1st, 2024, following two readings and publication.