HomeMy WebLinkAbout2.d. Water and Sanitary Sewer Rate StudyAGENDA ITEM: Water and Sanitary Sewer Rate Study
AGENDA SECTION:
PREPARED BY Andrew J. Brotzier, P.E., City Engineert
GENDA
c
ATTACHMENTS: April 17, 2006 Utility Commission Item;
Water and Sanitary Sewer Rate Study
APPROVED BY:
/y
RECOMMENDED ACTION: For discussion.
4 ROSEMOUNT
City Council Work Session: May 24, 2006
EXECUTIVE SUMMARY
CITY COUNCIL
BACKGROUND:
In 1999, a 5 -year rate study was completed and adopted for the water, sanitary sewer and storm sewer
utilities. In 2003 as part of the Comprehensive Stormwater Management Plan, an updated rate study was
prepared and was not addressed as part of this study. The water and sanitary sewer rates have not been
updated since 1999 have remained at a flat rate as established in the 1999 rate study.
With the recent completion of the Comprehensive Water Supply Plan adopted by Council in November
2005 which included future estimated costs, the attached Water and Sanitary Sewer Rate Study has been
completed. The rate study was reviewed and approved by the Utility Comnussion on April 17, 2006 and is
being brought before Council for consideration.
Following are highhghts from the rate study:
The proposed water and sanitary sewer rates are based on a base /increasingblock structure.
Unlike a flat rate per 1000 gallons, the base /increasing block structure unh7es one rate for the first
30,000 gallons per quarter and a second and higher rate for usage above 30,000 gallons per quarter.
The primary goal of this type of rate structure is the promotion of conservation.
In 1989, a water surcharge of $8.90 per quarter was instituted to pay for debt service on the
construction of the Connemara Tower and has been used to pay debt service on the Eastside
Tower. Since the inception of the water surcharge, the City has developed a trunk water area
charge that is collected with new developments that will pay future debt for capital improvements
such as water towers The Utihty Commission recommended maintaining the quarterly water
surcharge to fund future debt incurred at the time that a water treatment facility is constructed As
the future construction of a water treatment facility will be user driven or needed to meet
regulations, the cost of constructing a water treatment facility is considered to be a user cost rather
than a development related cost and is therefore proposed to be funded from the Water Utility
Fund.
The proposed rate increases for water and sanitary sewer have been modeled to change m 2007
and are projected for five years to 2011. Table 1.2 shows the proposed water rates and the
G \Wines \Unky Commission Info \RateStudyCWS5 -2406 doc
proposed sanitary sewer rates are shown in Table 1.3. The rates shown for 2006 are the current
rates charged by the City
The base rates for water and sanitary sewer are proposed to increase 5% per year and the
increasing block rates are proposed to Increase 10% per year.
The proposed rates account fot future increases in operating costs and have been established to
mamtam a balance in both the water and sanitary sewer utility funds. Also estimated is the future
growth rate of the City that will dictate revenues for both the utility funds and core funds.
With the new land use plan adopted by Council m July 2005 that expands the MUSA and guides
the remainder of the City, the preparation of a Comprehensive Sanitary Sewer Plan is
recommended. This has been discussed with the Utility Commission and will be budgeted for
completion in 2007.
As part of the rate study, a survey of other community water and sanitary sewer utility rates was
completed A copy of the survey is included with the packet
As noted above, the rate increases are proposed to become effective in 2007. In an effort to
communicate with property owners, Staff will work with the Communications Coordinator to develop
a communication plan that will include information with quarterly bills, articles m the City newsletter
and an informational page on the City's web page
SUMMARY:
Staff will review the Water and Sanitary Sewer Rate Study with Council and would request Council
direction and feedback on the proposed commnumcation strategy.
2
AGENDA ITEM: Water Sanitary Sewer Rate Study
AGENDA SECTION:
Old Business
PREPARED BY: Andrew J. Brotzler, P E., City Engineer
AGENDA NO.
6a.
ATTACHMENTS: Draft Water and Sanitary Sewer Rate
Analysis
APPROVED BY:
kV
RECOMMENDED ACTION: Motion to Recommend City Council Approval of the Water
and Sanitary Sewer Rate Analysis.
4 ROSEMOUNT
UTILITY COMMISSION
Utility Commission Meeting. April 17, 2006
EXECUTIVE SUMMARY
BACKGROUND:
There are two related items that Staff would like to discuss with the Commission. The first item is the
draft Water and Sanitary Sewer Rate Analysis, a copy of which is attached. The second item is a proposed
schedule for the future construction of a water treatment facility
I. Draft Water and Sanitary Sewer Rate Analysis
The plan provides background Information on the City's water and sanitary sewer utility funds and core
funds and presents proposed rates for 2007 to 2011. Based on discussions at the last Utility Commission
meeting, the following revisions /additions have been made to the plan:
1. Maintain quarterly water surcharge and allocate for future water treatment facility
Originally initiated in 1989, the quarterly surcharge was developed to contribute to the debt service
on water towers. Since the inception of the quarterly surcharge, the City's trunk water area charges
have increased to the point where debt service on water towers can be paid from the water core
fund as a capital improvement cost The rates in the plan reflect existing and future debt service
for the construcuon of water towers to be paid fiom the water core fund The quarteily surcharge
is proposed to remain ui effect to fund the future construcuon of a water treatment facility.
2. Develop base /increasing block rate structure.
Based on discussion at the last Utility Commission meeting, the plan includes a new rate structure
for water and sanitary sewer utility rates. This rate structure is a base /increasing block structure
that is utilized by a number of communities to promote conservation. In addition, the residenual
water and sanitary sewer rates are proposed to increase 5% per year, other user water and sanitary
sewer rates are proposed to increase 10% per year.
These two items represent the most significant changes from the current water and sanitary sewer utility
rate structure.
Staff is anticipating that the proposed rates will be instituted with the 2007 Fee Resolution and become
effective for the 1" quarter of 2007 Outlined below is a proposed schedule and communicanon process
for the implementation of the proposed rates.
Utility Commission approve draft Water and Sanitary Sewer Rate Analysis
Suinmaty of Utility Corruntssion action m Weekly Update
City Council review draft Water and Sanitary Sewer Rate Analysis
Article in Fall City Newsletter
Article insert uh 3" quarter utility bill
City Council approve Water and Sanitary Sewer Rate Analysis
City Council approve 2007 rates with 2007 Fee Resolution
II. Water Treatment Facility
As discussed during the development of the Comprehensive Water Supply Plan, the City over the past
several years routinely receives calls from residents with concerns about the aesthetic quality of the water.
The majority of the issue Is a foul odor at the home that is a result of a number of factors that include.
1. The City supplies water from deep groundwater wells This results in the water having a lugh iron
and manganese content that can result in discoloration and odor in the water The level of iron
and manganese in the water is considered a secondary drmkmg water standard by the Minnesota
Departinent of Health (MDH). While the levels are an aesthetic issue, they do not pose a health
risk.
2. The primary area where the City receives calls is in the newly developing area of the City, an area
where large trunk Imes are being constructed to facilitate future expansions of the system On an
interim basis, this can result m low flows in the system in these areas that can result in stagnant
water that may contribute to the issue.
3. Two other items that may be contributing to the issue is the magnesium rods that are installed in
hot water heaters and the use of plastic tubing in the house plumbing rather than copper tubing
Independent plumbers have indicated to City staff that these two items may contribute to the
issue.
The main solution to this aesthetic issue is treatment of the water. As discussed in the Comprehensive
Water Supply Plan, as a City's population grows, consumer demand for higher quality water typically
increases. For Rosemount, in addition to treating water to improve the quality, it may be necessary with
future wells to treat for radium. The past two wells that the Ctty has constructed have had higher than
normal radium levels while still being within the MDH threshold.
Staff would like to begin discussing with the Coininisston a strategy and appropriate timeframe for the
planning and development of a funue water treatment facility.
SUMMARY:
March 13, 2006
March 17, 2006
March 22, 2006
August 2006
September 2006
November 2006
December 2006
Nancy Zeigler and Kevin Newman will be in attendance at the meeting to review the above items with the
Commission Additional information that will be provided at the meeting will include rate comparisons
with surrounding communities and an outline for the umeframe and process to develop a water treatment
facility.
At this time, Staff is requesting Commission approval of the draft Water and Sanitary Sewer Rate Analysis.
G.'Utihties \Utility Commission Info \WtrSwrRateStudyUC4- 17- 06.doc 2
2006 Quarterly Residential Rates for Sanitary Sewer and Water
Rates based on:
30,000 gallons per quarter for water
22,500 gallons per quarter for sanitary sewer
City Name Water
(Lakeville —4 $30.90"
South St. Paul $33.00
Plymouth $35.73
New Brighton 538.40
rEagan'� $40.75
Anoka $41 65
Hopkins 542.00
Apple Valley 538.57
Crystal S45 10
,Eagan $46.15 r'
Richfield $47 10
Savage $49 38
Mendota Hights ,a ;,i$49.50,
Rosemount (current) $51 50
[Farmington 7 $43.80 Rosemount (proposed) 554.08
Cottage Grove $47 00 Farmington $55.13
Rosemount (current) $48 30 Hopkins $56 25
Hastings 549.50 Cottage Grove $57 09
'Rosemount (proposed) 55025 Lakeville 3' $581Qf
Ramsey $53 40 New Brighton $58 50
Northfield $56 01 Hastings $59.63
Richfield 557 00 Ramsey $60 50
IBgmsville $63.50 Anoka 563 03
IMehdotaHeights $64.00 Minneapolis $63 23
St Paul $64 56 'Burnsville x.,'564.45
Mahtomedi S65 10 Plymouth 6 5 42
Mound $66 69 ;Inver Grove Heights $65.46
PTORTalleywriPert $68.34 'South St. Paul $70.20
,Inver Grove Heights $68.98 Mound $70 88
Savage $86 94 St Paul $78 81
Prior Lake 587 00 Mahtomedi $87 55
Crystal $99 90 Prior Lake $89 63
Minneapolis $105 00 Northfield $90 02
City Name Total
Eagan $86.90
Lakeville $89 00
New Brighton $96 90
Hopkins 598 25
Farmington 598.93
Rosemount (current) $99.80
Plymouth $101 15
[South St. Paul ...e $103.20
Cottage Grove $104 09
Richfield $104 10
[Rosemount (proposed) $104.33
Anoka 5104.68
Apple Valley $106 91
Hastings $109.13
,Mendota Heights $113.50
Ramsey $113 90
Burnsville $127 95
Inver Grove Heights $134.44
Savage 5136 32
Mound $137 57
St Paul 5143 37
Crystal 5145 00
Northfield $146 03
Mahtomedi $152.65
Minneapolis $168 23
City Name Sewer
Indicates a Dakota County City II
G 1Chns\Utiiity Rate Survey
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Parameter
Level in
Well
No. 12
Level in
Well
No. 14
Level in
Test Well
14
Standard
Units
Iron
0.453
0 159*
.465
0 3
mg/1
Manganese
0 072
0.119
.112
0.05
mg/1
Combined Radium
(Radium 226 228)
1.4
3.7
2.5
5
pCi /1
Rosemount Utility Commission Meeting
April 17, 2006
Water Quality
I. At the Wells
A. High is iron
B. High in manganese
C. Future wells may be high m radium
*Results do not agree with other data. Iron level of Well No. 14 will be retaken once well is
online to confirm.
II. In the Distribution System
A. Water Age
B. Chlorine Residual
III. In Homes
A. Hot water heaters
B. New Plastic piping
C. Other factors
By Fall 2006 Siting test well completed
11/1/06- 2/1/07 Design, MDH review,
bidding
February 2007
Fall 2007
Fall 2007
Summer 2008
Fall 2008
Well 15
Preliminary Schedule
(Overall process 2+ years)
Award Contract
Well Construction Completed
Well House Design, Bidding
Substantial Completion
Final Completion
Water Treatment Plant
Sample Schedule
(Overall process 2+ years)
11/06 1/07* Pilot Testing Preliminary Design
February May 07* Final Design
June —July 07* MDH Review
Late Summer 2007* Award Contract
Late Summer 2008* Substantial Completion
End of 2008* Final Completion
Actual Dates are "To Be Determined" and will
depend on the final completion date selected
ANALYSIS OF CONCEPTS TO PROVIDE SANITARY
SEWER, WATER, AND STORM SEWER SERVICES
TO THE PROPOSED AIR CARGO FACILITY SITES
ROSEMOUNT, MN
Water and Sanitary Sewer Rate Analysis
City of Rosemount, MN
WSB Project No. 1582 -01
WATER AND SANITARY SEWER
RATE ANALYSIS
Prepared for the:
City of Rosemount
2875 145 Street West
Rosemount, MN 55068
May 2006
Prepared by:
WSB Associates, Inc.
701 Xenia Avenue South, Suite 300
Minneapolis, MN 55416
763 -541 -4800 (TEL)
763 -541 -1700 (FAX)
May, 2006
Honorable Mayor and City Council
City of Rosemount
2875 —145"' Street West
Rosemount, MN 55068
Re: Water and Sanitary Sewer Rate Analysis
City of Rosemount, MN
WSB Project No. 1582 -01
Dear Mayor and City Council Members:
Thank you for the opportunity to prepare this Water and Sanitary Sewer Rate Analysis
document. We have reviewed several potential rate structures that correspond with the projected
City growth, but recommended rates to best serve the City's needs.
We would be happy to discuss this report with you at your convenience. Please give us a call at
763 -541 -4800 if you have any questions.
Sincerely,
WSB Associates, Inc.
Kevin F. Newman, P.E.
Project Manager
Enclosure
I hereby certify that this plan, specification, or report was prepared
by me or under my direct supervision and that I am a duly licensed
professional engineer under the laws of the State of Minnesota.
Date: December, 2005 Lic. No. 25198
Prepared by:
Date: December, 2005
Water and Sanitary Sewer Rate Analysis
City of Rosemount, MN
WSB Project No. 1582 -01
Quality Control Review by:
CERTIFICATION
Kevin F. Newman, P.E.
Joseph C. Ward, E.I.T.
Nancy D Zeigler, P.E.
Date: December, 2005 Lic. No 42823
TITLE SHEET
LETTER OF TRANSMITTAL
CERTIFICATION SHEET
TABLE OF CONTENTS
1.0 EXECUTIVE SUMMARY 1
1.1 Water Core Fund 1
1.2 Water Utility Fund 2
1.3 Sanitary Sewer Core Fund 3
1.4 Sanitary Sewer Utility Fund 4
2.0 INTRODUCTION 5
2.1 Purpose 5
2.2 Utility Accounts and Funding 5
2.3 Existing Rates 5
2.4 Projected Future Usage 7
3.0 WATER CORE FUND 8
3.1 Description 8
3.2 Future Connection and Trunk Area Growth 8
3.3 Future Improvements (CIP) 9
3.4 Core Fund Rate Analysis 10
4.0 WATER UTILITY FUND 12
4.1 Description 12
4.2 Ongoing Operation and Maintenance 12
4.3 Rate Structure Analysis 15
4.4 Average Water 13111 16
5.0 SANITARY SEWER CORE FUND 19
5.1 Description 19
5.2 Future Connection and Trunk Area Growth 19
5 3 Future Improvements 20
5.4 Core Fund Rate Analysis 20
6.0 SANITARY SEWER UTILITY FUND 22
6.1 Descnption 22
6.2 Ongoing Operation and Maintenance 22
6.3 Rate Structure Analysis 24
6.4 Average Sanitary Sewer Bill 25
7.0 SUMMARY AND RECOMMENDATIONS 28
7.1 Water Core Fund 28
7.2 Water Utility Fund 28
7.3 Sanitary Sewer Core Fund 28
7.4 Sanitary Sewer Utility Fund 28
7.5 Summary of Rates 29
Water and Sanitary Sewer Rate Analysts
City of Rosemount, MN
WSB Project No 1582 -01
TABLE OF CONTENTS
APPENDIX A
Figures
APPENDIX B
MCES Study of 2004 Municipal Wastewater Rates
Water and Sanitary Sewer Rate Analysts
Cuy of Rosemount', MN
WSB Project No 1582-01
TABLE OF CONTENTS (continued)
1.0 EXECUTIVE SUMMARY
As development continues in Rosemount, the City's water and sanitary sewer systems must
increase capacity to serve new development. Also, economic pressures such as inflation or
deflation can change system operation and maintenance costs from year to year. Additional
water quality standards may be imposed by regulation or by citizen demands for an increased
standard of living All of these issues exemplify the need to review water and sanitary sewer
rates every five years.
This rate analysis has been completed to plan for future system expenses, and determine
appropriate, conservative rates to fund those expenses. Details of the assumptions used to
determine future revenues and expenses follow the executive summary.
The goals of the Utilities Commission for the rate study included maintaining account balances
necessary to fund infrastructure improvements, maximizing City value by avoiding debt
financing, and remaining competitive with other communities.
1.1 Water Core Fund
Future water system capital improvements to serve new development such as trunk water
mains, water towers, and wells are funded through the City's "core" fund. As system
improvements are constructed, either by system capacity increases or trunk main
extensions, initial costs are paid by the core fund. Then the core fund is reimbursed by
trunk area assessments and Water Access Charges (WAC) from new development.
To estimate future revenue, the Comprehensive Water System Plan was related to recent
system growth trends to project future development Future expenses or system
improvements to serve new development were identified in the Comprehensive Water
System Plan. From the growth projections, it was determined that an annual 10% rate
increase was needed to fund current debt service and future projects with cash on hand.
These rates are shown in Table 1.1.
Water and Sanitary Sewer Rate Analysis
City of Rosemount, MTV
WSB Project No. 1582 -01
Table 1.1 Proposed Trunk Area Assessment and WAC
Page 1
2006
2007
2008
2009
2010
2011
Trunk Area Assessment /acre)
$4,420 00
$4,862.00
$5,348.20
$5,883.02
$6,471.32
$7,118.45
WAC (Meter Size)
Single Family- 5/8"
$1,480 00
$1,628 00
$1,790 80
$1,969.88
$2,166 87
$2,383 55
Multi Family 5/8"
$1,480 00
$1,628.00
$1,790.80
$1,969 88
$2,166 87
$2,383 55
1"
$6,700.00
$7,370 00
$8,107 00
$8,917 70
$9,809 47
$10,790.42
1 5"
$10,050 00
$11,055 00
$12,160.50
$13,376 55
$14,714 21
$16,185.63
2"
$13,400 00
$14,740 00
$16,214 00
$17,835 40
$19,618 94
$21,580.83
2.5"
$16,750 00
$18,425 00
$20,267 50
$22,294 25
$24,523 68
$26,976.04
3"
$20,110.00
$22,121 00
$24,333 10
$26,766 41
$29,443.05
$32,387.36
4"
$23,460 00
$25,806 00
$28,386.60
$31,225 26
$34,347 79
$37,782 56
6"
$26,810 00
$29,491 00
$32,440 10
$35,684 11
$39,252 52
$43,177.77
8"
$30,160 00
$33,176 00
$36,493 60
$40,142 96
$44,157 26
$48,572 98
1.0 EXECUTIVE SUMMARY
As development continues in Rosemount, the City's water and sanitary sewer systems must
increase capacity to serve new development. Also, economic pressures such as inflation or
deflation can change system operation and maintenance costs from year to year. Additional
water quality standards may be imposed by regulation or by citizen demands for an increased
standard of living All of these issues exemplify the need to review water and sanitary sewer
rates every five years.
This rate analysis has been completed to plan for future system expenses, and determine
appropriate, conservative rates to fund those expenses. Details of the assumptions used to
determine future revenues and expenses follow the executive summary.
The goals of the Utilities Commission for the rate study included maintaining account balances
necessary to fund infrastructure improvements, maximizing City value by avoiding debt
financing, and remaining competitive with other communities.
1.1 Water Core Fund
Future water system capital improvements to serve new development such as trunk water
mains, water towers, and wells are funded through the City's "core" fund. As system
improvements are constructed, either by system capacity increases or trunk main
extensions, initial costs are paid by the core fund. Then the core fund is reimbursed by
trunk area assessments and Water Access Charges (WAC) from new development.
To estimate future revenue, the Comprehensive Water System Plan was related to recent
system growth trends to project future development Future expenses or system
improvements to serve new development were identified in the Comprehensive Water
System Plan. From the growth projections, it was determined that an annual 10% rate
increase was needed to fund current debt service and future projects with cash on hand.
These rates are shown in Table 1.1.
Water and Sanitary Sewer Rate Analysis
City of Rosemount, MTV
WSB Project No. 1582 -01
Table 1.1 Proposed Trunk Area Assessment and WAC
Page 1
1.2 Water Utility Fund
Operation, maintenance, and replacement (Capital Replacement Plan, CRP) of the water
system is funded by the City's "utility" fund. Fees are collected from the system users
based on a fixed charge, usage charge, water surcharge, and meter maintenance fee
Also, the debt service for Tower #4, Bacardi Tower, is funded with the water surcharge
shown in Table 1.2, but will be funded by the core fund beginning in 2007.
To estimate future revenue, the Comprehensive Water System Plan was related to recent
system growth trends to project future water demands and connections. Future expenses
were relative to water system growth, demand growth, inflation, and water treatment. It
was determined that an annual 5% rate increase for single family residential users and a
10% annual increase for large volume users would fund growing operation and
maintenance costs and water treatment plant debt service.
