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Commentary Private street utility surcharge — fair or unfair?

By Wes Mader Community      Columnist Aug 22, 2020

The term “private street” invites images of a gated community for exclusive multi-million-dollar homes. In Prior Lake it means nothing of the sort.

The approximately 1,500 homes in Prior Lake that are labeled by city hall as being on private streets are average Prior Lake homes. So what does the private-street label mean?

For decades, it has meant that the city assumes no obligation to provide street maintenance, even though the private street residents pay taxes that include dollars for street maintenance. I learned this the hard way when I purchased a home on Sycamore Trail. The street was in terrible condition, but I assured my concerned wife, that the city would take care of it within a couple of years. I was wrong. It took over 20 years before the city finally fixed the street and only then after a successful neighborhood effort to prove to city council that Sycamore was a public street. During those 20 plus years, neighbors contributed funds for a mediocre repaving job and bought bags of asphalt for filling pot holes.

The city has now introduced a new plan for residents living on private streets. It calls for private street residents to pay a surcharge on their sewer and water bill of $40 every other month. The rationale for collecting the $240 per year is to accumulate funds for the replacement of the street if/when the city has to tear it up to service underlying city water or sewer lines. So how did we get here?

While some streets like Sycamore Trail were designated private by city hall without a rational legal basis, others were created by negotiation between developers and city hall. For decades, city hall has permitted the designation of private streets, often based upon feel-good short-term considerations, without considering long-term consequences. Some developers have been adept at getting what they want from city hall in terms of deviations from land development ordinances.

In return the city was promised that residents on private streets would provide their own street maintenance, thereby eliminating city maintenance costs.

This has sort of a free lunch ring to it. Developers bottom-line profit goes up and city maintenance costs go down — until of course the street goes bad or has to be torn up to fix water or sewer line problems. That’s when the free lunch has to be paid for, by those who live on the designated private streets or by all taxpayers. By then the developer is long-gone from the scene, the residents may or may not have been accumulating funds for such an occurrence, and most assuredly some will object to spending their own funds to repair a perfectly usable street that was torn up because the city-owned a water line below that failed.

I applaud our new city manager for exposing this financial liability and I understand and respect the dilemma the council is facing. However, it seems clear that the fiscal problem was created by council decisions from the past. Given that fact, should the fiscal liability for past faulty decisions be levied against only those who live on streets designated as private? The residents who are now expected to pay the surcharge had no role in negotiations that created the current liability.

I have no doubt that each private street situation has its own unique history as I learned when I tried to unravel the mystery of how Sycamore became a private street. Consequently, a single-amount standard surcharge to all residents on streets designated as private, is in itself problematical. Let me make a glaring example.

Residents living on 160th Street (County Road 44) whose back yards face Westwood Grade School are being told they will be billed the surcharge because the city utilities to their homes are buried under Westwood Drive. They’re being told that Westwood Drive (whose purpose seems to be to service the grade school) is their private street even though they don’t use it.

While I haven’t and won’t examine the titles of these property owners to find out who owns what, I can’t think of any common sense reason why these folks should be paying a surcharge. While a city attorney might find a legal rationale, I think fairness should be the standard to go by.

A more general question: Should city hall be the collector of revenue for the purpose of maintaining privately owned property (if in fact the streets are privately owned by the residents)? This will be a debate worth watching.

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Wes Mader