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Home My WebLink About10A - Water & Sewer Rates ................,.._- t;""'.,..,o...j.'.;ft~sjJ.~......,.~ Oil./ ','I'!'J ~ 4tllVNE50<{,~ 16200 Eagle Creek Avenue S.L Prior Lake. MN 55372-1714 MEETING DATE: AGENDA #: PREPARED BY: AGENDA ITEM: DISCUSSION: H:\Water\Agenda rate increase. doc STAFF AGENDA REPORT JANUARY 5, 2004 10 A RALPH TESCHNER, FINANCE DIRECTOR Consider Approval of Ordinance Amendments Relating to Water and Sewer Rates: (1) ORDINANCE AMENDING PRIOR LAKE CITY CODE SECTION 704.1001 TO INCREASE THE BASE WATER BILLING RATE BY TEN CENTS (10~) FOR EVERY ONE THOUSAND (1,000) GALLONS OF WATER (2) ORDINANCE AMENDING PRIOR LAKE CITY CODE SECTION 705.901 TO INCREASE THE SEWER BILLING RATE BY FIFTEEN (15~) FOR EVERY ONE THOUSAND (1,000) GALLONS OF WATER Introduction A key element of the 2020 Vision and Strategic Plan is to "implement a groundwater plan emphasizing production, conservation, education and communication. " The purpose for this agenda item is to consider adopting an interim water and sewer rate which would increase the City's water utility billing rate from the current charge of$1.75 to $1.85 per thousand gallons and increasing the sewer rate from $3.00 to $3.15 per thousand gallons effective upon the first billing period (2/1 /04) in 2004 to provided adequate financial resources to accomplish this goal. Histor)! Outlined below is a water and sewer rate table that illustrates the city's water and sewer utility rate structure over the past 5 years and the proposed rates for 2004: Year Water Rate* Sewer Rate* 1999 $1.30 $2.85 2000 $1 .40 $2.85 2001 $1.40 $2.85 2002 $1.40 $2.85 2003 $1.75 $3.00 2004 $1.85 $3.15 * per J 000 gallons. www.cityofpriorlake.com Phone 952.447.4230 / Fax 952.447.4245 H:\Water\Agenda rate increase.doc Current Circulllstances The combined proposed rate of $5.00 per thousand gallons is a .25- cent increase and represents a total increase of 5 ~% above the present rate of $4.75 per 1000 gals. The 2nd tier rate of $2.00 per thousand gallons for water usage above 25,000 gals. would also increase by the same 10 cents $2.10 per thousand. Given the high priority the Council has attached to the ultimate construction of a water treatment plant over the course of the next 2-3 years it is important to begin establishing suffiCIent reserves to augment this project and utility replacement costs within the scope of our reconstruction projects. Also, the City Council directed Staff to consider yearly incremental increases in the future to keep pace with cost increases. In response the City Council recently adopted the 2004 Water & Sewer Utility Budget that incorporates this proposed adjustment to the utility billing rates. Because Prior Lake does not have a sewage treatment plant (our sewage is actually piped to Blue Lake treatment plant located outside of Shakopee) the MCES (Metropolitan Council Environmental Services) controls nearly 61 % of our costs and therefore our sewer rates. As a result of our treatment costs mcreasmg the proposed increase in the sewer rate also becomes necessary . The Council has approved a rate study, as part of the Comprehensive Water Plan Update to analyze our sewer and water rates. Until the new rates are established based upon the findings of this study an interim water rate should be considered to fund our current water budgetary needs. An estimated combined 2004 Water/Sewer Department Statement of Eamings position is projected below based upon the proposed interim rates: * Water/Sewer Dept. Expenses Budget Expenditures Enterprise Fund Transfer Equipment Fund Transfer $2,513,915.00 $250,000.00 $60,000.00 $2,823,915.00 * Utility Revenue Projection Utility Water/Sewer Receipts Water