The recommended base /increasing block rate structure presented below in Table 1.2
strongly encourages resource conservation and in turn increases the system life in the
long term Also, it closely correlates system use and system costs. High volume users
would pay a higher percentage of system operation and maintenance costs.
The water surcharge would not be increased until the water treatment plant is constructed,
and proceeds from surcharges would fund debt service. It was assumed the water
treatment plant would be constructed in 2008 -2009 (on -line in 2009) and surcharges
raised 5% annually at that time. As a part of the water treatment plant feasibility study, a
financial analysis would be completed to determine a more detailed estimate of the rate
increase required for the water treatment plant.
Water and Salutary Sewer Rate Analysis
City of Rosemount, MN
WSB Project No. 1582 -01
Page 2
1.3 Sanitary Sewer Core Fund
Table 1.2 Proposed Water Rates
Future sanitary sewer capital improvements such as lift stations and trunk sewers are
funded through the City's "core" fund. As properties develop, initial costs are paid by
the core fund. The core fund is reimbursed by trunk area assessments and Sanitary Sewer
Availability Charges (SAC).
Future development growth was projected similar to the water core fund and it was
assumed that the current SAC umt density of 2.4 units /acre would continue as the system
expands. Expenses were determined from the North Central Sanitary Sewer Study
completed in 2004.
The current Trunk Area Charges and SAC fees will fund development costs up to 53,955
per acre. As discussed in section 3.2, current costs to provide sanitary sewer service to an
Water and Sanitary Sewer Rate Analysis
Cty of Rosemount, MN
WSB Project No. 1582 -01
Page 3
2006
2007
2008
2009
2010
2011
Quarterly Fixed Charge
$8.90
$9.35
59 81
$10 30
$10 82
$11 36
Quarterly Usage Charge $11,000
gallons (1st 30,000 gallons)
$1 02
$1.07
$1 12
$1.18
$1 24
$1.30
Quarterly Usage Charge $11,000
gallons (after 30,000 gallons)
$1 02
51 12
$1.23
$1.36
$1 49
$1.64
Quarterly Meter Maintenance
Fee
Single Family 5/8"
50 00
$0 00
$0 00
$0.00
$0.00
$0 00
Multi Family 518"
$0 00
$0 00
$0 00
$0 00
$0.00
$0 00
1"
$6 25
$6.56
$6.89
$7 24
$7.60
57.98
1.5"
$11.25
$11 81
$12 40
$13 02
$13 67
$14.36
2"
$18.15
$19 06
$20 01
$21.01
522 06
$23 16
2.5"
$22.20
$23 31
$24 48
$25.70
526 98
$28.33
3"
$26 25
$27.56
$28 94
$30 39
$31.91
$33 50
4"
$45 00
$47 25
$49.61
$52 09
$54 70
$57 43
6"
$100 00
$105 00
$110 25
5115 76
$121 55
$127 63
8"
$130 00
$136 50
$143 33
5150 49
$158 02
$165.92
Quarterly Surcharge
Single Family 5/8"
58 80
$8 80
$8 80
$9 24
$9 71
$10 19
Multi Family 5/8"
$6 80
$6.80
$6 80
$7.14
$7.50
$7 87
1"
$13.50
$13 50
$13.50
$14.18
$14.88
515 63
1.5"
$28.00
$28 00
$28 00
$29 40
$30 87
532 41
2"
$31.50
$31 50
531 50
$33 08
$34 73
$36 47
2.5"
$39.35
$39.35
$39.35
$41.32
543.38
$45 55
3"
$47.00
$47 00
$47 00
$49.35
$51.82
$54 41
4"
$70 00
$70.00
$70.00
$73 50
$77.18
$81.03
6"
$154 00
$154.00
$154 00
$161 70
5169 79
$178 27
8"
$170 00
$170.00
$170 00
$178 50
$187 43
$196.80
1.3 Sanitary Sewer Core Fund
Table 1.2 Proposed Water Rates
Future sanitary sewer capital improvements such as lift stations and trunk sewers are
funded through the City's "core" fund. As properties develop, initial costs are paid by
the core fund. The core fund is reimbursed by trunk area assessments and Sanitary Sewer
Availability Charges (SAC).
Future development growth was projected similar to the water core fund and it was
assumed that the current SAC umt density of 2.4 units /acre would continue as the system
expands. Expenses were determined from the North Central Sanitary Sewer Study
completed in 2004.
The current Trunk Area Charges and SAC fees will fund development costs up to 53,955
per acre. As discussed in section 3.2, current costs to provide sanitary sewer service to an
Water and Sanitary Sewer Rate Analysis
Cty of Rosemount, MN
WSB Project No. 1582 -01
Page 3
average acre of development is $2,714. Unless the City would like the balance on this
fund to increase to a higher level than the projected $6,724,000, then it is not necessary to
increase rates until that time. It is recommended to review rates in 2010 to prevent the
fund from reducing its balance.
Also, it is recommended to complete a Comprehensive Sanitary Sewer Plan based on the
new land use plan adopted in 2005. It would identify specific sanitary sewer
improvements necessary to serve the City as it grows, and develop more detailed CIP
costs.
1.4 Sanitary Sewer Utility Fund
Operation, maintenance, and replacement (Capital Replacement Plan, CRP) of the
sanitary sewer system is funded by the City's "utility" fund. Fees are collected from the
system users based on a fixed charge and a usage charge. By definition of the MCES, the
City's rate structure is a base /uniform rate structure. Operation, maintenance, and
replacement are continual, so these charges are collected and applied as needed.
Future growth assumptions were identical to those used for the water utility fund with
one exception. Residential sanitary sewer usage has typically been 77% of water usage
due to the installation of second meters for lawn watering. Therefore, growth in sanitary
sewer flows were projected lower than future water demands. Future expenses were
relative to system growth, increased flows, inflation, and MCES Sewer Service Charges
(Met Council Treatment Charge).
It was determined that an annual 5% rate increase for single family residential users and a
10% annual increase for large volume users would fund growing operation and
maintenance costs, and a 22% increase over the next five years in the MCES Sewer
Service Charge.
The recommended base/increasing block rate structure presented below in Table 1.3 was
selected for the same reasons as the water utility fund. It encourages water conservation
and correlates lughcr costs to the higher volume users
Water and Sanitary Sewer Rate Analysis
Czty afRosemount. ANN
WSB Project No. 1582 -01
Table 1.3 Proposed Sanitary Sewer Rates
Page 4
2006
2007
2008
2009
2010
2011
Sanitary Sewer Fixed Charge
/account/quarter)
$20 00
$21.00
$22 05
$23.15
$24.31
$25.53
Sewer Use ($/1,000 gallons,
first 30,000 gallons)
$1 40
$1.47
$1 54
$1 62
$1.70
$1 79
Sewer Use /1,000 gallons,
after 30,000 gallons)
$1.40
$1 54
$1 69
$1.86
$2.05
$2.25
average acre of development is $2,714. Unless the City would like the balance on this
fund to increase to a higher level than the projected $6,724,000, then it is not necessary to
increase rates until that time. It is recommended to review rates in 2010 to prevent the
fund from reducing its balance.
Also, it is recommended to complete a Comprehensive Sanitary Sewer Plan based on the
new land use plan adopted in 2005. It would identify specific sanitary sewer
improvements necessary to serve the City as it grows, and develop more detailed CIP
costs.
1.4 Sanitary Sewer Utility Fund
Operation, maintenance, and replacement (Capital Replacement Plan, CRP) of the
sanitary sewer system is funded by the City's "utility" fund. Fees are collected from the
system users based on a fixed charge and a usage charge. By definition of the MCES, the
City's rate structure is a base /uniform rate structure. Operation, maintenance, and
replacement are continual, so these charges are collected and applied as needed.
Future growth assumptions were identical to those used for the water utility fund with
one exception. Residential sanitary sewer usage has typically been 77% of water usage
due to the installation of second meters for lawn watering. Therefore, growth in sanitary
sewer flows were projected lower than future water demands. Future expenses were
relative to system growth, increased flows, inflation, and MCES Sewer Service Charges
(Met Council Treatment Charge).
It was determined that an annual 5% rate increase for single family residential users and a
10% annual increase for large volume users would fund growing operation and
maintenance costs, and a 22% increase over the next five years in the MCES Sewer
Service Charge.
The recommended base/increasing block rate structure presented below in Table 1.3 was
selected for the same reasons as the water utility fund. It encourages water conservation
and correlates lughcr costs to the higher volume users
Water and Sanitary Sewer Rate Analysis
Czty afRosemount. ANN
WSB Project No. 1582 -01
Table 1.3 Proposed Sanitary Sewer Rates
Page 4
Fee Description
2006 Rate
Account
Funded
Water Use
$1 0211,000
gallons
Utility Fund
Water Fixed Charge
$8 90 /account
Utility Fund
Water Surcharge
See Below
Utility Fund
Meter Maintenance
See Below
Utility Fund
Trunk Area Assessment
$4,420 /acre
Core Fund
Water Access Charge (WAC)
See Below
Core Fund
2.0 INTRODUCTION
2.1 Purpose
This study will review the City's Water and Sanitary Sewer Utilities' existing financial
condition and the impact future growth will have on the utilities over the next five years.
Additionally, this analysis will provide recommendations to maximize the City's
resources for future utility expansions, operations, maintenance, and replacement as it
reaches its design life.
A Comprehensive Utility Rate Study was completed by SEH in 1999. The study
included an analysis of all three city utilities, water, sanitary sewer, and storm water A
recommendation of that study was to revisit rates approximately every five years. For the
past ten years the City's utilities have mamtamed strong financial condition and it is
important to continue that strength.
2.2 Utility Accounts and Funding
Both utilities consist of two separate accounts each with a separate purpose, but a
common goal of reliably serving an expanding Rosemount. The "utility" fund is the
operations and maintenance budget funded with user fees. The "core" fimd's purpose is
to contribute to future system capacity increasing projects (Capital Improvement
Program) necessary to serve new development. The core fund is funded with
development fees
2.3 Existing Rates
2.3.1 Water
Existing water utility rates are summarized in Table 2.1 below.
Table 2.1 Existing Rosemount Water Rates
Water and Sanitary Sewer Rate Analysis
City of Rosemount, MN
WSB Project No. 1582 -01
Page 5
Fee Descnption
Rate
Account Funded
Sanitary Sewer Use
$1 40/1,000 gallons
Utility Fund
Sanitary Sewer Fixed Charge
$20 00 /account
Utility Fund
Trunk Area Assessment
$1,075 /acre
Core Fund
Sewer Availablity Charge (SAC)
$1,200 /unit*
Core Fund
2"
31.50
1815
*SAC unit as determined by
MCES
3935
2220
3"
4700
2625
MCES SAC
$1,550 /unit
Collected by MCES for
Treatment
Meter Size
Surcharge
Meter Maint
Single Family 5/8"
8 80
Multi Family 5/8"
6 80
1"
13 50
6.25
1 5"
28 00
1125
2"
31.50
1815
25"
3935
2220
3"
4700
2625
4"
70 00
45 00
6"
154.00
100.00
8"
170.00
130 00
Meter Size
WAC Fee
Single Family 5/8"
1,480.00
Multi Family 5/8"
1,480
00
1"
6,700
00
1.5"
$10,050
00
2"
$13,400.00
2.5"
$16,750
00
3"
$20,110
00
4"
$23,460
00
6"
$26,810.00
8"
$30,160.00
Water and Sanitary Sewer Rate Analysis
City of Rosemount, MN
WSB Project No. 1582 -01
Water Surcharge and Meter Maintenance Fee
Water Access Charge (WAC)
2.3.2 Sanitary Sewer
Existing sanitary sewer utility rates are summarized in Table 2.2 below.
Table 2.2 Existing Rosemount Sanitary Sewer Rates
Page 6
r
Pater and Sa n tary Server Rate Analysis
Ctty ofRose'noont, MN
WSB Project No. 1582 -01
Metropolitan Council Environmental Services (MCES) SAC is shown at the
bottom of Table 2. This is not a City established fee but is collected by the City
and passed through to MCES. MCES SAC fees do not go to City funds.
However, it is a cost developers (ultimately users) will have to pay. It is
important to note all system charges to avoid discouraging development within
the City. The MCES SAC charge was not reviewed as a part of this rate analysis.
2.4 Projected Future Usage
Table 2 3 shows the projected 2005 -2010 water demands and sanitary sewer flows. The
Comprehensive Water System Plan considered historical water usage, estimated unit
water demand, residential and non residential growth, and the current land use plan for
projecting future water demands and future water system improvements to serve those
demands From 2002 -2004 sanitary sewer flows equaled the water sold for industrial,
commercial, and public /institutional with the exception of residential usage. The City
makes a separate water meter available to users for watering so they are not charged for
sanitary sewer usage when lawn watenng Over the last three years, residential sanitary
sewer flows have averaged 77% of the residential water sold Therefore, projected
sanitary sewer flows are less than projected water demands.
2.4.1. Reduced Residential Growth
Since the Comprehensive Water System Plan has been completed, future City
residential growth projections have been reduced. Recent residential growth has
been approximately 400 new connections per year. Residential growth
projections included in the Comprehensive Water System Plan were
approximately 875 new urban, transition, medium, and high density residential
units per year. Therefore, population projections, residential usage, and annual
acreage developed were reduced based on projected growth of 400 connections
per year.
Non residential (Air Cargo, Business Park, Institutional, Industrial, and
Commercial) development growth was not changed from the Comprehensive
Water System Plan projections.
Future connection growth is discussed in more detail in section 3.2.
2.4.2. Comprehensive Water System Plan Implications
The reduced residential growth projection affects the phasing of the
Comprehensive Water System Plan, but not the ultimate water system layout or
infrastructure requirements. The Comprehensive Water System Plan should
continue to be a guide for future water infrastructure location and sizing, unless
the City's land use diverges from the current plan. The rate at which the plan is
implemented will be relative to the City's development and population growth
However, it should be reviewed every five years to verify it is consistent with the
City's current land use and development projections.
Page 7
ru
2
3.0 WATER CORE FUND
3.1 Description
Future water system capital improvements for system expansion such as trunk water
mains, water towers, and wells are funded through the City's "core" fund. As system
improvements are constructed, either by system infrastructure capacity increases or trunk
main extensions, initial costs are paid by the core fund Then the core fund is reimbursed
by trunk area assessments and individual connection charges (WAC) from new
development. The current available balance in the water core fund is $3,925,570.54.
However, there is some existing debt from previous projects totaling $5,555,000.
Trunk Area Assessment fees are collected when a developer applies for a plat/subdivision
agreement. Any fees not collected with the plat/subdivision agreement are collected as a
connection charge prior to system connection. The assessment is calculated based on the
entire parcel area to be developed. The current Trunk Area Assessment for water is
$4,420 per acre.
A Water Availability Charge (WAC), or connection charge, is collected with the building
permit. The WAC charge is based on the size of the meter installed in each umt and is
shown previously in Table 2.1.
3.2 Future Connection and Trunk Area Growth
3.2.2 WAC
Water and Sanitary Sewer Rate Analysis
City ofRosemount, AIN
WSB Project No. 1582 -01
3.2.1 Trunk Area Growth
The residential population density assumptions included in the Comprehensive
Water System Plan were not changed as a part of the rate analysis. Therefore, the
reduced residential growth projections reduced the amount of land to be
developed over the next five years and in tum reduced trunk area assessment
revenues Projected Trunk Area Growth is shown in Table 3 1 at the end of
section 3.2 2. with projected connection growth.
To project future WAC revenues, units for each land use type were estimated.
The Comprehensive Water System Plan identified future estimated units for
residential property, but only water demand growth for non residential was based
on the acres developed. Therefore, to project the number of units for non-
residential property the existing land use types and connections were considered.
In 2004 there were 140 commercial connections on 172 acres yielding
approximately 1 2 acres /connection Commercial service connection sizes vary
throughout the City, but in the Downtown Redevelopment Study it was noted that
the majority of the service connections were 1 -inch. Therefore, to project
conservative revenues it was assumed that existing and future commercial
connections are 1
Page 8
Land Use Type
5 yr total
acreage
Avg.
Connections/Year
Meter Size*
Urban Residential
367
237
5/8"
Transition Residential
58
23
5/8"
Medium Density Residential
98
137
5/8"
High Density Residential'
61
3
6"
Commercial
35
8
1"
Business Park
620
12
6"
Air Cargo
630
12
6"
Industrial /Institutional
0
0
6"
Total
1,869
432
Water and Sanitary Sewer Rate Analysis
City of Rosemount, MN
WSB Project No. 1582 -01
Business park connections were estimated at 5 in 2004. Future business park
developments were assumed to be similar to the business park located south of
CSAH 42 and east of TH 3 where there are 7 future 6" service stubs at the north
end of the development on 73 acres, yielding approximately 1 connection per 10.5
acres. Business park connections were assumed to be 6 -inch The Air Cargo
facility was assumed to be similar to business park development.
Projected residential connections were taken from the Comprehensive Water
System Plan Table 7, which identified approximately 875 new connections each
year and reduced as discussed in section 2.4. Also, high density residential
connections were reduced to one connection per 50 units. Based on the 150 units
per year projected in the Comprehensive Water System Plan, there would be 3
new 6 -inch connections per year.
Table 3.1 below shows projected connections per year for the various land use
categories discussed in this section. In addition, it shows the appropriate meter
size for each type of connection. For simplicity, all existing and future water
connections were assumed to be 5/8 1", and 6
Table 3.1 Projected Average Annual Growth of Connections
3.3 Future Improvements (CIP)
A CIP was developed as a part of the City's Comprehensive Water System Plan.
However, since residential growth projections have been reduced the CIP has been
reduced. The lowered growth projections reduced the total number of new connections
by approximately 1/3 over the next 5 years. Therefore, the number of wells needed was
reduced from 3 to 2, raw water main needed for the new wells was reduced by 1/3, and
the 12" water main required to serve development was reduced by 1/3. Future 16" water
main was not reduced because it would serve the Air Cargo Facility, and future ground
storage was not reduced because it would be constructed at the same time as the water
treatment plant. The total cost of improvements within the next five years is shown in
Table 3.2.
Page 9
Improvement
Engineer's Opinion of
Probable Project Costs
Wells 15 and 16
2,452,000
Raw Water Main from Wells to WTP
1,273,000
8 -inch trunk main
Paid by developer
12 -inch trunk main
4,423,000
16 inch trunk main
4,963,000
Northwest Water Treatment Plant
Paid from user rates
Northwest Water Treatment Plant Ground Storage
2 0 MG
2,100,000
Total Capital Improvements 2005 -2010
15,211,000
Figure 2* shows the developable acres available in each parcel. Figure 5 shows the
ultimate water system which includes the improvements listed in Table 3.2. Figures
showing phased improvements (2010, 2015, and 2025 systems) have not been included
due to the reduced growth projections.
*All figures are referenced from the Comprehensive Water System Plan as their Figure
Title from the document. They are also included in the Appendix.
3.4 Core Fund Rate Analysis
Water and Sanitary Sewer Rate Analysis
Coy of Rosemount, MN
WSB Project No. 1582 -01
Table 3.2 Capital Improvement Plan 2006 -2010
Future annual development was assumed to average 374 acres per year (1,869 acres /5
years) and it was assumed the City would collect WAC and trunk area charges for all 374
acres of development m each year and the 432 new connections.
The City has expressed a desire to avoid debt financing, therefore, the available balance
in the core fund must be enough to fund the projected infrastructure improvements, and
costs recovered from development before more projects can be constructed. Otherwise, a
bond might have to be issued to fund the initial costs on new developments More value
will be provided to residents if interest costs related to debt financing can be avoided.
Expenses to be funded from the core fund include the CIP discussed in section 3.2 and
existing debt service. The annual CIP expense was the total over 5 years ($15,211,000/5
years) inflated at 3% annually All of the debt service on the 55,555,000 will be paid
from the core fund beginning in 2007 Currently, the existing debt service on Tower #4,
Bacardi Tower, is paid from the meter surcharges collected in the utility fund. The 2006
debt service payment will be $379,000, but increase to $641,000 in 2007.
Table 3.3 shows existing rates' impact on the balance of the core fund and indicates the
fund balance would decrease from 53,419,060.54 to 1,896928 96 indicating the current
rates cannot fund existing debt service and future CIP costs without financing future CIP
costs.
Page 10
Table 3.4 shows an increase in rates of 10% annually which would continually decrease
the account balance through 2009 to approximately $2,470,000, but the balance would
then begin to grow in 2010. The annual decrease in the account balance is caused by the
transition of cash funding all future projects as opposed to the current mix of cash
funding for smaller projects and debt financing for larger ones. This is shown in the 2006
column where there are $3,500,000 in expenses and $3,000,000 in revenue. The annual
deficit would decrease from 2006 -2009 and then become a surplus in 2010. A 10%
annual rate increase in development fees would make it possible to fund existing debt
service and future CIF costs without issuing more debt.
