HomeMy WebLinkAbout7E - Sewer and Water Rate Study Presentation
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MEETING DATE:
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4646 Dakota Street S.E.
Prior Lake, MN 55372-1714
CITY COUNCIL AGENDA REPORT
JUNE 1, 2009
7E
STEVE ALBRECHT, DIRECTOR OF PUBLIC WORKS
JERIL YN ERICKSON, FINANCE DIRECTOR
PRESENTATION OF PRELIMINARY WATER AND SEWER RATE ANALYSIS
Introduction
The purpose of this agenda item is to present the preliminary water and sewer
rate analysis.
Historv
The City last completed an updated sewer rate analysis in 2004 and last
increased water and sewer rates in January of 2005.
Current Circumstances
As part of the City's long-term financial and capital improvement planning the
City Staff has completed, with the assistance of Bolton & Menk, an updated
water and sewer rate study. There are multiple reasons why an updated rate
study is needed. With the start-up of the Water Treatment Facility the City will
incur additional costs related to the facility. The City's water and sewer
infrastructure is aging and examples such as the CR 21 Watermain replacement
show what type of costs can be associated with major repairs which can not all
be planned for. Additionally, the rate study completed in 2004 assumed
continued growth at levels far exceeding our current rates. The rate study is a
critical financial planning document that will incorporate these and other factors.
Bolton & Menk (BMI) has assisted City Staff with the setup and analysis of a
dynamic rate management tool. BMl's involvement and understanding of the
costs associated with the WTF were a critical element to developing the study
and the program. Tonight, Seth Peterson of Bolton & Menk, along with City
Staff, will present the preliminary findings and identify some issues for City
Council's consideration in the future. Based on our preliminary analysis and
current conditions, City Staff does not believe a rate increase will be warranted
until 2012 or thereafter. However, there are several variables which the Council
should be aware of that could affect this timetable. They include:
City's allocation of the Capital Facility Charge (CFAC) currently utilized to
pay debt service on City Water and Sewer facilities
City's decision to continue consolidating net assets for both Sewer and
Water in a single fund or to break out the net assets into separate funds
Future Met Council cost increases for sewage
Determination of what the appropriate minimum fund balance should be
for these funds
Determination of whether or not an emergency fund be established out of
the existing fund
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Unforeseen emergency repairs
Significant changes to water and sewer funding demands in the CIP
Later this summer, Staff will be bringing an updated Water and Sewer Ordinance
to the Council for consideration. This update will include the final rate study and
recom ndations related to the above issues will be made.
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Frank BOYleonrer
R:\Council\2009 Agenda Reports\06 01 09\Rate Study Presentation,doc