meter/pressure reducer sales Misc. revenue (incl. penalties, interest etc.) $2,905,500.00 $134,750.00 $226,250.00 $3,266,500.00 * Statement of Earniul::s Position Preliminary income before depreciation $442,285.00 * Depreciation <$459,100.00> NET INCOME/(LOSS) <$16,815.00> The City's water and sewer utility fund is operated as an enterprise fund which is intended to generate revenues to provide contributions to the General Fund to offset administrative and operatmg costs, revenue for fund transfers, i.e, the Maintenance Building, Equipment Fund and such long term needs as reserves to assist in sewer and water pipe replacement and a community water treatment plant. As a housekeeping item subparagraph (5) of Section 704.l00lwhich deals with a delinquency charge for failure to read the water meter for two consecutive billing periods is to be deleted because the City no longer requires the residents to submit a water meter reading since we have completed city-wide installation of an AMR (automatic meter reading) system. FINANCIAL IMPACT: When considering the entire water and sewer utility bill, which includes the capital facility charge of $7.50 and the storm water charge of $6.00, homeowners would experience, on average, a $2.25 rise on their total water bill amount per month in 2004. The financial impact of the rate increases are demonstrated below: AL TERNA TIVES: H:\Water\Agenda rate increase.doc Rate usage charge plus misc. CF AC charge plus misc. storm water charge Monthly Total... Monthly $ Increase... 2004 Average Monthly Bill $45.00 3,75 3.00 $51.75 $2.25 2003 Average Monthly Bill $42.75 3.75 3.00 $49.50 The above figures are based upon average monthly usage of 9000 gallons that is equal to an approximate daily consumption of 100 gallons per individual and a per capita household of three members. Assuming the above average, the typical homeowner will incur an annual increase of $27.00. Conclusion Staff would recommend approval of the proposed water and sewer interim rate increases as identified within the 2004 Enterprise Fund Budget. The proposed increase is required to maintain the revenue stream required to defray water and sewer related costs. Later this year we will prepare a survey of customers to determine if a monthly rather than bi-monthly billing cycle would be preferred. We will share the results of the survey and our recommendation for billing frequency with the Council. There are two ordinances pending before the Council: 1. Adopt Ordinance Amending Prior Lake City Code Section 704.1001 To Increase The Base Water Billing Rate By Ten Cents (lO~) For Every One Thousand (1,000) Gallons Of Water and Ordinance Amending Prior Lake City Code Section 705.901 To RECOMMENDED MOTION: REVIEWED BY: Attachments: H:\Water\Agenda rate increase. doc Increase The Sewer Billing Rate By Fifteen (15~) For Every One Thousand (1,000) Gallons Of Water. 2. Amend the water and sewer rates to another amount based upon Council consensus. 3. Take no action at this time and dIrect the staff to provide additional infomlation. 1. A motion and a second to adopt Ordinance Amending Prior Lake City Code Section 704.1001 To Increase The Base Water Billing Rate By Ten Cents (10~) For Every One Thousand (1,000) Gallons Of Water and 2. A motion and a second to adopt Ordinance Amending Prior Lake City Code Section 705.901 To Increase The Sewer Billing Rate By Fifteen (15~) For Every One Thousand (1,000) Gallons Of ater 1. Ordi anc An nding Prior Lake City Code Section 704.1001 To Increase The Base Water Billing Rate By Ten Cents (10~) For Every One Thousand (1,000) Gallons Of Water. 2. Ordinance Amending Prior Lake City Code Section 705.901 To Increase The Sewer Billing Rate By Fifteen (l5~) For Every One Thousand (1,000) Gallons Of Water. ~'--p Rio OZJ;?"'