Water and Sanitary Sewer Rate Analysis
City of Rosemount, MN
WSB Project No 1582 -01
Page 11
CO
O
11 bz
4,420 0011
1,480 00 11
6,700 00 11
26,810 00 11
e
(627,403.25)11
II LL'9£9i9b9'£
641,000 00 11
o
4,287,635 71 11
1 4,915,038.96)11
1 1,653,08000
1 587,560 00 11
1 53,600 00 11
1 723,87000o
11000LL'8Lois 1
(1,896,928.96)11
Il(LC9z9'69z'L) 1
Water Rate Analysis
Table 3.3 Core Fund No Rate Increase
City of Rosemount, MN
CO
O
1 bz
4,420 00
1,480.001
1 oo ooL'9
26,810 00
535,909.78
3,540,423 02
1 00 000' Lb9 I
z0 £Zb'L8L'4 1
1 3,645,513.25)
I 1,653,08000
587,560 00
53,600 00
723,870 00
1 3,018,110 00
J 627,403.25)
(zo£L£'£9L'L) 1
%LO•LLZ
CO
O
1 bz
4,420 00
1,480001
6,700 00 1
26,810 00 1
1,596,103.681
3,437,303 91
641,000 00
4,078,303 91
1 (2,482,200.22)
1 1,653,080.00
1 587,560.00
Fs 53,600 00
1 723,870 00
1 3,018,11000
9L'606'9E9 1
(L6 £6L'090' L)
%Zh 99 1
CO
O
1 VZ
4A20 00
1 00 08b' L
6,70000 1
26,810 00 I
j 2,556,181.94 1
3,337,188 26 I
1 00 000'149
1 3,978,188 26
1_$(1,422,006 32)
$_1,653,080 00
1 587,560 00
1 53,600 00
J 723,870.00
3,018,110 00
1,596,103.68
(960,078 26)
%9S L8
CO
CO
J 4z
4,420 00 1
I oo 094' 4
1 00 00L
26,810 00 1
3,419,060 54 I
3,239,988 60
00 000'1479 1
3,880,988.60
1 461,928 06)
1,653,080 00
I 587,560 00
1 53,600 00
1 723,870 00
J 3,018,11000
2,556,181 94
(09 8L9'399)
%4E SZ
CO
CO
1 43
4,420 00
100o8V
1 0000L'9
26,810
3,925,570.54 1
3,145,62000
379,000 00
3,524,620 00
400,950 54
1,653,080 00
587,560 00
00'009'£9 1
723,870 00
1 3,018,110 00
1 3,419,060.54
1 506,510 00)
%0621
II New High Density Residential Connections (Table 5) 1
(9 algel) suotpauuo3 leiaiawwo3 Mart 11
J (g algel) suogoauuo3 obJep Jiy /MJed ssauisng 11
(afoe l uewssess v eaw 4unJl 11
II 5/8" Meter WAC Fee 1
II 1" Meter WAC Fee
II 6" Meter WAC Fee
II Beginning Year Balance
II CIP not including Water Treatment Plant Annual Cost 1
(000'999'9$)1 lenuuv °Dimas Nap bugsixa II
II Total Expenses
sasuadxd Jaw aoueleg 11
1] Trunk Area Charges
II 5/8" Meter WAC Fees
II 1" Meter WAC Fees
II 6" Meter WAC Fees
II Total Revenues
II Balance after Revenues (Year End)
II Balance change
afueyo ll
Water Rate Analysis
Table 3.4 Core Fund Annual 10% Rate Increase
City of Rosemount, MN
II 4402
II 4LE 1
II L6E
11 bZ
11917 8441
1 2.383 55 0
f
II Z17'06C04 1
1 43,177 77 11
2,707,910.11 1
11 4L'9E9'949'£ I
1 641.000 00 II
II LL 9E9'L8Z'P
1Im9 SZC6LS'14
11 L8 40E Z99•Z
I1 96 4LZ 946
11 17£ £ZE 98
i
if L8 66L 991
i
0
i
114E 969'098'17
3,280,970.74
I
II 69 090 EL9
i
i9cAZ
01.0Z
PLC
L6E
co
co
bZ
1 6,471 32
1 2,16687
9,809 47 1
Z9 Z9Z
6 Z'9 4 9 1 0 L 4'Z
3,540,423 02
00 000'149
ZO£Z17'48L'P
14L'1
£b
tzrozyz
09 9171'099
78,475 76 1
1,059.818 07 1
4,418,814 85 1
2,707,910.11
1 68 1.6E'L£Z
1 600Z
4LE
LOS
co
co
4 Z
1 5,883 02 1
1 88 696'4 1
0L L46'8
441789
2,531,717781
3,437,303 91 1
100 000'449
4,078,303 91 1
I(Z4989'9179'L)
2,200,249 48 1
782,042 36 1
71,341 60 1
963,470 97 1
4,017,10441 1
2,470,518 29
1(09664'49)
1 %Z6'Z-
8002
*L£
LOE
o
17Z
5,348 20
1,790 80 1
OO L0re
32,440 10 1
2,857,992 94
3,337,188261
00 000'449
3,978,188 26 1
(Z£'S6LbZ4'0
2,000,226 00 1
710,947 60 1
64,856 00 1
875,882 70 1
3,651,913 10 1
2,531,717.78
(326,275 16)1
%zr LL-
L00Z
bL£
L6£
I E
co
17Z
00 Z98'P
1,628 00
7,370 00
00 4617
3,419,060 54
1 09 886'6£1'£
1 000'449
3,880,988 60
1(90 816'494)
1,818,388 00 1
100
58,960 00 1
796,257 00 1
3,319,921 00 I
2,857,992.94
1(09 L90'499)
1 %L17'96
900Z
PLC
L6E
CO
c
VZ
4,420 00 1
1,48000
L00 00L'9
26,810 00
3,925,570 54
3,145,620 00
379,000 00 1
3,524,620 00
400,950 54
1,653,080 00
587,560 00 1
53,600 00
723,870 00
3,018,110 00
179'090'644'£
(506,510 00)1
11 Annual Acreage Developed
II New Residential Connections (Table 5)
11 New High Density Residential Connections (Table 5)
11 New Commercial Connections (Table 5)
11 Business Park /Air Cargo Connections (Table 5)
11 Trunk Area Assessment /acre)
11 5/8" Meter WAC Fee
I1 f Meter WAC Fee
11 6 Meter WAC Fee
Beginning Year Balance
II GIP not including Water Treatment Plant Annual Cost
I
11 Existing Debt Service Annual Cost ($5,555,000)
11 Iota! Expenses
11 Balance After Expenses 1
11 I runk Area Charges
11 5/8" Meter WAC Fees
11 1" Meter WAC Fees
1 seal ow lawn ..9 1
11 1 otal Revenues
Balance after Revenues (Year End)
II Balance change 1
II change 1
4.0 WATER UTILITY FUND
4.1 Description
Operation, maintenance, and replacement (Capital Replacement Plan, CRP) of the water
system is funded by the City's "utility" fund Fees are collected from the system users
based on a fixed charge, usage charge, meter surcharge, and meter maintenance fee. The
debt service for Tower #4, Bacardi Tower, is funded with the water surcharge shown in
Table 2.2, but will be funded by the core fund beginning in 2007 The current utility fund
available balance is $2,347,961.84.
Fixed Charges are collected from each user on a quarterly basis The current fixed charge
of $8 90 per account was based on approximately 50% of the water utility's fixed costs in
1999 and a state required minimum charge of $5 21 Today, revenues from the fixed
charge account for only 20% of the overall fixed costs or approximately 50% of salanes.
Fixed cost items are independent of water demands and include salanes and benefits,
office supplies and materials, computers, infrastructure replacement, equipment
maintenance, and quality testing. In Table 4.1, all highlighted line items are vanable
costs and the remaining are fixed costs. Well operation, tower operation, and chlonne are
all vanable costs since they correlate to the amount of water consumed.
Meter surcharges and maintenance fees are collected on a quarterly basis. Similar to the
fixed charge, meter surcharges and maintenance fees are charged per account
independent of water usage.
Usage Charges are collected from customers on a quarterly basis. The current usage
charge is $1.02 /1,000 gallons as shown in Table 4.1.
4.2 Ongoing Operation and Maintenance
4.2.1 Existing City Budget and Potential Updates
Existing and forecasted operation and maintenance expenses are shown in Table
4.1. The existing utility fund budget is included in the column marked 2006 City
Budget The major expense categories are salaries, utilities, and replacement of
existing infrastructure (CRP). Each expense line shown in bold is an item where
a major change was assumed necessary in the future Line items not in bold were
not changed greatly from the 2006 city budget and future costs were based either
on system expansion, inflation, or water demand As discussed previously,
highlighted expense items are vanable costs.
Salaries, including worker's comp insurance, were forecasted to increase at an
annual rate of 8% over the next five years, while utility costs to operate the wells
and towers were assumed to increase at an annual unit rate of 7% Vehicle and
the Water Conservation and Emergency Plan are independent items established by
the council in their budget each year. These costs have not been camed forward
to future years as they are widely vanable. Vulnerability Assessment
Water and Sanitary Sewer Rate Analysis
City of Rosemount, MN
WSB Project No. 1582 -01
Page 12
Water and Sanitary Sewer Rate Analysis
City of Rosemount, MN
WSB Project No. 1582 -01
Improvements and Building Structures have been assumed to be funded at the
same level, without inflation, for the next 5 years.
New water tower and well fixed and variable costs were assumed similar to
today's costs, except inflated at 3% annually for fixed costs and 7% for variable
costs. For instance, a well coming online m 2008 would have a fixed cost similar
to today for Well No.'s 7 and 8 but three years of inflation would have
compounded at 3 Variable costs were estimated in the same manner except
inflation was 7% for utilities In addition, it was assumed 2006 would be the last
year of operation for Well No 3.
Chemical and chemical products for treatment at the wells has been estimated at
$45,000 for 2006 in the City budget. Over the last four years chemical costs have
been widely variable, but averaged $61 per Million Gallons of water pumped to
the distribution system. Therefore, costs going forward were based on the volume
of water demanded plus 3% annual inflation in the unit cost of treatment.
An existing operation and maintenance cost not included in the 2006 City budget
is tower repainting. Rosemount is very proactive relative to their tower
maintenance and spot repairs which reduces the need for full tower repainting.
However, a full coating on the inside and out is recommended every 20 years.
Based on the size of the towers a 2005 cost to repaint them was determined
Tower repainting costs were then divided over 20 years and inflated annually at
3
The remainder of costs listed in the budget will grow at a rapid rate in the near
future. As the system expands, the amount of existing system to operate and
maintain will increase. The existing area served by the water system is
approximately 3,389* acres. Projected operation and maintenance costs for the
system is for 2006, but the 2007 operating costs will be greater because in 2006
the system expanded 374 acres or 11.0% These increases are related to most
fixed costs and the affected line items were shown in italics in Table 4.1.
Expense line items not shown in italics were increased or decreased related to
factors other than the system expansion rate as discussed above Since 374 acres
of service area will be added each year the total system will increase in size by
11.0% in 2006, 9 9 9.0 8.3 and 7.1% for the years 2007, 2008, 2009, and
2010 respectively. Therefore, the operation and maintenance cost in 2007 will
increase by 11 0 or the amount the system grew in the previous year. Due to
the size of the system increases it was assumed there would be no additional
inflation in future unit costs except for utility costs on the wells and towers of 7%
annually, and salaries and benefits.
The existing water system serves a larger amount of land area, however the
general industnal category is inflated due to the large land area consumed by Flint
Hills Resources. Therefore, the amount of served acres was adjusted downward
to more accurately reflect a similar level of service for each area with water
service
Page 13
Water and Sanitary Sewer Rate Analysis
City ofRosemount, MN
WSB Project No. 1582 -01
4.2.2 Replacement
As infrastructure reaches its design life or capacity it begins to deteriorate and
needs replacement. Replacement costs, or CRP as shown in the utility fund
budget, are for increasing capacity or replacing deteriorated infrastructure in the
existing water system. $100,000 was budgeted for these costs in 2006. CRP
could include projects such as water main reconstruction, well pump motor
replacement, or tower replacement.
Approximately 80% of Rosemount's water mains are less than 10 years old, so
the remaining 20% was assumed to be replaced over the next 20 years. The
annual replacement cost was assumed to be $200,000 inflated at 3% each year.
A replacement cost not included in the 2006 City budget was replacement of
existing water meters. The majonty of existing water meters have recently been
replaced and the meters are well maintained. Therefore, a small number of meters
are anticipated to be replaced each year at a cost of approximately 510,000
annually inflated at 3%
4.2.3 Water Treatment Plant
Since all water users will benefit from treated water, it is recommended to pay for
the water treatment plant through an increase in water rates The Comprehensive
Water System Plan estimated the cost of the water treatment plant to be
$9,928,000 in 2005 dollars. It was assumed the water treatment plant would be
constructed in 2008, on -line in 2009. The cost at that time would be $11,174,000
based on 3% annual inflation.
To fund the plant from the utility fund, it was assumed that the current surcharge,
which is funding the #4 Tower (Bacardi Tower) debt service, would continue to
be collected. Proceeds from the surcharge would be applied towards future water
treatment plant debt service.
Water Treatment Plant operation and maintenance expenses have been estimated
and included in the budget shown in Table 4.1. No replacement costs have been
included because it is recommended to develop those in the next rate study within
five years. At that time, the water treatment plant should be operational and the
City will have a better idea of operation and maintenance costs
Included in the Table 4 1 budget in the year 2009 are changes to salaries, worker's
comp insurance, well electrical and gas, high service pumps at water treatment
plant, ground storage at water treatment plant, high service pumps electncal,
ground storage electrical, WTP potassium permanganate feed, and WTP
equipment maintenance.
Assumptions for salaries and worker's comp insurance included adding another
full -time employee to run the water treatment plant at a cost of $120,000 (540,000
salary and multiplier of three for benefits). Existing well electrical and gas costs
Page 14
would greatly decrease as the treatment plant became operational. The high
service pumps and ground storage at the treatment plant would have operational
costs, excluding utilities, similar to those of the existing wells and storage
Additional chemical costs were added to the water treatment plant for iron and
manganese removal. WTP equipment maintenance costs were added, but
operational costs were assumed to be included in the other budget line items.
4.3 Rate Structure Analysis
Water and Sanitary Sewer Rate Analysts
City of Rosemount, MN
WSB Project No. 1582 -01
4.3.1 Existing Base/Uniform Rate Structure
To simplify revenue estimates, all users were considered either a 5/8 1", or 6"
connection. Although, there are many other different sizes of connections, these
were assumed because they were connections for a typical small commercial
business, larger business park/mdustnal business, or a residential home. These
categories were used to determine the appropriate percentage of rate increase then
each type of service connection was multiplied by that rate increase percentage.
Revenues from Fixed Charges, Meter Surcharges, and Meter Maintenance Fees
are all based on the number and size of connections. The revenue estimates were
based on the projected number of acres to develop of each land use type and the
number and size of new connections as discussed in section 3.2.
Table 4.1 shows the impact of not increasing rates for the next five years. It
shows a decrease of 6% and 4% in 2007 and 2008 until debt service payments on
the water treatment plant begin in 2009, at which the fund balance would rapidly
decrease. The utility fund balance from the current $2,300,000 would reduce to
$420,000.
4.3.2 Base /Increasing Block Rate Structure
Based on Section 4.3.1., it was determined that rates needed to be increased in
anticipation of the future water treatment plant. An objective of the commission
was to conserve water from an environmental and cost reduction viewpoint. To
accomplish these objectives a base /increasing block rate structure was introduced.
Typically, a base /increasing block rate structure conserves water and increases
revenue from the high volume users who place the greatest stress on the system.
Eventually high volume users adjust to the increasing block rate and lower their
water usage. Lower water usage may reduce city revenues, but it also reduces
expenses because less infrastructure replacement, operation, and maintenance are
required.
Potential disadvantages of this rate structure include the additional time required
for City staff to determine customer water bills and the unpredictability of
customer water usage as they try to reduce water consumption to lower their bills.
Page 15
Water Rate Analysis
Tab e 4 1 Utility Fund No Increase
City of Rosemount, MN
City Acct. a
Description
2006 City Budget
2007
2008
2009
2010
2011
Projected
Demands and
Connections
'Business
Wafer Demand (MG)
1,027 29
1 1 55 69
1290 35
1,421 95
1,553 55
Percent of System Expansion
9 9%
9 0%
6 3%
7 1%
6 5%
Residential Single Family Connections
6420
6 690
6987
7 303
7 563
Resident al Multi Family (Med Dense) Connections
324
455
575
664
S21
Resident al Multi Family (Hi Dense) Connections
7
10
13
16
1 9
Commercial Connections
156
164
172
180
188
InstltutICnal'lndustnal Connections
41
41
41
41
41
Park/Air Cargo Connections
53
77
101
125
149
PmleCe d
Rates
Water Fixed Charge($Iaccoi.nUquarteq
5 890
890
890
5 890
5 590
890
Water Use (S/1,000 gallons)
5 1 02
102
1 02
1 02
1 02
1 02
Single Family 5(8' ($/account)
880
880
880
880
8 890
880
S u-charge-
Surcnarge Multi Family 5,8 '(Si account)
680
680
680
680
650
680
Surcharge- 1 "($laccourt)
1350
135
3 1350
1350
1350
5 1350
I Sucharge-6" (5/account)
15400
5 15400
15400
15400
15430
5 15400
Meter Maintenance 1' (1/account/quarter)
625
625
8 625
625
625
5 625
Meter Maintenance- 6'I &accounrigiarter)
100 CO
5 10000
100 CO
5 100 00
5 10000
5 10000
602 49450
Beginning Balance
1 2,347.961 84
2,347,961 34
;236,236 38
2161,661 93
5 1,076164 82
418,3713 61
10100
Salaries and Benefits (8 %increase/yr)
5 440,400 00
475,700 00
513300 00
5 690,000 00
6 745,200 00
804,90000
203 09 19
Forms, 0 c and Operahnq Supplies
Z90000
$20000
3,50000
3,60000
4 100 00
.r'y600.00i
4,40000
594109;800 DO'
21600
Chemd Preduc&( ed topopgrth i'
e;' 4500000
i `'64:50011Xt
'Si ,'7S•"..0O
$9- 400600
22001
Water Meter Purchases (replacements)
11,100 00
12,200 00
13,300 00
4 14,400 00
15,40000
220 CO
Water Meter Purchases (new homes)
6 130,000 00
126,000 00
6 129,800 00
133,70000
137,700 00
5 141,90000
224 -242
Maintenance, Tools, and Supplies
S 19, 300 00
21,400 00
5 23, 500 00
25 600 00
3 27 700 00
5 29 700 00
303 01
Water Conservation Emergency Plan
25 000 00
5
5
5
303 02 -315 01
OS Leger, Testing, One -Call, Public In/ormabon
49,500 00
5 54900 00
60 300 00
5 65 700 00
3 71,200 00
5 75 300 00
315 02- 03
Plan Amendments,Sem.nars
5 6 000 00
6 200 00
6 6 400 00
6 600 00
6 800 00
7000
31504
Vulnerability Assessment Imo
3 50 000 00
5 50 000 00
6 50 000 00
501x000
50,00000
5000000
31800
Contract Engineer
5 900000
5 9 300 00
960000
4 9,90000
10,200 00
1050000
319 -352
Pmfessronal Services, Mainq, Notices, Advertising, Travel
3 14 400 GO
16 000 00
5 17 600 00
3 19,200 00 5 20,800 00
22300 00
365111
Workers Comp Insurance (6 54)
5 4,50000
4,90000
5 5,30000
6 6,80000 1 7,30000
7,90000
369439
insurance, Computers, R&M, Education, Misc Charges
5 37,30060
41,400 00
45 500 00
49,600 00 S 53, 700 00
57,500 00
521 00
Buiiding Structure Purchases
10 000 00 10,000 00
10,000 00
10,000 00 10000 CO
10,000 00
53001-02
Annual Well Ins iron, Msc Im•mvements
CRP of Water Main
3 60 000 00 66 600 00
5 73200
79,600 00 5 66 400 00
92,50000
530 03
S 100,000 00 5 206,000 00
212,200 00
5 218,600 00 225,200 00
232,000 00
53004- 05
Replace Pickup #342, and Survey Grade GPS
5 47500 00
5 5
560 -570
Furmfure and Office
5 2 000 00 2,200 00
3 240000
5 2,60000 Z80000
3000 00
Weiland
Tower
Expenses
Well No 3 (ex Electrical and gas)
4 2,900 00
5
Well No 3 Contract Repairs and Maint
25,000 00
5
Well Nei; Electrical andeasry -r e s` -.h G22liT i-14L
Well and Vault not rncidurnq utibbes
w!; 5 9,500.00 5
5 I", lair!'
'w
1$7,A1 gip',1 r 4 -S'•';E, i
13,100 00 3 14,500 G0
15 500 00
S 17,300 00 5 18,700 00
20,00000
Well No 10 Contract Repairs and Mamt
2900 00 5
1
5
Well No 15 lex. Electrical, gas)
2,10000
2,200 00
2,30000 6 240000
250000
Well No 16 lex. Electncal, gas)
3
2,200 00
6 230000 2,40000
250000
Well No 17 (ex. Electrical, 999)
S 5
5 ;30000 6 2,40000
5 2,50000
Wel$E1ac16tatare■Qas,r'krti 1, ,s i,S "tt'n' T'
140.600:0011$L a2.40O10
Z081**O!0O
3 $g` '3,400:001 "$r Sti300.NPE
600W04
6 9600 00
Existtnq Travers not including utilities
S 5 200 00 6400 00
8700 00
5 9 000 00 5 9,30000
Water Tower #4 (ex Electncal)
5 3,800.00
3,90000
5 4,00000 5 4,10000
3 4,20000
E song Toweq Eli-Moab 3 10 -1 -23 caul" -,"349 Tv:
'S ^..3 3 ;50 00 00 5. 1 4'200:00
'5 6,60000
v5 °.'a 4:1QQ00.2 v5•„-'367,600.00
599 .3.100.00..
