The city of Arden Hills wants to charge the developer of the former Twin Cities Army Ammunition Plant site for sewage fees that the city itself never had to pay.
The request, estimated at more than $5.8 million, is one of the key issues that threatens to derail a proposal by Alatus LLC to develop the 427-acre site, which has sat vacant since the 1970s.
The city wants to be paid for sewer availability charge credits, known as SAC credits, that it owns on the site. While cities normally pay the Metropolitan Council for those credits and pass the charges along to developers, the ammunition plant is so old that it was grandfathered into the SAC program and Arden Hills wasn't charged.
The plant also produced enough wastewater in its heyday that the new development almost certainly won't require any additional sewage capacity or increase in charges, according to Ramsey County estimates.
"I know the city is calling it a SAC fee, but we don't even consider it a SAC fee," said Rafael Ortega, a Ramsey County board member. "Really they want to charge a development fee and that's what they should call it as far as I'm concerned."
Phone calls to Arden Hills Mayor David Grant and Council Members Dave McClung and Brenda Holden were returned by Blois Olson, who was hired by the city to act as a spokesman. Olson declined to comment.
The SAC program was created in 1973 by the Metropolitan Council, which collects and treats the region's wastewater, as a way to try to get new development to pay for itself.
When a development is built, the Met Council determines how much sewage it will produce at its busiest time of year, said Ned Smith, Met Council finance and revenue director. The council then charges the city a one-time fee to essentially set aside that much space in the sewage system. The city will typically pass that fee along to the developer, Smith said.
Every piece of property that was in use before 1973 was given credit for how much sewage space it was already using.
The Army Ammunition Plant, which employed thousands of people during World War II, flushed a massive amount of wastewater at its full capacity. The plant produced about 4,600 credits on the site, or roughly as much sewage as 4,600 single-family homes would on their busiest day, according to the Met Council.
Using Met Council metrics for how much wastewater is produced, the county has estimated the new development would create about half that sewage, requiring just more than 2,300 SAC credits. With more than enough credits already attached to the site, the Met Council would not charge Arden Hills additional SAC fees if the projections are accurate.
Typically, cities trying to redevelop blighted areas will use SAC credits as a selling point to make the site more attractive to developers. When Surly Brewing Co. wanted to open a new brewhouse in Minneapolis in 2014, it picked a site that already had SAC credits grandfathered in. Minneapolis didn't charge Surly for those credits.
But Arden Hills council members have said the credits are a city asset that should not be given away.
The Army Ammunition Plant site is owned by Ramsey County, which is still negotiating with Alatus and Arden Hills over the development's size and scope. Tentative plans call for the creation of 1,460 homes and apartments and enough businesses to support at least 4,000 jobs.
Arden Hills council members have said the county is rushing the deal, not leaving enough time to make sure taxpayers will be financially protected.