~Ls:..,...~ ,.::..".' , '. '.' ... <' r-. .'....'........'........ '7 -".,,' ~ u/'c" I'!'J '~ 4tllVNE50<{,~ 16200 Eagle Creek Avenue S.L Prior Lake, MN 55372-1714 ORDINANCE 04-XX AN ORDINANCE AMENDING PRIOR LAKE CITY CODE SECTION 704.1001 TO INCREASE THE BASE WATER BILLING RATE BY TEN CENTS (10~) FOR EVERY ONE THOUSAND (1,000) GALLONS OF WATER WHEREAS, the City of Prior Lake reviews its sewer and water rate structure on an annual basis; and WHEREAS, the City has affim1ed it is financially necessary to increase the existing water rate to generate sufficient water revenues to offset current operating and capital expenses; and WHEREAS, the .City Council has reviewed and approved the financial justification support to increase the base billing charge by ten cents (lO~) to $1.85 per one thousand (1,000) gallons of water for the first 25,000 gallons of water consumed; and. WHEREAS, the City Council has detennined the second tier rate for water consumed in excess of 25,000 gallons is to be increased by ten cents (1 O~) to $2.10 per one thousand (1,000) gallons of water. NOW THEREFORE, BE IT ORDAINED by the City Council of the City of Prior Lake, Minnesota that: 1. The recitals set forth above are incorporated herein as if fully set forth. 2. Prior Lake City Code Section 704.1001 is amended to read as follows: 704.1001 Rates: (1) Effective February 1,2004 billing cycle a billing charge of one dollar eighty-five cents ($1.85) per thousand (1000) gallons of water shall be charged to the Ist25,000 gallons of water used and a billing charge of two dollars ($2.10) per thousand (1 OOO)gallons of water shall be charged for all water consumed in excess of 25,000 gallons. (5) Delete in its entirety. Passed and adopted this 5th day of January, 2004. This ordinance shall become effective upon publication. YES NO Haugen Blomberg LeMair Petersen Zieska Haugen Blomberg LeMair Petersen Zieska [Seal} City Manager City of Prior Lake www.cityofpriorlake.com H:\Wmer\Agenda rate increase.doc Phone 952.447.4230 / Fax 952.447.4245 .o.m~..,..,-.E!:l.,OR... ;. . , '. ". <' ;.. ........ .., " '7 ot:.~ ~ 4tllVNESOil'- 16200 Eagle Creek Avenue S.E. Prior Lake, MN 55372-1714 ORDINANCE 04-XX AN ORDINANCE AMENDING PRIOR LAKE CITY CODE SECTION 705.901 TO INCREASE THE SEWER BILLING RATE BY FIFTEEN (15~) FOR EVERY ONE THOUSAND (1,000) GALLONS OF WATER WHEREAS, the City of Prior Lake reviews its sewer and water billing rate structure on an annual basis; and WHEREAS, the City has affirmed it is financially necessary to increase the existing sewer rate to generate sufficient sewer revenues to offset CUITent operating and capital expenses; and WHEREAS, the City Council has reviewed and approved the financial justification support to increase the sewer billing charge by fifteen cents (l5~) to $3.15 per one thousand (1,000) gallons of water consumed. NOW THEREFORE, BE IT ORDAINED by the City Council of the City of Prior Lake, Minnesota that: 1. The recitals set forth above are incorporated herein as if fully set forth. 2. Prior Lake City Code Section 705.901 (sentence one) is amended to read as follows: Rates: Effective February 1,2003 billing cycle a billing charge of three dollars ($3.15) per thousand (1000) gallons of water shall be charged. Passed and adopted this 5th day of January, 2004. This ordinance shall become effective upon publication. YES NO Haugen Blomberg LeMair Petersen Zieska Haugen Blomberg LeMair Petersen Zieska {Sean City Manager City of Prior Lake H:\Waler\Agenda rate increase.doc www.cityofpriorlake.com ___.._._.__._,_._,...._~w____._..._._.____'"*_. ,,_.."__~.~... . ...~~.._.__.___,_.".___~_n..."~__~,. _",..~_,.~.~.._.~__.._~.~.~_'.~... Phone 952.447.4230 / Fax 952.447.4245