Tower repambng each 15 years
5 76,100 00
6 7640000
5 80,300 00 5 83,200 00
5 85,70000
Future Water
Treatment
System
Expenses
High Service Pumps (07 WTP (ex Electncal)
1
5
5 6300.00 8500 00
5 61100 00
Ground Store •e WTP ex Electncial)
Hlgh SeNick PNrORg,EleGtdcaki_ .wed,
5 6
;S, .10 S
(51,.' 9 t'4''$
S 4,50000 4,60000
=''N9)OOG00•'$^ %138�0060g1
9 4,70000
••$6e°- •160,100:00`
Groum151arpge 1 "i
'100'0 'S i
s o'
i, 3)700,90 4.00400.v$
*a 14300:00'
WTRPatessfunjPerrzr:'Feed
22,50000 2 3 2 0 0 0 0
e 2 3 8 0 0 9 0
WTP Equipment Maintenance
27,700 00 28,50000
29,400 00
2 WTP Debt Service $10,174,000 20 years e 65%
923,40000 923,40000
923,40000
r
Total Expenses
(1,25840000)
(1,453 100 00)
(1 576,5 00)
(2,748,80000)
(2,882,70000)
(3
Balance after Expsenses
1,089,561 64
894,861 84
659,73638
(587,138 07)
$(1,806,53518)
(2,606,521 39)
Revenues
City Revenues
1 256,400 00
WSB Cat 8 000 Charges
249,23560
264,75720
280,84840
5 297 224 40
312,60360
Water Use (6/1 000 gallons)
1,047 838 94
1 181,868 34
1 316,154 49
5 1,450 389 39
1 584 621 00
WSB Cat Meter Maintenance -1'
3,90000
4,100 00
4 300 00
4 500 00
4,70000
WSB Caic Meter Maintenance -6"
40,400 00
51,200 nil
62 COO 00
5 72 800 00
5 83,600 00
Total Revenues excluding surcharge
1 258 400 00
1341374:4
5 150192554
1 663,302 89
1 824,913 79
1,985,52460
Trans'er from Water Treatment Capital Reserve
400,00000
400,00000
Balance after Revenues (Year End)
2,347,961 84
2,236,23638
2,161,66133
1,076,16482
418,37861
(220,996 79)
Balance change
01172546)
(74 574 46)
(1,085,497 11)
(657,786211
(539,375 40)
change
000%
-4 75%
-3 33%
-50 22%
-5112%
-152 92%
Water
Treatment
Facility Capital
Reserve
I W58 Cale Water Surcharge- Sngle Family 518"
225,98400
23548600
245,942 40
257,06560
266 217 60
I WSB Cak Water Surcharge Multi Family 518"
8,81280
12 376 00
15,64000
18,60480
22 331 20
I WSB Cak Water Surcharge -1"
8,42400
885600
9,28800
9,72000
10 152 00
I WSB Cale Water Surcharge 6'
62,21600
78,84800
96,48000
112,11200
128 744 00
Tots. Water Sutha se Revenue
305,43680
335,56800
366 350 40
397,50240
427 444 80
WTF Expense
1,000,00000
400,00000
400,0x000
'Water Treatment Facility Capital Reserve
305 436 80
641,004 80
7,35520
4 857 60
32,302 40
'Quarterly surcharge currently funds debt service on Conemer Tower, in 2007 the debt service shall be Varferred to the Water Core Fund but the surcharge shall be maintained
to contribute toward Water Treatment Facility capital reserve
'Water Treatment Faculy To` at Ccst= 39928000 or $11 174 000 (2009) 31 000 000 cash paid dawn from Water Treatment Facility Capital Reserve to Total Deot 510 174,000
'Water Treatment Faceey Capital Reserve snail be maintained within the Water Utility Fund
Water Rate Analysis
Table 4 2 Utility Fund with 6% Residential Increase, 10% Large User Increase
City of Rosemount, MN
City Acct
Descnptton 2006 City Budget
2007
2008
2009
2010
2011
Projected
Demands and
C erect p5
Water Demand (MC)
1,02729
1,15869
290 35
1 421 95
',55355
Block Rate Weter Demand Reduction (0 %,5 %,10
000
5793
12903
14220
15536
Percent of System Expansion
9 9%
9 0%
8 3%
71%
5 6%
Residential Single Family Conrections
6420
6 690
6 987
7 303
7 563
Residential Multi Family Riled Cense) Connections
324
455
575
664
821
Residential Multi Family (Hi Derse) Connections
7
10
13
16
19
Commercial Cornections
156
164
172
180
185
Institutional /Industnal Connections
41
41
41
41
41
Business PardAir Cargo Connections
53
77
101
125
149
Projected
Rates
Water Fixed Charge (5 /eccounlquarer) 5 890
935
5 981
1030
1082
1136
Water Use $/1000 gallons first 30 KO gallons) 3 102
3 107
3 112
5 118
8 124
6 130
Water Use (5/1 000 gallons after 30 000 gallons) 5 102
3 112
5 123
136
6 149
5 164
'Surcharge Single Family 5/8" (Siaccou ^t) 6 8 80
5 8 80
8 80
924
8 9 70
s 1019
'Surcharge Multi Family 5/8 /account) 680
5 680
680
1 714
750
787
'Surcharge 1' (5/account) 1350
1350
6 1350
1 1418
1488
5 1563
'Surcharge 6 6 /accoun0 8 15400
15400
154 W
S 16170
16979
5 17827
Meter Maintenance- 1'(S.eccocnUquaner) 625
656
8 689
724
5 760
6 798
Meter Maintenance 6' (S/accounUquaner) 100 00
10500
8 1
5 11576
6 12155
12763
602 49450
Beginning Balance 6 2,347,961 84
2,347,961 84
5 2,319,913 31
2,391,611 86
1623,206 00
51,247,39245
10100
Salanes and Benefits (8% Increase/yr) 5 440,400 00
475,700.00
4 513,80000
690,08000
745,200 00
5 804,90000
203,09,19
Forms Office and Operating Supplies S 2 900 00
3 200 00
3 500 00
5 3,80000
3 4 100 00
4,40000
21600
ChemicalsandChemical ,Products (fled to pop gfthl ,S 46,00000`
,5
S 91,200.00
77,400001
541 0P13750 Of
3$ 96,90050
22001
Water Meter Purchases (replacements)
11,10000
1220000
13 30000 14,400 00
15,40000
22000
Water Meter Purchases (new homes) 6 130,00000
5 126,000 00
129,800 00
5 133,700 00 5 137,700 00
5 141,90000
224 -242
Maintenance, Tools and Suoplres 19 300 00
21 400 00
2350000
3 25 500 CO 27 700 00
29 700 00
30301
Water Conservation Emegency Pap 5 2500000
5
5
3
303 02-315 01
GIS Legal, Testing One -Call Public Information 49 500 00
54,900 00
5 60,300 00
55,700 00 71 200 00
76 300 00
315 02- 03
Plan Amendments Seminars 6 6,00000
5 6,200 00
8 5 400 00
6 6,60000 5 6,80000
3 7 000 00
31504
Vulnerability Assessment mp 5 50 000 00
50,000 00
1 50 000 00
3 50,000 00 50 000 00
5 5000000
31800
Contract Engineer 8 9 000 00
9 300 00
5 9 600 00
9 900 00 1020000
10 500 00
319 -352
Professional Services, Malmo Nobres Advertrsmq Travel 14,400 00
16 000 00
17,600
19,200 00 20,800 00
2230000
36500
Workers Comp Insurance (8 5 4,50000
4,90000
5 5,300
6,80000 7,30000
5 7,90000
369 -439
Insurance, Computers R&M Education Miss Charges 37 300 00
41 400 00
45,500 00
49 600 00 53 700 00
5 57,50000
521 CO
Buildrnq Structure Purchases 10 000 CO
^0,00000
3 10 000 00
10,000 00 1 10,000 00
5 10 000 00
53001 -02
Annual Well Inspection, Use Improvements 60 000 00
5 66 600 00
S 73 200 00
79 800 00 86 400 00
92,50000
53003
CRP of Water Main 100800 00
206,000 00
6 212,200 00
218,60000 225,200 DO
5 232,00000
530 04- 05
Replace Pickup #342 and Survey Grade GPS 47 500 00
5
5
5
5
560-570
Furniture and Office 2,00000
220000
0 2 400 00
2 600 00 2 800 00
3,00000
WeN and
Tower
Expenses
Well No 3 (ex Electrical and gas) 5 2,900 00
5
5
Well No 3 Contract Repairs and Matnt 5 25,000 00
5
5
5
WeIIN43 ElectrIea8and Gas 5,2 4 ,-i lt,'ar n..=, kS00 -00
WellandVaultnatmcldumqutrhtles 13,10000
14 500 00
15 900 00
17,300 90 18 700 00
S 20,000
Well No 10 Contract Repairs and Mani 5 2 900 00
9
5
Well No 15 (ex Electncal, gas) 5
2,10000
2,200 00
5 2,30000 2,400
2,50000
Well No 16 (ex Electrical, gas) 5
5 2,200.00
5 2,30000 240000
4 2,50000
Well No 17 (ex Electrical, 9as) 5
2,30000 2,40000
5 2,50000
Well ElecUfcala0d :Gas 7Ya_ 5 n.fei,i l('1 t "i(.r i55 'S- 140600 00
5' 17260000
5
1 ,n39,300000 .V 3346j1o0
i$' '64,00000i
Existing Towers not includ ng utiiities
8 200 00
0 8,40000
8 870003
6 9,00000 5 9 300 00
9 600 00
Water Tower #4 (ex Electrical)
5
9 3,80000
5 3,900
5 4,00000 5 4,10000
4,200 00
Existing Tbvygr Electrical L' t7
.3:40000
'6 200 00
6
7 750000 .,.&1100'00'
Tower rep tilting each (d 15 years
6 6 76,100 00
78,400 00
6 80,800 00 83,2000015 &5]0000
Future Water
Treatment
System
Expens_s
High Service Pumps Col WTP (ex Electrical)
3
5
8,300 00 8,500 00
8,800 00
Ground Storage A WTP (ex Electrician
5
8
5 4,50000 5 4,60000
4,70000
High Ser4ice;PUmps Electrical 71 -4
Y 8,
4c4=- 4 r.
104,60,000'$ 1221300t00i
§m 144,00006
Ground Storage'Ele'btncal
S -i.
4 i
5 3,70000'5 °4,000100
-T 4,300,99
WTP Potassium Perm Feed
r
S, 22,500 (IQ $3 22 200 00
"1 ,23,90000
WTP Equipment Maintenance
5
27,700 00 5 28,500 00
5 29,400 00
'WTP Debt Service $10,174,00020 years
6
6
923,400 00 923,40000
5 923,400 00
Tote Experses
5 (1258,400 60) 5(1 453 100 00)
5(1562,30000)
5(2921,70000) 5(2,652,60000)
(2 991 800 00)
Balance after Expsenses
0E19,561 04 5 894,061 84
b 757,613 31
5 (330,088 14) $(1,329,394001
$(1,]44,40]55)
Revenues
City Revenues
6 1258 400 00
WSB Caic Fixed Charges
8 25169738
291/39481
5 325 117 13 6 361 278 12
5 398 970 21
Water Use ($/1000 gallons 5rst 30 000 gallons)
751 458 58
794 027 49
6 835 927 06 5 927,122 54
1 063 600 17
Water Use (5/1 000 oa1'ors after 30 000 gallons)
6 365 380 51
487,107 99
615 499 41 5 794 427 17
95471087
WSB Cale Meter Maintenance -1'
5 409500
5 4 520 25
8 4 977 79 6 546978
5 998 52
WSB Cale Meter Maintenance -6'
42 420 00
56 448 00
71 772 75 5 8845886
5 106 697 14
Total Rerenuesexduoinq surcharge
6 1,256 400 00 $142505147
5163399854
01 62,176,76646
$252997691
Transfer from Neter Treatment Capital Reserve
3 400000 09
5 400,000 00
Balance after Revenues (Year End)
6 2,347,961 84 Z319,913 31
5 2,391611 86
1,523,206 00 51,247,39245
51,185,56936
Balance change
5 (25048 53)
5 71 698 54
S (868,405 86) (275,813 54)
5 (61 823 09)
%change
000% -119%
309%
-3631% -18 11%
-096 %_j
Water
Treatment
Facility Capital
Reserve
WSB Oalc Water Surona'qe Single Family 5/8"
5 225 984 00
235,48800
258 239 52 283,41492
300,180
'W98 Calc Water Surcnarge Muth Family 5/8'
3 8,812
12,37600
'6 422 00 5 20,511 79
25,851 16
1 4/SB CaIc Water Surcharge 1"
5 8,42400
8 856 00
9,75240 5 10,71630
11 752 21
'WSB Ca(c Water Surcharge -6"
62,2
78 848 00
100,254 CO 123,60348
149,03727
Total Water Surcharge Reverue
305 436 80
335 568 00
38466792 438 246 40
494,82079
WT= sxaense
1 000 000 30 400 000 00
400,00000
'Wafer Treatment Faulk Capital Reserve
305 436 80
64100480
25672 7 2 63 919 12
5 15873990
'puartedy surcharge currently funds debt service on Conamer Tower, in 2007 the debt service shall be banferred to tne Water Core Fund but the surcharge shall be
maintained to ccntrbute toward' Water Treatment Facility capital reserve
'Warr Theatm en' Facility Total Cost $9 928 000 ;2005) or 511 '74 000 00091 5' 300 OCO cash pate down born Water Treatment Facility Capital Reserve to Total Debt 510 174 000
'Water Treatren Facility Capital Feserve shall se maintained within the Water Utility Fund
The average single family residential home in Rosemount uses approximately
25,000 gallons /quarter. To raise rates on high volume users the block rates were
set for those usmg under 30,000 gallons /quarter and those above. Therefore, the
majonty of single family homes will be paying the lower rate as they don't exert a
large system demand
Table 4.2 shows a base /increasing block rate structure. Due to the increasing unit
rate of service, residential demands would be expected to decrease after a few
years Therefore, Table 4.2 shows a 5% reduction in the amount of water usage
for 2008 and a 10% reduction in 2009 -2010. In addition, the same fixed expenses
were used in each scenario to remain conservative, but variable expenses were
changed to reflect the reduced water usage. In all likelihood, all expenses would
decrease over time as less stress is placed on the system from a lower water
demand.
The rates in Table 4.2 (5% annual increase to residential users and 10% to large
volume users) were developed with the goal of maintaining the utility fund
balance in the future. However, the water treatment plant would increase the
utility fund expenses by approximately 75% in one year. Water rates should not
be increased for consumers by 75% in one year, therefore, a steady annual
increase will cover increased water usage over the next five years and prepare for
the addition of the water treatment plant It should be noted that the fund balance
is still decreasing in 2011, but the deficit would be decreasing as well As a part
of the water treatment plant feasibility study, a financial analysis would be
completed to deteimme a more detailed estimate of the rate increase required for
the water treatment plant.
4.4 Average Water Bill
Table 4.3 below shows average water demand per connection for the different categories
of water customers the City uses. Assumptions and projections for connection growth for
each of the categories were reviewed in the preceding sections
Water and Sanitary Sewer Rate Analysis
City of Rosemount, YLN
WSB Project No 7582 -07
Page 16
Water and Sanitary Sewer Rate Analysis
C,ry ofRosemount, 4IN
WSB Project No. 1582 -01
Table 4.3 Average Water Use by Category
Based on the above estimated demand per connection an estimated bill for each customer
has been developed below in Table 4.4.
Table 4.4 Average Customer Bill and increase in that bill
Page 11
2006
2007
2008
2009
2010
Residential Single Family
Connections
$43 86
$45.61
$47 46
$50 78
$52.67
Residential Multi Family
(Med Dense) Connections*
$41.86
$43 61
$45.46
$48 78
$50 67
Residential Multi Family
(Hi Dense) Connections*
$514.62
$545 23
$578 64
$632.49
$667.39
Commercial Connections
$118 88
$128 66
$139.38
$156.34
5169.15
Institutional Connections
$645 11
$688 77
$736 53
$811 60
$864.41
Business Park /Air Cargo
Connections
$821 04
$882 30
$949 42
$1,05308
$1,130.04
Industrial Connections
$891 67
$959.99
$1,034.87
$1,150 02
$1,236 67
Increase from 2006
Residential Single Family
Connections
0 00%
4.00%
8 19%
15 77%
20 08%
Residential Multi Family
(Med Dense) Connections*
0 00%
4 19%
8 58%
16 52%
21.04%
Residential Multi Family
(Hi Dense) Connections*
0 00%
5.95%
12.44%
22.91
29.69%
Commercial Connections
0 00%
8 23%
17.25%
31.51%
42.29%
Institutional Connections
0.00%
6 77%
14 17%
25 81%
33 99%
Business Park/Air Cargo
Connections
0 00%
7.46%
15.64%
28 26%
37.63%
Industrial Connections
0 00%
7.66%
16 06%
28.97%
38.69%
Water and Sanitary Sewer Rate Analysis
C,ry ofRosemount, 4IN
WSB Project No. 1582 -01
Table 4.3 Average Water Use by Category
Based on the above estimated demand per connection an estimated bill for each customer
has been developed below in Table 4.4.
Table 4.4 Average Customer Bill and increase in that bill
Page 11
Connections
2005 Demand
(gpd)
Demand /Connection
(qpd)
Demand /Quarter (90
days)
Residential Single Family
Connections
6,003
1,710,760
285
25,649
Residential Multi Family
(Med Dense)
Connections*
0
0
0
0
Residential Multi Family
(Hi Dense) Connections*
1
2,742
2,742
246,780
Commercial Connections
140
137,600
983
88,457
Institutional Connections
26
108,250
4,163
374,712
Business Park /Air Cargo
Connections
5
30,400
6,080
547,200
Industrial Connections
15
102,740
6,849
616,440
Total existing 2005
Connections
6,190
Water and Sanitary Sewer Rate Analysis
C,ry ofRosemount, 4IN
WSB Project No. 1582 -01
Table 4.3 Average Water Use by Category
Based on the above estimated demand per connection an estimated bill for each customer
has been developed below in Table 4.4.
Table 4.4 Average Customer Bill and increase in that bill
Page 11
Table 4.4 shows that under an increasing block rate structure the majority of the rate
increase would fall on the high volume users. Over the next five years the bill for the
average non residential user (includes high density residential) would increase
approximately twice that of the single family home or town home. This difference is
justified because the majority of the new demand on the water system is gomg to come
from non residential users. Table 4.5 below shows that Non Residential, or high volume
users, which now account for 18% of total system demand, will double and account for
nearly 42% of total system demand by 2010.
Water and Sanitary Sewer Rate Analysis
Cory ofRosemount, MN
WSB Project No. 1582-01
Table 4.5 Water Demand Growth by Category
*Non residential water demand growth includes Air Cargo Facility water demand
Page 18
2005 Demand
(GPD)
201D Demand
(GPD)
Growth
Residential (Single Family& Med Dense)
1,710,760
2,276,378
33 06%
Non Residential (All Others)
381,732
1,619,376
*324 22%
of Total System Demand
Residential (Single Family& Med Dense)
81 76%
58 43%
Non Residential (All Others)
18 24%
41 57%
Table 4.4 shows that under an increasing block rate structure the majority of the rate
increase would fall on the high volume users. Over the next five years the bill for the
average non residential user (includes high density residential) would increase
approximately twice that of the single family home or town home. This difference is
justified because the majority of the new demand on the water system is gomg to come
from non residential users. Table 4.5 below shows that Non Residential, or high volume
users, which now account for 18% of total system demand, will double and account for
nearly 42% of total system demand by 2010.
Water and Sanitary Sewer Rate Analysis
Cory ofRosemount, MN
WSB Project No. 1582-01
Table 4.5 Water Demand Growth by Category
*Non residential water demand growth includes Air Cargo Facility water demand
Page 18
5.0 SANITARY SEWER CORE FUND
5.1 Description
Future sanitary sewer capital improvements such as lift stations and trunk sewers are
funded through the City's "core" fund. As properties develop, initial costs are paid by
the core fund. Then, the core fund is reimbursed by trunk area assessments and
individual connection charges. The current available balance in the core fund is
$4,937,959.30
Trunk Area Assessments are collected when a developer applies for a plat /subdivision
agreement. Any fees not collected with the plat /subdivision agreement are collected as a
connection charge pnor to system connection. The assessment is calculated based on the
entire parcel area to be developed The current Trunk Area Assessment is $1,075 per
acre.
The SAC fee, or connection charge, is collected when a new or existing property applies
to connect to City sanitary sewer The SAC charge is $1,200 per SAC unit, and is
equivalent to 274 gallons per day (gpd). A single family residence is considered one
SAC unit but other types of buildings pay a prorated SAC fee relative to their estimated
sanitary sewer flows.
5.2 Future Connection and Trunk Area Growth
Future connection growth dictates the expected future income of the core funds based on
Trunk Area Assessments and SAC collected from development In addition, it
determines the capital improvements required to expand the sanitary sewer system to
serve future development, which are the core fund expenses.
Trunk Area Growth was assumed the same as discussed in section 3.2.1. and shown in
Table 3.1.
The number of SAC units expected to develop over the next five years is relative to the
projected sanitary sewer flows from Table 2.3 and residential connection growth
discussed in section 3.2.2. and Table 3.1. A single family residence is considered one
SAC umt. There are 6,002 residential connections on 2,400 acres, yielding 2.5 units /acre.
Current non residential (excludes mdustnal because it is not expected to grow over the
next five years) SAC units /acre is approximately 1 5 The majonty of Rosemount is
residential property, so combined non residential and residential SAC unit density was
calculated to be 2.4 SAC units /acre.
It was assumed in the Comprehensive Water System Plan, and has been confirmed by
City staff, that developments will become more dense as they move eastward across the
City Land on the east side of the City is more suitable for development. Based on
increased residential density and increased business park/air cargo development future
SAC density for the City was assumed to be 2.7 units /acre. How ever, to conservatively
calculate future income, the existing City density of 2.4 units /acre was used.
Water and Sanitary Sewer Rate Analysts
City of Rosemount, MN
WSB Project No 1582 -01
Page 19
5.3 Future Improvements
Specific future sanitary sewer improvements have not yet been identified. A general
recommendation of this analysis is for the City to complete a Comprehensive Sanitary
Sewer Plan. This plan would develop an ultimate sanitary sewer system required to serve
the City's future growth. Also, it would include a OP identifying improvements
necessary to maintain the City's growth, including capacity improvements to existing
sanitary sewer and extensions to future developments.
To estimate future CIP budgets, the cost of service per acre is incorporated with trunk
area growth identified in section 3.2. The cost of service per acre was determined from
The North Central Sanitary Sewer Study completed m 2004. The purpose of that study
was to determine the feasibility and cost of providing sanitary sewer service to that area
of the City. The North Central study found a total cost to serve the north central area
(2,363 gross acres, or 2,127 developable acres) of $5,236,380 including trunk sewers and
lift stations, but excluding land acquisition costs. The cost is $2,462 per developable acre
in 2004 dollars to provide sanitary sewer service. The study assumed street nght -of -way
and permanent utility easements would be dedicated as trunk sewer is installed through
and adjacent to new developments
The cost of service per acre of $2,462 was incorporated with a 5% increase in the per acre
cost per year, therefore 2006 improvements would cost $2,714 per acre and 2010
improvements would cost $3,300 per acre Then, the cost of service per acre was
multiplied by the projected trunk area growth shown previously in Table 3.2.
5.4 Core Fund Rate Analysis
Table 5.1 shows existing rates' impact on the balance of the core fund. The City pays the
initial cost for infrastructure capacity increases necessary for development and then be
reimbursed from the SAC and trunk area charges. Therefore, the available balance in the
core fund must be enough to fund the projected development, and costs recovered from
the development before more projects can be constructed Otherwise, a bond might have
to be issued to fund the initial costs on new developments The City has an expressed
desire to avoid debt financing More value will be provided to residents if interest costs
related to debt financing can be avoided.
Future developments are expected to average 374 acres per year. Since population
growth is expected to increase at the rate equal to 374 acres of development per year, it is
assumed the City will recover initial costs from SAC and trunk area charges for
development each year. However, it is impossible to estimate the amount of initial cost
necessary for each project or year. Therefore, until that time, the City will have to use
caution regarding the amount of initial costs they cover in order to avoid debt financing.
Table 5.1 shows that the existing Trunk Area Charges and SAC increase the core fund
balance to $6,724,000 in the year 2010. The current Trunk Area Charges and SAC fees
will fund development costs up to $3,955 per acre. As discussed in section 3.2, current
costs to provide sanitary sewer service to an average acre of development is $2,714 in
2006. Unless the City would like the balance on this fund to increase to a higher level
Water and Sanitary Sewer Rare Analysis
City of Rosemount, MN
WSB Project No 1582 -01
Page 20
than the projected $6,724,000, then it is not necessary to increase rates until that time. It
is recommended to review rates in 2010 to prevent the fund from reducing its balance.
Also, it is recommended to complete a Comprehensive Sanitary Sewer Plan as discussed
previously.
Water and Sanitary Sewer Rate Analysis
Cay of Rosemount, ■1N
WSB Project No 1582 -01
Page 21
Sanitary Sewer Rate Analysis
Table 5.1 Core Fund No Rate Increase
City of Rosemount, MN
II 4402
II 17LE
1199t/'£
II 9 10' 4
II 00Z' L
6,723,809.30 II
1,295,910 0011
1 5,427,899.30 11
1 402,050 0011
1 1,077,120 00 II
1 1,479,170 0011
II 0£'690`106`9 I
II
1 183,260 0011
11%£n 1
1 0402
I VL£
I00£'£
9L0'L
00Z'I.
6,478,839.30 I
1,234,200 00 I
5,244,639.30
402,050 00
000Z I
1,479,170 00
6,723,809.30
244,970 00
3.78%
600Z
171£
I £h L'£
I SL0' L
OOZ'L
6,175,151.30 I
1,175,482 00
4,999,669.30
1 402,050 00
1,077,120 00
1,479,170 00
1 6,478,839.30
1 303,688 00
%Z6'Y 1
I 8002
1 PLE
I £66'3
I9L0'L
1 00t L
0£'£9£'448`S
1,119,382 00
4,695,981.30
00 090'Z017
1,077,120 00 I
1,479,170 00 I
I 6,175,151.30
359,788 00
%61'9 I
1 Lou
I hL£
1 0991
9L0' L
I OOZ'L
5,402,093.30
00 006'990
4,336,193.30
0 0 090
1,077,120 00
1,479,170 00
5,815,363.30
413,270 00
%99 "2
1 900Z
I 4L£
t' LL'Z
1 9 10' L
I OOZ' L
4,937,959.30 1
00'9£0 CO'
fl$ 3,922,923.30
402,050 00
1,077,120 00
1,479,170 00
I 5,402,093.30
1 464,134 00
%06'6 I
IlAnnual Acreage Developed I
IICost/Acre to Develop (Up 5% annually) I
IITrunk Area Charge Rate per Acre
IISAC Fee Rate per Unit
I Beginning Year Balance
'lingo' Development Costs (CIP)
IlBalance after Expenses
IlTrunk Area Charges
IISAC Fees (2 4 Units /Acre)
!Total Revenues
IlBalance after Revenues (Year End)
I Balance change
aBueya %II
6.0 SANITARY SEWER UTILITY FUND
6.1 Description
Operation, maintenance, and replacement (Capital Replacement Plan, CRP) of the
sanitary sewer system is funded by the City's "utility" fund. Fees are collected from the
system users based on a fixed charge and a usage charge. By definition of the DICES, the
City's rate structure is a base /uniform rate structure Operation, maintenance, and
replacement are continual, so these charges are collected and applied as needed. The
current utility fund available balance is $2,320,101.89.
Fixed Charges are collected quarterly from each user. The current fixed charge of $20.00
was based on approximately 50% of the sewer utility's fixed costs in 1999 Today,
revenues from the fixed charge account for 70% of fixed costs. Fixed cost items are
independent of the amount of sanitary sewer flows generated and include all budget items
listed in Table 6 1 except Sewer Service Charges and lift station operation and
maintenance which are highlighted.
Quarterly Usage Charges are collected from customers based on drinking water usage.
For billing, drinking water usage is assumed equal to the amount of sanitary sewer flows.
However, the City makes a separate water meter available to users for watenng so they
are not charged for sanitary sewer usage on all their water usage, which results in a
sanitary sewer average usage rate of approximately 77% of the water sold. The current
usage charge is S1.40 /1,000 gallons and covers the remammg costs in the utility fund as
shown in Table 6 1. Vanable costs, those dependent upon the amount sanitary sewer
flows in the system (highlighted items), are estimated each year based on the previous to
establish an appropriate budget.
6.2 Ongoing Operation and Maintenance
Water and Sanitary Sewer Rate Analysis
City ofRoseraount, MN
WSB Project No. 1582 -01
6.2.1 Existing City Budget and Potential Updates
Existing and forecasted operation and maintenance expenses of the sanitary sewer
system are shown in Table 6.1 The existing utility fund budget is included in the
column marked 2006 City Budget The expense categories consuming the
majority of the operation and maintenance budget include salaries, sewer service
charges (charges paid to MCES for wastewater treatment), and replacement of
existing infrastructure.
Salanes were forecasted to increase at an annual rate of 8% over the next five
years and assumed no increase in staff to serve the system, while utility costs to
operate the lift stations were assumed to increase at an annual unit rate of 7
Engineering, vehicle, and equipment costs are all independent items established
by the council in their budget each year. These costs have not been earned
forward to future years as they are widely variable.
Page 22
Sanitary Sewer Rate Analysis
Table 6 1 Utility Fund No Increase
City of Rosemount, MN
coy Acct
Descnption
2006 City Budget
2007
2008
2009
2010
2011
Projected
Demands and
Connections
Sanitary Sewer Flaws (MG)
85735
97579
109442
1,21302
1 331 62
Percent of stem Ex•ansion
99%
9 0%
8 3%
7 1%
6 6%
Residential Single Family Connections
6 420
6,690
6987
7,303
7 563
Residential Multi Family (Med Dense) Connections
324
455
575
684
821
Residential Multi Family (Hi Dense) Connections
7
10
13
16
19
Commercial Connections
156
164
172
180
188
Instrtutionaltlndustnal Connections
41
41
41
41
41
Business Par'(.'Air Cargo Connections
53
77
101
125
149
Projected Rates
Sanitary Sewer Fixed Charge (1 /account /quarter)
2000
2000
6 2000
2000
S 2000
2000
Sewer Use ($11,000 gallons)
1 40
1 40
6 1 40
5 1 40
1 40
1 40
602 49450
Beginning Balance
2,320,101 89
$2,320,10189
Z095,171 89
1,764,739 71
1,312,553 73
720,199 77
100's
Salanes and Benefits (8 %increase /yr)
439,400 00
474,600 00
9 512,600 00
553,700 00
1 598,000 00
5 645,90000
200's
,Matenals and Egmpmert
10,300 00
11 500 00
12 700 00
13900 00
3 15100 00
16 200 00
300's
Communications, Computer ex Engr
53,000 CO
56 900 00
64 800 00
70,700 00
3 76,600 00
82,100
30000
Engineering
22 000 00
S
400's
Other
7,10000
7,900 GO
870000
9,50000
10,30000
11 100 00
52100
Buildin! and Other Structures
10 000 00
6 10,000 00
10 000 00
1000000
1000000
5 10,00000
53001
Misc Improvements
S 20,000 00
2Z200 00
24,400 00
26,600 00
3 28 900 00
31 000 00
53002
Miso Improvements /Repairs
20,000 00
S 22,200 00
24 400 00
26,600 00
28900 G0
31,00000
530.03
CRP
100,00000
5 162,500 00
170,700 00
179,200 00
1 188,100 00
5 197,60000
53004
Replace Pickup #342
22,50000
5
S
6
9
53005
Survey Grade CPS
25 000 00
5
5
53006
Crash Attenuator
6 6,50000
5
6
5
540 00
Heavy Macninery
3
6
56000
Furniture and Fixtures
S 50000
60000
70000
S 80000
5 900 CO
1 000 00
57000
Office Equipment
5 50000
S 60000
3 70000
80000
3 90000
1,00000
60200
Sel/er Serifoe ChargesHpe- 'v`8'"',- 2 (=,t5tehtcs",•a3k'n'•
$"i6=8571,
1,184,60e00
57,427,50000-
SA-04040M,
611 00
'nterest an Lease Payments
6
S
Lift Statton 81 ex EIecicaI)
6 140000
1,50000
3 1,60000
1,70000
1,80000
1,90000
Lift Station #7 (ex Elecncal)
6 140000
1 500 00
160000
1,70000
1,80000
1,90000
Lift Station #3 (ex Electrical)
5 1 400 PC
1 500 00
1,60000
1 700 00
180000
1 900 00
'-ift Slabon #4 (ex Electrical)
6 1,70000
1 800 00
5 1,90000
6 2,00000
2 100 00
2 200 00
Lift Station 45 (ex Electrical)
6 140000
1 500 00
160000
1,70000
1,80000
190000
ufl Station 46 (ex Elec'rical)
5 140000
1,50000
6 1,60000
1,70000
1,80000
1 900 00
Lift Slat on 47 (Glendalougn ex Elecma,)
1,40000
1,50000
1,60000
1,70000
1,80000
1 900 00
Lift Station Electrical (E annual umt increase l
ercent 9 el..11sion. v l u
I2r#0QLL0
$_'1810000'
=V 22.80000
''7'27;400:00
W V 32400'00,
3. '`38,00400
°hh!,, vzl t ie
-HI} 1h6,612
5 !12L16
ethx,= i
“4
Total Expenses
1432,00000
51985,30000
$2291,50000
$2615,50000
$2,958,50000
53,32500000
Balance after Expenses
City Revenues
W68 Calculated Fixed Charges
Sewer Use (511,000 gallons)
Total Revenues
Balance after Revenues (Year End)
Balance change
change
888,101 89
1,432,00000
1,432 000 00
2,320,101 89
000%
334801 89
560,08000
$1,200,29000
1,760,37000
2,095,171.89
S (224,930 00)
-9 69%
(196,32811)
594,96000
1,366,10782
1,961,067 82
1,764,73971
(330,43218)
-1577%
5 (850,760.29)
631,12000
1,532,19402
2 163,314 02
1,312,55373
(452,185 98)
-2562%
5(1,645,946 27)
667,92000
$1,696,22605
2,366,14605
720,19977
(592,353 95)
-45 13%
6(2,604,800 23)
702,48000
1,864,26800
2,566 748 00
(38,052 231
(758,252 00)
1052854
'2006 City Budget sanitary flows are the flows for 2005 MCES bills on a yea prior basis, so the Sewer Service Charge is based on the previous year
Year
Rate per 1,000,000
gallons
Annual
Increase
5 -Year
Increase
1990
$1,039 40
1991
$1,05990
1.97%
1992
$1,09740
3.54%
1993
$1,15230
500%
1994
$1,252.80
8 72%
1995
S1,296 40
3 48%
24 73%
1996
$1,374.50
6 02%
1997
$1,298 20
-5 55%
1998
$1,350 00
3 99%
1999
$1,257 00
-6 89%
2000
$1,200 00
-4 53%
-7 44%
2001
$1,180.00
1.67%
2002
$1,230 00
4 24%
2003
$1,300 00
5 69%
2004
$1,340 00
3.08%
2005
$1,464 56
9.30%
22.05%
2006
$1,543.32
5.38%
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Water and Sanitary Sewer Rate Analysis
City of Rosemount, MN
WSB Project No. 1582 -01
The remainder of costs, excluding the MCES Sewer Service Charge and
replacement, listed in the budget will grow in similar fashion as the water system.
Details regarding the growth assumptions are discussed in section 4.2.1. Due to
the size of the system increases it is assumed there would be no increase in unit
costs, except for lift station utility costs.
Lift station utihty costs were based on previous years cost relative to flows. In
2004, sanitary sewer flows were 587,278,000 gallons at a cost of $10,406, or
$17.83 per million gallons. Costs were 815.79 and $19 97 in 2003 and 2002
respectively, but the average for 2002 through 2004 was $17.83. Therefore, the
cost per million gallons was increased at 7% annually.
6.2.2 MCES Sewer Service Charge
The sewer service charge is a fee paid to the Metropolitan Council for wastewater
treatment based on the City's sanitary sewer flows The rate charged to the City
per million gallons on sanitary sewer flow to be treated is called the Municipal
Wastewater Rate. This rate changes annually based on MCES's operating
expenses, replacement costs, and expansion costs Therefore, MCES does not
provide future rate projections Historical, current, and projected Municipal
Wastewater Rates are shown in Table 6.2 Since the Municipal Wastewater Rate
has increased 22% over the last five years, it was assumed this trend will
continue. The years 2007 -2010 are highlighted because they are projections.
Table 6.2 Historical and Projected MCES Municipal Wastewater Rates
Page 23
Water and Sanitary Sewer Rate Analysis
City of Roseinount, M.'V
WSB Project No. 1582 -01
The sewer service charge paid to MCES is not simply calculated by the rate of the
current year multiplied by the gallons of flow in that year. MCES charges the
current year's rates to the previous year's flaws. For example, in 2006 the City
will pay the 2006 rate per million gallons multiplied by the flow from July 1,
2004 to June 30, 2005. For simplicity, this budget projection used the flow from
the previous year multiplied by the rate for the current year. For example, 2006
Municipal Wastewater Rates were multiplied by the 2005 flow.
6.2.3 Replacement
As infrastructure reaches its design life or capacity it begins to deteriorate and
needs replacement. Replacement costs or CRP, shown in the utility fund budget,
are for increasing the capacity or replacing deteriorated infrastructure in the
existing sewer system Other than the proposed 2006 budget for CRP is $100,000
there is no specific infrastructure identified for replacement within the next five
years. However, it is prudent to budget for anticipated replacement expenses as
the system ages
The 1999 SEH Utility Rate Study stated that the majority of the infrastructure was
constructed in the mid 1940's, so it is approaching 60 years old. The existing
sewer system serves approximately 3,389* acres, and if it is to be replaced over
the same time penod of 60 years, then approximately 57 acres (1.7% of system)
of service area would need to be replaced each year. New sanitary sewer
constructed in accordance with the CIP over the next five years was not taken into
account for the CRP. To forecast replacement expenditures over the next five
years it should be assumed the construction cost per acre is the same as that
identified in section 5.3. City sanitary sewer improvements are typically done
with street reconstruction, so the cost for pavement removal and replacement
would be funded from a separate account.
*The existing sanitary sewer system serves a larger amount of land area than the
3,389 acres indicated, however the general industrial category is inflated due to
the large land area consumed by Flint Hills Resources. Therefore, the amount of
served acres was adjusted downward to more accurately reflect a similar level of
service for each area with sanitary sewer.
6.3 Rate Structure Analysis
6.3.1 Existing Base Uniform Rate Structure
Table 6.1 shows the impact of not increasing rates for the next five years and
using the existing base /uniform rate structure. The revenue estimates were based
on the projected number of acres to develop of each land use type and the number
of new connections as discussed in section 3 2. Table 6 1 shows the costs
outpacing the growth in revenues, largely due to the MCES Sewer Service
Charge, and the balance decreasing from the current $2,320,000 to $720,000.
Page 24
Water and Sanitary Sewer Rate Analysis
City of Rosemount, MN
WSB Project No 1582 -01
6.3.2 Base/Increasing Block Rate Structure
Based on Section 6.3.1., it was deteimmed that rates needed to be increased to
fund the future cost increase, largely due to the MCES Sewer Service Charge. An
objective of the commission was to conserve water from an environmental and
cost reduction viewpoint. To accomplish these objectives a base /increasing block
rate structure was introduced.
According to the MCES the majority of communities within their sanitary district
have a base /uniform rate similar to Rosemount's. Other possible rate structures
include flat, uniform, or base /increasing block rates. A descnption of each is
located in the appendix in the MCES Study of 2004 Municipal Wastewater Rates.
Base /increasing block rates, which would be a progressive step for Rosemount
have been implemented in five communities within the MCES service area. In a
base /increasing block rate structure, users would be charged a base fee as they are
currently, but the unit cost of service increases as the volume increases. For
example, the first 1,000 gallons may cost S1.50 /1,000 gallons, but the next 2,000
gallons would cost $2 00 /1,000 gallons. The benefits and disadvantages of a
base /increasing block rate structure is discussed in Section 4 3.2.
Table 6 2 shows a base /increasing block rate structure Block rates were set at
30,000 gallons /quarter as discussed in section 4.3.2. Due to the increasing unit
rate of service, flows would be expected to decrease in similar fashion to the
water use as discussed in section 4.3.2. Due to the reduction in flows of 5
vanabie costs were reduced relative to sanitary sewer flows, so lift station
operational costs and sewer service charges are less than in the base /unifoiiu
rates. It is important to reduce the MCES Sewer Service Charge because it helps
to reduce the costs for not only the City, but the whole metro area. Also, the City
cannot control the costs for treatment, so if costs nse greatly in one year, the City
must pay a high rate. Therefore, the less volume subject to the sewer service
charge, the less the City's risk of unpredictable costs.
The proposed base /increasing block rates would increase annually by 5% on the
fixed charge and the rate for less than 30,000 gallons /quarter, but 10% on those
using above 30,000 gallons per quarter. This rate increase would reduce the fund
balance from $2,320,000 in 2006 to $2,050,000 in 2010. The balance reductions
would be very small each year, and then turn positive in 2010. Also, the potential
reduction of use from the increasing blocks would cause the fund balance to
increase potentially into the future as the sewer service charge reduces.
6.4 Average Sanitary Sewer Bill
Table 6.4 below shows average water demand per connection for the different categories
of water customers the City uses. Assumptions and projections for connection growth for
each of the categories were reviewed in the preceding sections.
Page 25
Sanitary Sewer Rate Analysis
Table 6 3 Utility Fund 5% Residential Increase 10% Large User Increase
City of Rosemount, MN
City Acct Description
2006 City Budget
2007
2008
2009
2010
2011
Protected
Demands and
Connections
Sanitary Sewer Flows NG)
85735
97579
1,09442
1,21302
1,33162
Block Rate Water Demand Reduction (0 5 10
0 00
48 79
10944
121 30
13316
Percent of System Expansion
Residential Single Family Connections
6 420
6,690
6987
7 303
7563
Residential Multi Family (Med Dense) Connections
324
455
575
684
821
Residential Multi Family (Hi Dense) Connections
7
10
13
16
19
Commercial Connections
156
164
172
180
188
Institutional /Industrial Connections
41
41
41
41
41
Busness ParklAlr Cargo Conneottans
53
77
101
125
149
Protected Rates
Sanitary Sewer Fixed Charge TS /account/quarter)
6 20 00
21 00
22 05
S 23 15
24 31
25 53
Sewer Use ($1^ OCO gallons, `first 30 000 gallons)
1 40
1 47
1 54
5 1 62
1 7D
3 1 79
Sewer Use ($)1 OGO gallons, ear 30000 gallons)
3 1 40
3 1 54
1 69
1 86
3 2 05
0 2 25
602 49450
Beginning Balance
5 2,320,101 89
$2,320,10109
2,205,389 73
§2,059,44900
51,964,65079
52,054,15093
100's
Salaries and Benefits (8 %Increase /yr)
5 439,400 00
5 474,600 00
5 512,600 00
5 553,700 00
598,000 00
3 645,90000
200 s
Mafenals and Equpment
S 10 300 00
11,50000
12,700 00
13,900 00
S 15 100 00
16,20000
300 s
Communications, Computer ex Engr
5 53 06000
5890000
S 64800
70 700 00
5 76 60000
S 82 100 00
30000
Engneering
22,00000
400s
Other
7,160
790000
S 70000
9 500 00
10,3tio 90
11 100 00
52100
Building and Other Slrucrures
5 1000000
'0,00000
5 10 000 00
10,000 00
10,00000
10,00000
530 01
Mrsc Improvements
20,000 00
22
S 24 400 00
2660000
5 28,900 00
31 000 00
53002
1Nsc Improvements /Repairs
20,000 00
22 200 00
24,40000
26,60000
28,900 00
31,000 00 1
53003
CRP
5 100,000 00
162,500 00
5 1713,700 00
5 179,200 00
188,100 00
5 197,60000
530 C4
Replace Pickup #3
5 22,50000
5
5
5
53005
Survey Grade GPS
25,00000
3
5
5
5
530 06
Crash Attenuator
6 500 00
5
5
5
54000
Heavy Machinery
5
5
5
56000
Furniture and Fixtures
S 500 GO
60000
S 70000
80000
3 90000
1,00000
57000
Office Equipment
500 GO
60000
S 70000
80000
90090
1,000
60200
Sewer Service Charges -1,'!“
673,00000
`51480.80000
$4,427 ;60000 ';$4,599,900.00
`0,75 Oa
$`2.02£800:00
611 00
Interest on Lease Payments
5
3
S
5
Lft Station #1 (ex Electri
1 400 00
1 500 00
5 160000
1,700 CO
5 180000
1,90000
Lift Station #7 (ex Electrical)
1 400 00
1,50000
1 600 00
3 1,700 CO
5 1,80000
1,90000
Lift Station #3 (ex Electrical)
1 400 00
1 500 00
1 600 00
1,700 CO
1,80000
1,S00 C0
L9 Station #4 (ex Elacrical)
3 1 700 00
5 1 800 00
5 1 900 00
2,000 CO
2,10000
5 2200 C0'
Lift Station #5 (ex Electrical)
1 400 00
1 500 00
16000D
1,700 GO
1,80000
1,90000
Lift Station #6 (ex Electrical)
1 400 00
1,50000
1 600 00
1,70000
1,80000
190000
Litt Station 47 (Glendalough, ex Eledncal)
1 400 00
1 500 00
1 600 00
1,70000
1 800 00
1,90000I
Lift Staton Electrical (7%,,annual unit inc(easepIt4S,
percent systefi expansion)
612,10000
'4
$i`# 2570600..
=24 60000
00
3-. u34,200;00'
__ti
n,,,s f.
r
Total Expenses
1,432 000 00
$1,985,300 00
2,290,400 00
2 528,500 00
2,759,700 00
3 3,096,500 CO
Balance after Expenses
City Revenues
WSB Calculated Fixed Charges
Sewer Use XI 000 gallons, first 30,000 gallons)
Sewer Use ($11 000 gallons, after 30000 gallons)
Total Revenues
Balance after Revenues (Year End)
Balance change
charge
888,101 89
1,435,000 00
1432,000 00
2,320,101.89
00D%
334,801 89
5 588,084 00
794,18790
488,31594
$1 970,567 84
52,205,38973
(114,712 16)
-494%
(55,0115 27)
655,94340
839,17769
649,33819
2 144,459 27
$2,059,44900
(145,940 73)
652%
(469,051 00)
730,600 29
883,45990
819,641 59
2,433,701 78
1,964,650.79
(94,798 22)
-4 80%
(795,049 21)
B11,860 93
979,841 20
1 057,498 01
2,849,200 14
2,054,150.93
89,500 14
455%
5(1,042,349 07)
896,562 27
$1,129,42725
1,276 982 08
3,302,971 59
§2,260,62252
206,471 59
1005%
'2006 City Budget sanitary flows are the Flows for 2005 MCES bills on a yea prior basis, so the Sewer Service Charge is based on the previous year
Table 6.4 Average Sanitary Sewer Flows per Connection
Based on the above estimated flows per connection an average bill for each customer
type has been developed rn Table 6.5 below.
Table 6.5 Average Sanitary Sewer Bill per Quarter by Customer Category
Water and San,tary Sewer Rate Analysis
Cay of Rosemount, 41N
WSB Project No. 1582 -01
Page 26
2006
2007
2008
2009
2010
Residential Single Family
Connections
47 65
50 03
52 53
55.16
57 92
Residential Multi Family (Med
Dense) Connections*
47.65
50 03
52 53
55 16
57 92
Residential Multi Family (Hi
Dense) Connections*
286 03
313 63
343 94
377 24
413 80
Commercial Connections
143 84
157.22
171.90
187 98
205 62
Institutional Connections
544 60
598 06
656 81
721 39
792 37
Business Park /Air Cargo
Connections
786.08
863.69
949 01
1,042 80
1,145.93
Industrial Connections
883 02
970.32
1,066 30
1,171 83
1,287 85
'VD Increase from 2006
Residential Single Family
Connections
0 00%
5 00%
10 25%
15 76%
21 55%
Residential Multi Family (Med
Dense) Connections*
0 00%
5 00%
10 25%
15 76%
21 55%
Residential Multi Family (Hi
Dense) Connections*
0.00%
9 65%
20.25%
31.89%
44 67%
Commercial Connections
0 00%
9 30%
19 51%
30 69%
42 95%
Institutional Connections
0.00%
9 82%
20 61%
32 46%
45 50%
Business ParklAir Cargo
Connections
0 00%
9 87%
20 73%
32.66%
45 78%
Industrial Connections
0.00%
9 89%
20.76%
32 71%
45 85%
Table 6.4 Average Sanitary Sewer Flows per Connection
Based on the above estimated flows per connection an average bill for each customer
type has been developed rn Table 6.5 below.
Table 6.5 Average Sanitary Sewer Bill per Quarter by Customer Category
Water and San,tary Sewer Rate Analysis
Cay of Rosemount, 41N
WSB Project No. 1582 -01
Page 26
Connections
2005 Demand
(gpd)
Demand /Connection
(gpd)
Demand /Quarter
(90 days)
Residential Single Family
Connections
6,003
1,317,285
219
19,749
Residential Multi Family
(Med Dense)
Connections*
0
0
0
0
Residential Multi Family
(Hi Dense) Connections*
1
2,111
2,111
190,021
Commercial Connections
140
137,600
983
88,457
Institutional Connections
26
108,250
4,163
374,712
Business Park /Air Cargo
Connections
5
30,400
6,080
547,200
Industrial Connections
15
102,740
6,849
616,440
Total existing 2005
Connections
6,190
Table 6.4 Average Sanitary Sewer Flows per Connection
Based on the above estimated flows per connection an average bill for each customer
type has been developed rn Table 6.5 below.
Table 6.5 Average Sanitary Sewer Bill per Quarter by Customer Category
Water and San,tary Sewer Rate Analysis
Cay of Rosemount, 41N
WSB Project No. 1582 -01
Page 26
Table 6.5 shows that under an increasing block rate structure the majority of the rate
increase would fall on the high volume users. Over the next five years the bill for the
average non residential user (includes high density residential) would increase
approximately twice that of the single family home or town home. This difference is
justified because the majonty of the new flows in the sanitary sewer system is going to
come from non residential users Table 6 6 below shows that Non- Residential, or high
volume users, which now account for 22% of total system flows, will double and account
for nearly 47% of total system flows by 2010.
Water and Sanitary Sewer Rate Analysis
City of Rosemount, MN
WSS Project No. 1582 -01
Table 6.6 Sanitary Sewer Flows Growth by Category
Page 27
2005
2010
Growth
Residential (Single Family& Med
Dense)
1,317,285
1,752,811
33 06%
Non Residential (All Others)
381,101
1,570,527
312 10%
of Total System Demand
Residential (Single Family& Med
Dense)
77 56%
52 74%
Non Residential (All Others)
22 44%
47 26%
Table 6.5 shows that under an increasing block rate structure the majority of the rate
increase would fall on the high volume users. Over the next five years the bill for the
average non residential user (includes high density residential) would increase
approximately twice that of the single family home or town home. This difference is
justified because the majonty of the new flows in the sanitary sewer system is going to
come from non residential users Table 6 6 below shows that Non- Residential, or high
volume users, which now account for 22% of total system flows, will double and account
for nearly 47% of total system flows by 2010.
Water and Sanitary Sewer Rate Analysis
City of Rosemount, MN
WSS Project No. 1582 -01
Table 6.6 Sanitary Sewer Flows Growth by Category
Page 27
7.0 SUMMARY AND RECOMMENDATIONS
7.1 Water Core Fund
In order to fund existing debt service and implement the CIP on a cash flow basis, rates
should be increased 10% annually. The CIP includes all system capacity and expansion
improvements needed to support the projected level of growth with the exception of the
water treatment plant. The water treatment plant should be funded by user rates since it
will be used by all residents, not just new development.
If the projected rate increases are too high, then it is recommended for the City to finance
some of the projects included in the CIP. Additional rate scenanos should be reviewed
with lower increases and increasing debt service on the core fund.
7.2 Water Utility Fund
The proposed implementation of the base /increasing block rate structure would more
closely align system expenses with those causing the greatest demand. With the addition
of the Air Cargo Facility and increasing business park usage, non residential users will
increase their demand on the system. Based on the increase non residential users it is
recommended to implement a rate structure where the first 30,000 gallons /quarter is a
lower cost than usage above that level. This structure will encourage residential and non-
residential users to be conservative in their use of water, thus reducing system costs and
the need for additional infrastructure.
Increasing rates for usage below 30,000 gallons at 5% annually, and 10% for usage above
30,000 gallons, the fixed charge at 5 and meter maintenance fees at 5% would
decrease the utility fund balance However, it would gradually return to a surplus after
the water treatment plant is constructed. The surcharge would not be increased, and
proceeds would fund future water treatment plant debt service. As a part of the water
treatment plant feasibility study, a financial analysis would be completed to determine a
more detailed estimate of the rate increase required for the water treatment plant.
7.3 Sanitary Sewer Core Fund
Rates in the core fund are acceptable for the next five years based on fiiture projections.
7.4 Sanitary Sewer Utility Fund
Current usage and fixed rates are not high enough to cover projected increases in MCES
Municipal Wastewater Rates coupled with the anticipated system growth over the next
five years. As the community grows, the sanitary sewer system will expand
approximately 8 -10% per year.
The recommended option from a long term planning and conservation perspective
standpoint is to implement a base /increasing block rate structure. Discussion regarding
the adoption of the rate structure and usage blocks is included in section 6.2.
Water and Sanitary Sewer Rate Analyses
City of Rosemount, MV
WSB Project No. 1532 -01
Page 28
Rates are recommended to be increased by 5% annually on usage under 30,000 gallons,
10% on usage above 30,000 gallons, and 5% on the fixed charge. This rate increase
would cause the fund balance to decrease from $2,320,000 to S2,050,000 over the next
five years, but the balance would begin to increase in 2010.
7.5 Summary of Rates
Water and Sanitary Sewer Rate Analysis
Cory of Rosemount, MN
WSB Project No. 1582 -01
Table 7.1 Proposed Trunk Area Assessment and WAC
Page 29
2006
2007
2008
2009
2010
2011
Trunk Area Assessment (S /acre)
$4.420 00
$4,862 00
$5,348 20
$5,883 02
$6,471 32
$7,118 45
WAC (Meter Size)
Single Family 5/8"
$1,480 00
$1,628 00
$1,790.80
$1,969.88
$2,166 87
$2,383.55
Multi Family- 5/8"
$1,480 00
$1,628.00
$1,790 80
$1,969 88
$2,166 87
$2,383 55
1"
$6,700 00
$7,370 00
$8,107 00
$8,917 70
$9,809 47
$10,790 42
1 5"
$10,050.00
$11,055 00
$12,160 50
$13,376 55
$14,714.21
516,185 63
2"
$13,400.00
$14,740.00
$16,214 00
$17,835 40
$19,618.94
S21,580 83
2.5"
$16,750 00
$18,425.00
$20,267 50
$22,294 25
S24,523 68
526,976 04
3"
520,110 00
$22,121 00
$24,333 10
526,766 41
529,443 05
$32,387.36
4"
S23,460 00
$25,806 00
$28,386 60
$31,225 26
534,34719
$37,782.56
6"
526,810 00
$29,491 00
$32,440 10
$35,684 11
$39,252 52
$43,177 77
8"
$30,160.00
$33,176 00
$36,493 60
$40,142 96
$44,157 26
$48,572 98
Rates are recommended to be increased by 5% annually on usage under 30,000 gallons,
10% on usage above 30,000 gallons, and 5% on the fixed charge. This rate increase
would cause the fund balance to decrease from $2,320,000 to S2,050,000 over the next
five years, but the balance would begin to increase in 2010.
7.5 Summary of Rates
Water and Sanitary Sewer Rate Analysis
Cory of Rosemount, MN
WSB Project No. 1582 -01
Table 7.1 Proposed Trunk Area Assessment and WAC
Page 29
Table 7.2 Proposed Water Rates
Water and Sanitary Sewer Rate Analysis
City of Rosemount, MN
WSB Projecl No. 1582 -01
Table 7.3 Proposed Sanitary Sewer Rates
Page 30
2006
2007
2008
2009
2010
2011
Quarterly Fixed Charge
$8 90
59 35
$9.81
$10 30
$10 82
511 36
Quarterly Usage Charge /1,000
gallons (1st 30,000 gallons)
$1 02
$1 07
$1.12
$1.18
51 24
$1 30
Quarterly Usage Charge $(1,000
gallons (after 30,000 gallons)
$1 02
$1.12
$1.23
$1 36
$1.49
$1 64
Quarterly Meter Maintenance
Fee
Single Family 5/8"
$0.00
$0.00
$0 00
50 00
$0 00
$0 00
Multi Family 5/8"
$0.00
$0.00
$0 00
$0 00
$0.00
50 00
1"
56 25
$6.56
$6 89
$7 24
$7.60
57 98
1 5"
$11 25
$11 81
$12.40
$13.02
$13 67
$14 36
2"
$18 15
519.06
$20 01
$21 01
$22 06
$23 16
2 5"
$22 20
$23.31
$24 48
$25 70
$26 98
$28 33
3"
$26 25
$27 56
$28 94
$30 39
$31 91
$33 50
4"
$45 00
$47 25
$49 61
$52 09
$54 70
$57 43
6"
$100 00
$105 00
5110 25
5115/6
$121 55
$127 63
8"
$130 00
$136 50
$143.33
$150 49
$158 02
5165 92
Quarterly Surcharge
Single Family 5/8"
$8 80
$8.80
$8.80
$9.24
$9.71
$10.19
Multi Family 5/8"
$6 80
$6 80
$6 80
57 14
$7.50
$787
1"
$13.50
$13 50
$13 50
$14 18
$14 88
$15.63
1 5"
528 00
$28 00
$28.00
$29.40
$30 87
532 41
2"
$31 50
$31 50
$31.50
$33 08
$34 73
$36 47
2 5"
539 35
$39 35
$39 35
$41 32
$43 38
$45 55
3"
547.00
547 00
$47 00
$49 35
$51 82
$54 41
4"
$70 00
570.00
$70 00
$73 50
$77.18
$81.03
6"
5154 00
$154.00
$154 00
$161 70
$169 79
$178 27
8"
$170 00
$170.00
$170 00
5178 50
$187 43
$196.80
Table 7.2 Proposed Water Rates
Water and Sanitary Sewer Rate Analysis
City of Rosemount, MN
WSB Projecl No. 1582 -01
Table 7.3 Proposed Sanitary Sewer Rates
Page 30
2006
2007
2008
2009
2010
2011
Sanitary Sewer Fixed Charge
/account/quarter)
$20 00
$21 00
$22.05
$23.15
$24 31
$25 53
Sewer Use ($/1,000 gallons,
first 30,000 gallons)
$1.40
$1 47
$1 54
$1 62
$1 70
$1.79
Sewer Use ($/1,000 gallons,
after 30,000 gallons)
$1 40
$1.54
$1 69
$1.86
$2 05
$2 25
Table 7.2 Proposed Water Rates
Water and Sanitary Sewer Rate Analysis
City of Rosemount, MN
WSB Projecl No. 1582 -01
Table 7.3 Proposed Sanitary Sewer Rates
Page 30
Water and Sanitary Sewer Rate Analysis
City of Rosemount, MN
WSR Project No. 1582 -01
APPENDIX A
Figures
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Water and Sanitary Sewer Rate Analysis
Cn y ofRose/nount, AWN
WSB Project :V'o. 1582 -01
APPENDIX B
MCES Study of 2004 Municipal Wastewater Rates
Andover
Anoka
Apple Valley
Arden Hills
Bayport
Birchwood
Blaine
Bloomington
B rooklynCenter
Brooklyn Park
Burnsville
Centerville
Champlin
Chanhassen
Chaska
Circle Pines
Columbia Heights
Coon Rapids
Cottage Grove
Crystal
Deephaven
It Metropolitan Council
Environmental Services
Metropolitan Council
Environmental Services
2004
Municipal Wastewater Rates
Eagan
Eden Prairie
Edina
Empire
Excelsior
Falcon Heights
Farmington
Forest Lake
Fridley
Gem Lake
Golden Valley
Greenfield
Greenwood
Hastings
Hilltop
Hopkins
Hugo
Independence
Inver Grave Heights
Lake Elmo
Laketown Township
��xNli
STUDY OF
July 2004
Lakeville
Landfall
Lauderdale
Lexington
Lilydale
Lino Lakes
Little Canada
Long Lake
Mahtomedi
Maple Grove
Maple Plain
Maplewood
Medicine Lake
Medina
Mendota
Mendota Heights
Minneapolis
Minnetonka
Minnetonka Beach
Minnestrist
Mound
Mounds View
New Brighton
New Hope
Newport
North Oaks
North St Paul
Oak Park Heights
Oakdale
Orono
Osseo
Plymouth
Prior Lake
Ramsey
Richfield
Robbmsdale
Rosemount
Roseville
Sant Anthony
Saint Bonifacws
Saint Louis Park
Saint Paul
Saint Paul Park
Savage
Shakopee
Shoreview
Shorewood
South St Paul
Spring Lake Park
Spring Park
Stillwater
Tonka Bay
Vadnais Heights
Victoria
Waconia
Wayzata
West St Paul
White Bear Lake
White Bear Township
Willernie
Woodbury
230 EAST FIFTH STREET ST PAUL, MINNESOTA 55101 -1633 TELEPHONE (651\ -'005
Metropolitan Council
II Environmental Services
230 East Fifth Street St. Paul, MN 55101 (651) 602 -1005
Metropolitan Council Members
Chair:
Peter Bell
Council Members:
Roger Scherer Distnct 1 Natalie Steffen District 9
Toni Pistilli District 2 Vacant Distnct 10
Mary H Smith District 3 Georgeanne Hilker District 11
Julius C (Jules) Smith District 4 Chris Georgacas District 12
Russ Susag District 5 Richard Aguilar District 13
Peggy Leppik District 6 Song Lo Fawcett District 14
Annette Meeks District 7 Thomas Egan District 15
Lynette Wittsack District 8 Brian McDaniel District 16
Council Regional Administrator
Thomas Weaver
General Manager, Environmental Services Division
William G Moore
The mission of the Metropolitan Council is to develop, in cooperation with local communities,
a comprehensive regional planning framework, focusing on transportation, wastewater, parks
and aviation systems, that guides the efficient growth of the metropolitan area. The Council
operates transit and wastewater services and administers housing and other grant programs
Publication #32 -04 -044
Released July 2004
Metropolitan Council
Environmental Services
Study of
2004
Municipal Wastewater Rates
July 2004
1
Prepared by:
Metropolitan Council Environmental Services
Analysts and Authors
Dale Ulrich
Jason Willett
Dan Schueller
Dorothy Goodwin
CONTENTS
Page
I. Background Information 1
Introduction
MCES's Rate System
Revenue Sources
Factors That Influence Wastewater Pricing
II. The MCES Cost Allocation System 5
Providing Regional Equity
III Twin Cities Area Residential Wastewater Charges 7
Average and Median Residential Charges
Types of Rates
Community Rate Setting Practices
How Community Residential Rates Were Compared
IV. National Data and Trends 11
National Comparison
National Trends
V. Other Rates and Charges .13
MCES's Treatment Related Rates and Charges
VI. Next Steps 15
Exhibits
1 MCES 2004 Survey Community Retail Sewer Charges Annual Charges for One- and
Two Family Residences (1986 to 2004) 18
2 2001 National Comparisons Retail Wastewater Charges 21
3 State Law on Cost Allocation (Minnesota Statutes 473 517) 22
4. State Law on Federal Water Pollution Control Act Amendments of 1972
System of Charges (Minnesota Statute 473 519) 23
This survey is intended to be helpful to customer communities and
policymakers. We wish to thank all the customer communities
who took the time to respond to our questionnaire and provide
comments. Further comments and questions are welcome
See your individual community's estimated
annual residential wastewater charge in Exhibit 1
on pages 18 to 20.
BACKGROUND INFORMATION
Introduction
The Metropolitan Council
The Metropolitan Council is the regional
planning agency for the Twin Cities seven
county metropolitan area. The Council serves
the public by providing cost effective services,
coordinating orderly economic development,
and helping communities plan for anticipated
growth. The Council also:
Operates the regional bus system, the 11
largest in the nation.
Collects and treats wastewater.
Plans and funds a renowned system of
regional parks and trails.
Provides affordable housing opportunities.
Operates Metro Mobility, a transportation
service for people with disabilities.
Under its Development Framework growth
plan, the Council works to support
development that makes the most efficient use
of public resources and investments, protects
natural resources, enhances livability and
quality of life, and promotes economic
competitiveness.
The Framework also integrates the `regional
systems" including transportation. aviation,
parks and openspace, and water resources
management.
More information about the Metropolitan
Council can be found on the Council's Web
site (www.metrocouncil.org).
Metropolitan Council Environmental
Services
Metropolitan Council Environmental Services
(MCES) is one of the public service divisions
of the Metropolitan Council. Following is
MCES's mission statement.
The mission of Metropolitan Council Environmental
Services (MCES) is to provide wastewater services
that protect the public health and environment
while supporting regional growth.
Water resources management services
provided by MCES ensure that:
Wastewater collection and treatment services
are provided in a cost- and quality-
competitive manner,
Sufficient sewer capacity exists to serve
planned development,
Sufficient capital investments are made to
preserve water quality in the region, and
Local plans provide for adequate water
supply and nonpoint pollution prevention in
the region.
In order to provide these services to customer
communities, MCES:
Owns and maintains approximately 600
miles of regional sewers that collect flow
from 5,000 miles of sewers owned by 103
communities.
Treats about 300 million gallons of
wastewater daily at eight regional treatment
plants.
Study of 2004 Municipal Wastewater Rates 1
Continues to achieve near- perfect
compliance with federal and state clean
water standards.
Maintains wastewater service rates
consistently below the national average.
Works with approximately 800 industrial
clients to substantially reduce the amount of
pollution entering our wastewater collection
system.
Provides water resources monitoring and
analysis for the region
MCES's Rate System
A system of rates has been established to pay
the costs incurred in meeting MCES's
responsibilities. These rates are briefly defined
and listed in order of their fiscal significance
as well as their importance in this report (see
Figure 1).
While the main focus of this report is
municipal wastewater rates, Section V
provides more information on SAC and
industry specific charges Information on all of
MCES's rates, as well as copies of financial
documents, SAC and Industrial rate reports
and procedure manuals can be found on the
MCES Web site at:
www.metrocouncil org /environment.
2
Documents are also available by calling the
Council's data center at (651) 602 -1140.
Community Rates
Addressed in this Study
Within the seven county metropolitan area,
there are 103 communities that are the
customers (primary users) of the urban
wastewater system. They are billed by MCES
at a wholesale rate. In turn, each community
bills property owners residential, industrial
and commercial users —for wastewater
collection and treatment.
The focus of this report is on the municipal
wastewater charges imposed by the 103
Metropolitan communities on their single
family residential customers. This is a retail
rate and includes the wholesale rate that
MCES charges to each community.
Wholesale Rate per 100,000 gallons. The
MCES wholesale rate is determined during the
budget process in two steps: 1) top down:
considering the competitiveness and
affordability to customers of selected rate
scenarios, and 2) bottom up. by dividing the
total municipal wastewater revenue needed for
the year by the estimated gallons of
wastewater flow for the year. The adopted rate
reflects consideration for both of these steps.
Since 1992, all 103 customer communities
Figure 1: Definition of MCES's Rates
Municipal Wastewater Rate: The wholesale rate charged by MCES to communities for wastewater collection
and treatment Communities pay MCES based on the volume of wastewater treated (rate is set per 100,000
gallons of flow)
Service Availability Charges (SAC). Another wholesale rate charged by MCES to communities This onetime
capacity fee is imposed for new connections or increased volume to the metropolitan wastewater system The
SAC fee is similar to fees used by many wastewater utilities and municipalities and is generically known as an
"impact" or "connection' fee A freestanding single family residence is charged one SAC unit, which equals
274 gallons of maximum potential daily wastewater flow volume Some communities add their own SAC fees
on top of MCES's service availability charge
Industnal Strength Charges: These retail fees cover additional treatment costs caused by industrial
wastewater that has more pollutants than typical residential wastewater Industrial strength charges are based
on the concentration of pollutants and the volume of the discharge and are charged directly to industries
Other Industrial Charges: Included in this category are liquid waste hauler load charges, industrial discharge
permit fees, add -on- service charges, self monitoring report late fees, stipulation agreement payment and cost
recovery fees
Study of 2004 Municipal Wastewater Rates
r
have been charged the same rate. Prior to that
date, a multiple rate system that was dependent
on geographic location was used. This system,
divided into six service areas, included a
uniform rate for treatment works associated
services, and an area -based rate for interceptor
system services. State law was changed to
provide a five -year phaseout of the rate
differentials and by 1992 the phaseout was
complete.
Figure 2. Wastewater Treatment Rates/
100,000 gallons of flow
Change Change
Prior Prior
Year Rate Year Year Rate Year
1971 $20 04 n/a 1988 $92.68 5 0%
1972 22 17 10 7% 1989 93 47 0 9%
1973 23 31 5 2% 1990 103 94 11 2%
1974 26 33 13 0% 1991 105 99 2 0%
1975 29 74 12 9% 1992 109 74 3 5%
1976 36 24 21 8% 1993 115 23 5 0%
1977 36 83 1 6% 1994 125 28 8 7%
1978 39 80 8 1% 1995 129 64 3 5%
1979 44 45 11 7% 1996 137 45 6 0%
1980 52 73 18 7% 1997 129 82 —5 6%
1981 57 52 9 1% 1998 135 00 4 0%
1982 64 05 11 4% 1999 125 70 —6 9%
1983 61 83 —3 5% 2000 120 00 —4 5%
1984 65.76 6 4 2001 118 00 —1 7%
1985 70 38 7 0% 2002 123 00 4 2
1986 74 28 5 6% 2003 130 00 5 7%
1987 $88 28 18 9% 2004 134 00 3.1%
NOTE Rates pnor to 1998 reflect an adjustment
process and occasionally a refund to communities
In Figure 2, rates shown for 1971 to 1991 are
those charged to the cities of Minneapolis and
St. Paul: the largest percentage of MCES's
customer base.
MCES's rates are based on 100,000 gallons of
wastewater flow Communities base their
wastewater charges on metered water
consumption. 100,000 gallons of metered
wastewater flow is equivalent to 72,300
gallons of water consumption.
Retail Rate. The fee a municipality charges
its customers residential, commercial or
industrial —for wastewater flow is a retail rate.
This fee covers the wholesale cost from
Study of 2004 Municipal Wastewater Rates
MCES as well as funds needed to administer
and maintain the local conveyance system.
Exhibit 1 on page 18 lists the retail rates of
MCES's customer communities from 1986 to
2004. This biennial report fulfills a
requirement of M.S. 473.519 to provide a
review of the retail wastewater treatment rates
charged by communities to their users (see
Exhibit 4 on page 23).
Revenue Sources
MCES's sole revenue source is fees from users
of the system (primarily the municipal
wastewater charges). These fees, or charges,
are established through a systemwide cost
allocation process that distributes the annual
cost of developing and operating the system
among users. Refer to Exhibit 3, State Law on
Cost Allocation: Minnesota Statutes 473.517,
on page 22 for the legislation, which defines
costs and the allocation of those costs.
In addition to municipal wastewater charges,
most of the remaining revenue comes from the
SAC fees and industry- specific charges.
Figure 3. MCES's Revenue Sources
Municipal Wastewater
Charges
79%
SAC
Transfer
13.7%
Industry-Specific
Other Charges 5.3%
2%
Based on 2004 Budget of $169 5 million
As the graph in Figure 3 shows, 79 percent of
MCES revenue is from wholesale municipal
wastewater charges to customer communities.
3
In 1998, in response to increased competition
in the marketplace, MCES implemented a
three -year budget reduction goal. Successful
implementation of that goal is reflected in
reduced rates for the years 1990 -2001 (refer to
Figure 2 on the previous page).
Maintaining competitive rates and a high level
of performance are priorities for MCES and
the health of the region.
Factors That Influence
Wastewater Pricing
Comparing wastewater treatment charges
among communities, both locally and
nationally, is one indicator of relative cost and
efficiencies. Many factors other than cost and
efficiency have a strong influence on
wastewater pricing. These factors include,
among others, such variables as the:
level of treatment (primary, secondary, or
tertiary),
age of the system,
amount of infiltration and inflow (influenced
by proximity to water table),
climate in the locale of the system,
customer composition,
inclusion of debt service in sewer service
charges, and
size and density of urban area.
For example, MCES pays all its debt service
(38.9 percent of the 2004 Annual Budget) from
its fee revenue, while in some comparably
sized metropolitan areas, debt service is paid
from property taxes and not reflected in fees.
The level of treatment can also cause
large variances among otherwise comparable
metropolitan areas.
The range and variety of factors that influence
operations mean that rates alone are
insufficient data from which to draw
conclusions regarding the efficiency and
effectiveness of wastewater operations. Utility
costs, including sewer rates, are important for
the quality of life of our residents and the
economic competitiveness of our businesses.
When compared to other utility costs, sewer
rates are a bargain.
Figure 5. Comparison of Sewer Rates and
Other Utilities (2003 Estimates)
Cast/Month
$70
$60
550
$40
$30
520
$10
$o
121 $161 6151
Wireless O.s Elecli4e. Cable Fnen• water Trash Sewn
PSe• SmIce Snvle• TV Service Supply C.Il..d,• Service
Service Smlee (retail'
Section IV, beginning on page 11, explores
national data and trends in the wastewater
collection and treatment industry and defines
criteria for comparing MCES's competitive
position on a national level.
4 Study of 2004 Municipal Wastewater Rates
ni THE MCES COST ALLOCATION SYSTEM
Providing Regional Equity
It was in the 1970s that the Metropolitan
Council and the Metropolitan Waste Control
Commission (a predecessor agency to MCES),
acting under statutory direction, took a
regional approach to the cost of wastewater
treatment. As a result, a community's bill does
not depend on the size of the nearest treatment
plant (and its unit cost of treatment); rather,
the costs of the system are pooled and
allocated across all communities. As
mentioned in the previous section on
wholesale rates (page 2), in 1992 the regional
approach was also applied for the costs of
construction of interceptors and conveyance of
wastewater
The regional approach was reaffirmed by a
1995 customer -based Sewer Rates /Cost
Allocation Task Force, which said
A uniform sewer service rate is the
most equitable way to allocate costs
throughout the Metropolitan Disposal
System (MDS) for sewage requiring a
normal level of treatment because the
system is designed to maximize
regional efficiency and regional water
quality goals
Regional treatment provides cost savings not
available with local treatment. In general, the
larger the plant, the lower the unit cost of
treatment The regional approach also provides
equity in costs and service throughout the
region and enhances environmental quality by
allowing service decisions to be made at the
regional level
Over time, the facilities that make up the
metropolitan disposal system have gone
through several phases of development. In the
early years the focus was on consolidating and
regionalizing the system decommissioning
small inefficient plants, especially those which
were discharging into lakes rather than rivers.
A primary focus was on bringing the entire
system into compliance with evolving federal
and state environmental standards.
Later, expansion and upgrade of several larger
regional plants was completed to meet the
demands of growth and of increased
regulation. In the current phase, and as we
move into the future, maintenance,
rehabilitation and meeting the needs of a
growing metropolitan area are the primary
issues.
Systemwide Cost Allocation System
While the facilities and operation of MCES
were being updated and made efficient, so too
was MCES's system of setting wastewater
service charges undergoing changes. The result
of this evolution is that today MCES has a rate
system that charges on a utility -like basis and
reflects only the cost of providing service and
the volume of use The rate is set in advance
and billings are based on use of the system,
which facilitates the planning and budgeting
processes for MCES and its customers.
Study of 2004 Municipal Wastewater Rates 5
The Council uses a two -step process to
determine monthly bills. First, the fixed rate is
established by dividing the estimated annual
wastewater service charges by the annual
projected flows (Figure 6).
Figure 6. MCES' Rate Determination: Step 1
Total Annual Budget (Rate Base)
Transfer from SAC Fund
Other Revenues
Annual Wastewater Service Charges
Estimated Annual Wastewater Flow
Fixed Rate per gallon of Wastewater
This tentative rate is analyzed for
competitiveness and affordability.
Adjustments are made by putting pressure on
the total annual budget. During this process
(Step 1) of budgeting and rate setting, the
MCES management team, Council
administration and staff, and municipal and
industrial customers interact to discuss and
determine the best way to meet the region's
water resource and wastewater collection and
treatment needs.
The second step of the process determines a
community's bill by multiplying the fixed rate
by,the community's flow for the quarter
using the flow in the quarter six months earlier
as proxy. (Figure 7).
Figure 7. MCES' Rate Determination: Step 2
Fixed Rate per gallon of Wastewater
X Community's Flow for Quarter
3
Community's Monthly Bill
6 Study of 2004 Municipal Wastewater Rates
Y
TWIN CITIES AREA RESIDENTIAL
WASTEWATER CHARGES
Average and Median Residential Charges
Average /Median per Community
In 2004, the weighted average community
wastewater charge for a single- family resident
in the Twin Cities area was $186 per house-
hold per year, a 5.1 percent increase from 2002
(an average annual increase of 2 5 percent).
This average is based on charges for 5,000*
gallons of water consumption per month and is
weighted by the number of single family
customer households served by each commu-
nity. See Exhibit 1 on page 18 for individual
community charges from 1986 to 2004
Also included in the study are median charges
for the years 1986 through 2004. Available
average and median charges for the
metropolitan area communities from 1996 to
2004 are listed below in Figure 8.
Figure 8 Twin Cities Metropolitan Area
Community Retail Sewerage
Based on 5,000 gallons of water consumption per month
Two-year Two-year
Average Percent Median Percent
Charge** Change Charge Charge
1986 $104
1988 $118 135%
1990 $127 76%
1992 $140 102%
1994 $153 9 3%
1996 $167 9 2%
1998 $167 na
2000 $171 2 4%
2002 $177 3 5%
2004 $186 5.1%
$98
$110
$120
$132
$145
$159
$166
$168
$172
$180
122%
91%
10.0%
9 8%
97%
4.4%
1 2%
2.4%
4.7%
`Using previously collected data and Information from this year's surveys, residential customers served by MCES use on an average,
5,000 gallons of water per month
'1986 -1996 are averages of ates charged by all communities regardless of size 1998 to 2004 are weighted averages
Study of 2004 Municipal Wastewater Rates
Weighted Average per Household
The average cost per household in the Twin
Cities area was $177 in 2002 and $186 in
2004. This statistic weights community rates
by the number of households in each
community to arrive at an average regional
cost per single- family household in the Twin
Cities area. Prior to 1998, the rate studies used
a community average, which added all
community charges and divided that sum by
the number of communities with no
consideration for the number of residential
households in each community. The number of
one and two family households served by
MCES varies from 12 in the city of Hilltop to
76,000 in the city of Minneapolis. Therefore,
MCES believes a weighted average is the most
accurate reflection of rates for the purpose of
this study.
The weighted average regional cost per
household is figured as follows
Community rate
x of households in community (served by MCES)
Total individual community cost
Total of all Individual communities costs
Total regional cost
of MCES households served
Average regional cost per household
(annual charge for single family house)
7
Types of Rates
Communities in the Twin Cities area use
several types of rates for charging residential
customers:
34 use flat rates,
42 use a base /uniform rate,
18 use a uniform rate,
5 use a base /increasing block rate,
2 uses a declining block rate.
While all 103 communities responded to our
survey, the above list totals 101. This question
was not applicable for two communities: one
does not charge directly for wastewater service
and the other has no residential customers.
These rate types used by MCES customer
communities are defined as follows.
The flat rate for residential customers is a
fixed dollar amount for each residential unit,
regardless of use. It is generally structured on
several assumptions: that volume varies little
among single- family houses; that system
access or availability is the principal
consideration in costs; that revenue from flat
rates is more predictable than from
volume -based rates; or that a flat rate system is
easier to administer. Also, flat rates are
charged where water use is not metered.
Environmentalists generally discourage this
methodology as it encourages consumption
and discourages conservation.
The base /uniform rate combines a fixed
dollar charge (generally, per month or per
quarter) with a volume charge. The fixed
dollar charge ranges widely. In some cities, the
fixed portion equates to a service charge or
billing fee and the total is modest —often less
than $5. In other cities, the fixed portion is
higher and equates to what is likely the total
fee for a typical single family residence. The
uniform rate generally kicks m after a base
volume is used: for example, above 1,000
gallons of use.
Study of 2004 Municipal Wastewater Rates
Uniform rates are set so that each gallon of
metered water use is charged the same rate.
Bills are often based on usage of water during
the winter quarter so that homeowners are not
charged sewerage fees based on water used in
lawn and garden care.
Base /increasing block means that like the
base /uniform, there is a fixed dollar charge
combined with a volume charge. The
difference is that the volume rate increases as
the volume used increases. For example, the
first 5,000 gallons might be $2 per thousand
gallons and the second 5,000 gallons might be
$3 per thousand gallons
Declining block (DB) rates are also based on
volume but are set so that the rate is lower as
more water is used.
Community Rate Setting
Practices
Communities served by MCES and its
interceptor sewers and wastewater treatment
plants have the authority to set their own retail
rates, but they must be consistent with
pertinent laws and regulations. Pursuant to
MN Statutes, section 473 519 (Exhibit 4), each
unit of government must adopt a system of
charges sufficient to pay its share of the cost
allocated to it by the Council.
For volume -based rates, the principal pertinent
law is the federal requirement that users pay
their proportionate share of costs; in other
words, rates are not reduced for high volume
users.
Proportionality Requirement
Under Environmental Protection Agency
(EPA) regulation 35.929 -1, the Council is
required to review its system of user charges
biennially. All user charge systems
(municipalities) are required to submit
information for a biennial review of their
operation and maintenance charges.
Municipalities must maintain proportionate
distribution of costs among users and user
groups. For example, municipalities cannot
charge a rate to one group of customers that
does not cover the wholesale cost. The result
of one group underpaying is another group
being overcharged or money taken from
unrelated funds to compensate for the revenue
lost.
For municipalities to comply with the
proportionality requirement, their lowest rate
must be higher than MCES's wholesale rate.
For municipalities with rates that decrease as
volume usage grows, the lowest possible rate
was used for the proportionality calculation.
As long as that lowest rate exceeds MCES's
rate, the EPA's requirement is satisfied.
To fulfill this review requirement from the
EPA, the 2004 survey asked all customer
communities to indicate the lowest sewer
service charge applied to any commercial/
industrial user per 1,000 gallons (133 97 cubic
feet) of water. No customer indicated charging
less than the current MCES wholesale rate.
Study of 2004 Municipal Wastewater Rates
Residential Rate Changes
In most cases, the biggest part of a
community's cost is the charge from MCES,
which typically changes each year Further,
local expenses can be expected to vary with
price increases and specific local needs. While
the surveys do not reveal the reasons for rate
increases, data and information from city
officials attending MCES's budget meetings
indicate a strong preference on the part of most
communities to keep the increases as
infrequent as possible. A substantial increase
in a single year often provides sufficient
revenue to fund the system for several years
Figure 9 illustrates the portion of an average
household retail rate that is needed to cover the
cost of MCES's wholesale rate
Figure 9. MCES's Portion of Retail Rates
Avg. MCES's MCES's
House- Portion Percent
hold of Retail of Retail
Year Cost' Rate'" Rate
65%
1992 $140 $90 96
1994 $153 $103.85 68%
1996 $167 $113.94 68%
1998 $167 $111.91 63%
2000 $171 $99 48 56%
2002 $177 5101 96 58%
2004 $186 5111 08 60%
`1986 -1996 are averages of rates charged by all
communities regardless of size 1998 to 2004 are
weighted averages
gallons per month of water consumption
82,896 gallons of wastewater per year (see Figure
10 on the following page)
9
How Community Residential
Rates Were Compared
Local Comparisons
To compare rates across communities in the
Twin Cities metropolitan area, MCES
requested mfomtation from their customer
communities. All 103 communities responded
and provided the asked for information.
For the volume -based charges, the estimated
average annual wastewater rate is based on
5,000 gallons per month or 60,000 gallons per
year of metered water volume. Because of
several factors, metered water use of 60,000
gallons per year requires treatment of
approximately 83,000 gallons of waste -water
per year, which is the estimated flow per
Residential Equivalent Connection (REC) The
factors include adjustments for seasonal
variation, water meter variation, and Inflow
and Infiltration (I &I) into the system. The
formula incorporating these effects was
developed by MCES's engineering staff and is
displayed in Figure 10
Figure 10. Wastewater Flow Formula
Water sold (x)(y)(z) wastewater flow
x 0 94 (adjustment for seasonal variation)
y 0 875 (adjustment for variation in water
metering)
z 0 88 (adjustment for 1 I into the system)
Study of 2004 Municipal ?Wastewater Rates
NATIONAL DATA AND TRENDS
National Comparison
Comparing MCES's performance and
competitiveness with sewerage agencies in
other areas of the country is important to
MCES. While not perfect, analyzing national
data and comparing levels of service, rates,
operating and maintenance costs, and debt
service with similar agencies helps MCES
assess its competitive position.
For this study, MCES used the survey
prepared triennially by the Association of
Metropolitan Sewerage Agencies (AMSA) as
its primary authority on the expenses, revenues
and rates of other agencies across the nation.
AMSA members represent the majority of
sewered population in the United States and
collectively treat more than 18 billion gallons
of wastewater per day. AMSA member
agencies treat from 2.3 to 1,409 (Chicago)
million gallons per day (mgd) of wastewater
with the median being 37 mgd.
The most current AMSA survey, The AMSA
Financial Survey 2002, contains data for
2001. There were 127 member agencies that
completed this AMSA survey. The annual
retail wastewater charges for these
communities increased, on an average, seven
percent from the 1999 survey, which included
responses from 119 members. In comparison,
the average retail rate increase for MCES
customer communities for this same time
period was approximately 4.2 percent.
In order to make the national comparison as
meaningful as possible, MCES included in the
comparison only those peer agencies that treat
over 100 million gallons of wastewater per day
and respond to AMSA's triennial Financial
Survey. Exhibit 2 on page 21 lists the average
2001 retail rate for the 31 agencies treating
over 100 million gallons per day and shows
MCES to be sixth lowest when comparing
only rates.
While retail rates are the focus of this report,
MCES also considers other criteria when
comparing competitive levels and this quality
information cannot be ignored when
comparing overall efficiencies and
effectiveness.
Interpretation of National Survey Data
Interpretation of survey data is difficult.
Survey data may differ because of survey
wording and wording of responses, unique
rate setting and operational strategies, and
other factors not covered by generic survey
forms. AMSA mentions that some agencies,
when responding to a current survey, will
modify answers to previous surveys; others
respond to some of the questions but not all.
MCES found the same to be true for its
regional survey.
In addition, funding of wastewater treatment
varies greatly across the nation, causing
further disparities in comparisons. An example
is the fee structure for the city of Milwaukee
Milwaukee's fee structure is based on
operation costs only, debt service is paid
through property tax assessments. In 2003, 41
percent of MCES's annual budget was applied
to debt service
Study of 2004 Municipal Wastewater Rates 11
However even with the disparities and not
always perfect responses, survey information
remains extremely useful for comparative
purposes and as an indicator of trends in
wastewater financing.
The AMSA survey also provides information
on the current trends in the wastewater
industry across the nation.
National Trends
The 2002 AMSA Financial Survey reported a
growing awareness of the potential long -term
finding challenges faced by wastewater
utilities. Several reports cited in the
"Executive Summary" section of the survey
reached similar conclusions concerning
funding.
An April 2000 report from the Water
Infrastructure Network called attention to the
unprecedented funding gap faced by
America's water and wastewater systems in
meeting infrastructure needs
Similar conclusions were reached by the U.S.
EPA and stated in a 2002 report that
documented a potential capital payments and
operation and maintenance gap for wastewater
utilities of $13 billion per year over the next
20 years. Preventing this gap would require
utilities to maintain annual revenue increases
significantly above the inflation rate.
Even with the funding challenges facing the
nation's wastewater industry, the survey
reported continued improvement in levels of
treatment and user charges near the rate of
inflation.
However, continuing signs of the funding
challenges facing the wastewater treatment
industry include the following:
Rapidly increasing long -term debt.
Increasing capital needs for sewer overflow
control and plant and sewer rehabilitation.
Continued decrease in the use or availability
of Federal and State Assistance.
12 Study of 2004 Municipal Wastewater Rates
n OTHER RATES AND CHARGES
MCES's Treatment Related Rates
and Charges
Other MCES rates and charges related to
treatment of wastewater are summarized in
this section. Communities also have related
charges, such as sewer connection and /or city
SAC fees This study does not include
information on other community charges; that
information is most reliable if received from
individual communities
MCES Service Availability
Charge (SAC)
Since 1973, MCES has levied this onetime
capacity charge for new connections or
increased volume to the metropolitan
wastewater system. The SAC fee is similar to
fees used by many wastewater utilities and
municipalities and is generically known as an
impact or connection fee. One SAC unit equals
274 gallons of maximum potential daily
wastewater flow volume. A freestanding
single -family residence is charged one SAC
unit. Other types of buildings pay a prorated
SAC fee, based on the estimated capacity of
wastewater they may demand.
The dollar value of a single SAC is set by the
Metropolitan Council and is the subject of a
biennial study. Figure 11 shows the SAC for
the years 1995 through 2004. Beginning in the
year 2001, there was no differentiation
between the charge for communities with and
without interceptors. Prior to that, a few
communities (those without interceptor
service) received a lower SAC fee per unit.
For more information on MCES's service
availability charges, refer to the SAC Biennial
Report or the SAC Procedures Manual, which
can be found on the MCES Web site or
ordered by calling the Council data center at
(651) 602 -1140.
Figure 11. MCES SAC (per Residential
Equivalent Connection)
1995 Base SAC $850
1996 Base SAC $900
1997 Base SAC.. .$950
1998 Base SAC $1,000
1999 Base SAC $1,050
2000 Base SAC $1,100
2001 Base SAC $1,150
2002 Base SAC $1,200
2003 Base SAC .$1,275
2004 Base SAC... $1,350
Industrial Strength Charge
Industrial strength charges reflect additional
treatment costs caused by industrial
wastewater which has more pollutants than
typical residential wastewater. Industrial
strength charges are based on the
concentration of pollutants (as measured by
Total Suspended Solids (TSS) and Chemical
Oxygen Demand (COD) and the volume of the
discharge. Strength charge rates are
determined annually by the Council, based on
expenses at wastewater treatment plants for
treating TSS and COD in excess of normal
residential wastewater. Industrial users are also
subject to normal municipal wastewater and
Study of 2004 Municipal Wastewater Rates 13
service availability charges. Of the
approximately 800 permitted Industrial Users,
slightly more than 350 pay strength charges to
MCES.
Figure 12. Industrial Strength Charge Rates
2004 Rate
Cost per excess pound of TSS .123
Cost per excess pound of COD $.0615
Industrial Strength Charge: Outside the
Region
This strength charge applies to customers
outside the Council's seven county area. It
reflects the full cost of treatment.
Figure 13. Out -of- Region Industrial Strength
Charge Rates
Cost per excess pound of TSS
Cost per excess pound of COD
2004 Rate
$.232
$.116
Liquid Waste Hauler Load Charge
Liquid waste haulers pay MCES for septage,
leachate and other hauled wastes that are
discharged to approved MCES disposal sites.
The load charge combines a strength charge
component with a volume component. The
volume component is based on the MCES
municipal wastewater rate In addition, a $50
per load service charge applies to hauled
wastes originating outside the seven county
metropolitan area.
The Council is currently accepting domestic
septage and holding tank waste generated in
the ten counties surrounding the Council's
seven- county area (at a higher rate that
recovers the full cost of treatment).
Industrial Discharge Permit Fee
Industrial users of the Metropolitan Disposal
System must apply for a permit from MCES to
discharge wastewater. Those Industrial users
issued a permit are subject to annual permit
fees, which recover a portion of the costs to
administer the industrial pretreatment
program. Permit fees are based on permit type,
annual volume of wastewater, significant
industrial user (SIU) status, and self
monitoring reporting frequency.
Add -On- Service Charge
This charge is assessed to special discharge
permittees for disposal of treated,
contaminated groundwater and is assessed in
lieu of SAC.
Self Monitoring Report Late Fee
A late fee is assessed to permittees who fail to
submit a complete self-monitoring report on a
timely basis, The fee amount is based on the
frequency and severity of late reports.
Stipulation Agreement Payment
These negotiated monthly and daily penalties
are intended to negate the economic advantage
of noncompliance with federal pretreatment
stands or local limits
Cost Recovery Fees
These fees are used to recover costs from any
responsible party associated with spill or
enforcement responses or non routine data
requests.
For more information on MCES's industrial
strength charges, refer to the latest Industrial
Rate System Biennial Report, which can be
found on the MCES Web site or ordered by
calling the Metropolitan Council data center at
(651) 602 -1140.
14 Study of 2004 Municipal Wastewater Rates
NEXT STEPS
MCES thanks its 103 customer communities
for their cooperation and responses to our
survey. We hope that the information
presented in this study is of interest and value
to our customers and stakeholders.
We welcome the readers feedback on this
issue and suggestions for future studies. Please
e -mail comments to Jason Willett at
Cason wallett@mete state mn us or call him at
(651) 602 -1196. When appropriate, your
comments and suggestions will be
incorporated into our 2006 rate study and will
provide assistance in setting goals and
planning budgets.
Study of 2004 Municipal Wastewater Rates
Wastewater treatment agencies are one of the
stewards of the health and environment
(quality of life) of the nation's communities.
MCES embraces this stewardship with goals
that continue to ensure a sustainable
environment within the context of providing
competitive, quality service to the region's
residents.
16 Study of 2004 Municipal Wastewater Rates
Study of 2002 Municipal Wastewater Rates 17
s
Exhibit 1
DICES 2004 Survey
Community Retail Sewer Charges Annual Charges for One- and Two- Family Residences
Based on 5,000 metered gallons of water consumption per month
NOTE: See section titled "Types of Rates" on page 8 for explanation of column three (Method of residential rate)
2004 4 of
Annual Method House
Community Cost or Rate holds 2002 2000 1998 1996 1994 1992 1990 1988 1986
Andover $191 Flat 6,053 $184 $178 $174 $168 $156 $144 $144 $102 $96
Anoka $205 Base Umform 4,320 $199 $199 $193 $191 $185 $160 $132 $106
Apple Valley $170 Basellnc Block 11264 $166 $163 $163 $121 $104 $93 $88 $88 563
Arden Hills $204 Flat 2,450 5204 $208 $216 $216 $208 $151 $125 $125 $109
Bayport S194 Base/Uniform 656 $194 $194 $194 $190 $176 $142 $120 $90 $78
Birchwood $240 Flat 384 $220 $220 $220 $200 $188 $157 $132 $120 $100
Blaine $179 Rat 13,273 $179 $179 $179 $179 $148 $132 $120 $88 $73
Bloomington $122 Flat 24,600 $117 $117 $124 $116 $111 $101 590 $75 $70
BrooklynCenter $222 Flat 8254 $210 $190 $181 5175 $170 $143 $108 593 $85
Brooklyn Park $138 Uniform 19,530 $143 $143 $142 $130 $128 $128 5128 $128 $128
Burnsville $185 Base/Uniform 14,349 $179 $162 $161 $135 $115 NR $66 $81 $79
Centerville $196 Flat 1208 $196 $168 $156 $156 $144 NR $144 $164 $164
Champlin $177 Base /Uniform 6,446 $172 $172 $182 $194 $156 $156 $150 5150 $120
Chanhassen $164 Uniform 6,233 $156 5156 $156 $156 $156 $144 $124 $124 $124
Chaska 5152 Uniform 4 936 $211 $211 5211 $194 $133 N R $102 $89 569
Circle Pines 5168 Base /Uniform 1,790 $150 5136 $136 $159 $132 $132 $132 5132 $104
Columbia Heights 5126 BaselUniform 5,874 $127 5127 $114 $145 $101 $101 $75 $75 575
Coon Rapids $188 Rat 18474 $180 5176 5168 $148 5140 $120 $80 580 596
Cottage Grove 5162 Basellnc Block 9,170 $144 5126 5126 $122 $102 $141 $114 $106 $60
Crystal $180 Flat 7,531 5168 $173 5164 5159 $145 $120 5104 $96 $84
Deephaven $240 Flat 1,431 $200 5200 5180 5180 $180 5120 5120 $100 $100
Eagan $119 Base/Uniform 15,000 $114 $117 $121 $115 $104 $89 589 575 $68
Eden Prairie $117 Uniform 16,700 $142 $142 $142 $142 $164 $145 $139 5127 $106
Edina $167 Uniform 14,030 $150 $146 $140 $140 $122 $93 5104 5131 $116
Empire Township $144 Base /Uniform 420 5180 $180 $180 $152 $100 NR $100 $72 NR
Excelsior 5220 Base /Uniform 591 $203 5191 5172 $172 $164 5140 $128 $109 $92
Falcon Heights $140 Rat 2,152 5140 $140 $140 5140 5140 $108 $88 $88 576
Farmington 5150 Base /Uniform 4,665 5150 $150 $261 $254 $221 $191 $191 $174 $126
Forest Lake 5170 Base /Uniform 2,739 $166 5166 $173 5100 $135 NR $105 $105 5105
Forest Lake Township Merged w)Forest Lake $264 $264 3240 5240 $240 3216 $216 $216
Fndley $145 Uniform 7,640 $137 $132 5150 5150 $100 $113 $99 $99 $91
Gem Lake $120 Flat 28 $112 5112 $112 $112 $100 $80 570 $60 $60
Golden Valley 5198 Flat 6,669 $184 5172 $156 5136 $112 $88 580 580 $80
Greenfield 5444 Flat 53 $408 5408 5408 $408 $408 $408 $315 $315 $315
Greenwood $240 Flat 267 $180 $180 $18C 5133 $180 $120 $12C E $120
13 Study of 2004 Municipal Wastewater Rates
Exhibit 1 (continued)
2004
Annual
Community Cost
Hastings
Hilltop
Hopkins
Hugo
Independence
Inver Grove Heights
Lake Elmo
Laketown Towhship
Lakeville
Landfall
Lauaerdale
Lexington
Lilydale
Lino Lakes
Little Canada
Long Lake
Mahtomedi
Maple Grove
Maple Plain
Maplewood
Medicine Lake
Medina
Mendota
Mendota Heights
Minneapolis
Minnetonka
Minnetonka Beach
Minnetnsta
Mound
Mounds View
New Bnghton
New Hope
Newport
North Oaks
North St Paul
Oak Park Heights
Oakdale
Orono
Osseo
Plymouth
5147
5116
$135
5185
$529
5167
Method
or Rate
Uniform
Uniform
Uniform
Base /Uniform
Rat
Base/Uniform
No residential customers
5392
5155
$174
$168
5162
$135
$268
5180
5221
5217
5147
$156
$157
Flat
Base/Uniform
BaseNmform
Flat
Flat
Flat
BaseNmform
Base/Unrform
Uniform
Base /Uniform
Base /Uniform
Base /Uniform
Uniform
No user charge for uhl ties
5211 Uniform
$160 Flat
5140 Base/Uniform
5275 Unrform
5141 Uniform
$192 FIat
$300 Flat
$254 Base /Uniform
$190 Base /Uniform
$142 Uniform
5181 Base /Uniform
$155 Base/Inc Block
$152 Flat
5260 Base/Inc Block
$188 Base/Unrform
5200 BaseNmform
5365 Flat
$140 Base /Uniform
$170 Base /Unrfona
Stu dy of 2004 Municipal Wastewater Rates
of
House-
holds 2002 2000 1998 1996 1994 1992 1990 1988 1986
6,346 $141 $141 $140 $135 $120 $100 595 $86 $86
12 $120 $120 $116 $120 $90 $48 548 NR NR
2,694 $135 $135 $150 $165 $155 $150 $105 $95 595
1,785 $144 5136 $168 $168 5168 $168 5128 5128 591
188 $360 5303 $303 5303 $243 $243 $243 5243 $0
6,245 $158 5148 $138 $128 5128 $105 $75 575 $74
278
11,600
302
539
620
570
3,463
1,972
643
2,252
18,200
529
10,000
170
647
55
3,300
76,368
16,000
233
1061
3,487
2,811
5,204
4,830
1,000
46
4260
999
8,200
2,060
830
18,380
5356 $356 $400 $300 5261 $228 $228 5180 $180
$146 $146 $146 5130 $116 $116 $116 $120 $120
$174 5174 $174 5203 $155 NR NR NR $0
5160 5156 $164 5164 $122 $112 596 596 596
5162 $162 $154 5145 $145 NR $132 $132 576
5125 $125 $115 $100 $100 NR 5100 $70 570
5224 $204 5200 5192 $176 NR 5144 5120 5120
$150 $150 5150 $150 $150 $136 5130 5116 $116
5218 $214 $215 $197 $136 $117 5117 5117 $105
$206 $206 $206 5205 $200 $194 NR NR $0
5147 $147 $147 $137 $137 5131 $128 5124 5120
$137 $137 5137 $137 5137 N R $137 5137 5137
5130 $115 5119 $146 5140 $135 $125 $112 5110
5201 $201 $201 5201 5201 $201 5201 $201 201
$160 $160 $160 $160 NR $160 NR NR 0
5140 5140 $140 $140 $140 $105 $105 $105 89
$253 5230 $201 $175 5152 $130 $115 598 93
$123 5111 $102 $93 $87 $72 $66 $60 57
$192 $192 $192 5170 5170 $170 $170 $170 $97
5300 5300 $260 5240 $232 $192 5180 5180 $180
5220 5210 $210 $171 $155 $147 $135 5135 $72
$188 5182 $182 $182 $172 $165 $153 5123 $123
$137 $141 $137 $135 $127 $105 $100 5106 5106
$180 $164 $149 $149 $149 $121 597 $97 $97
$155 5148 $141 $172 $112 $112 $112 598 $74
$176 $180 $156 $88 NR NR $148 NR 50
5246 5246 5226 $176 $167 5149 8151 5151 $144
$168 $149 5126 5126 5106 $92 $92 580 568
5197 $188 5184 5177 5155 $151 5146 5135 $135
5346 5327 $307 $288 5266 $205 $126 $126 $126
$140 $140 $160 $160 5143 NR $143 5125 5116
$152 $152 $152 $139 $139 $112 5129 5123 $123
Exhibit 1 (continued)
2004 of
Annual Method House
Community Cost or Rate holds 2002 2000 1998 1996 1994 1992 1990 1988 1986
Prior Lake $189 Unform 6,268 $171 $171 $171 $171 $138 $126 $84 $84 $84
Ramsey $242 Flat 2,385 $242 $288 $213 $184 $160 NR $128 $128 $128
Richfield $149 Urbfarm 9,900 $140 $137 $119 $107 $83 $64 $56 $53 $52
Robbinsdale $188 Base /Uniform 4,622 $178 $173 $161 $109 $94 $94 $94 $94 $94
Rosemount $164 Base/Uniform 4,900 $164 $164 $157 $157 $157 $111 $111 $75 $63
Roseville $122 BaseNnrform 3,030 $122 $121 $130 $128 5118 $116 $102 $91 $97
Saint Anthony $198 Uniform 1,913 $165 $158 $148 $132 $132 $113 $106 $99 $90
SaintBonifacus 5164 Base /Uniform 841 $164 $119 $119 $119 $104 $104 $104 $104 $104
Sant Louis Park $166 BaseUniform 12,180 $153 $157 $150 $142 $128 $117 $107 $97 $73
Saint Paul $204 Declining Black 69,807 $194 $194 $194 $183 $164 $147 $132 $153 $108
Saint Paul Park $152 Base /Uniform 1,793 $138 $125 $125 $125 $117 $114 $114 $77 $55
Savage $193 BaselUniform 7,751 $187 $187 $208 $200 $158 $131 $119 $101 S101
Shakopee $168 Base /Uniform 6,620 $172 $182 $188 $193 $133 NR $109 $109 $109
Shoreview 5191 Declining Block 10,975 $174 $168 $169 $157 $144 $137 $128 $117 $112
Shorewood $280 Flat 2,726 $240 $240 $260 $260 $260 $262 $199 $116 $166
South St Paul $168 Base/Uniform 6,308 $168 $168 $179 $168 $173 $150 $122 $122 $122
Spnng Lake Park $195 Flat 2,287 $180 $180 $162 $148 $121 $121 $107 $101 $87
Spring Pak $238 Base /Uniform 254 5238 $238 $238 $296 $196 $154 $154 $154 5154
Stillwater $214 Base /Uniform 5,110 $198 $198 $198 $198 $198 $198 5198 $178 5178
Stillwater Township Merged with Shlhvater $198 5198 $198 $198 $198 $178 $178
Tonka Bay $332 Flat 689 $332 $332 $308 $308 $220 $168 $152 $168 $140
Vadnais Heights $188 Rat 4,877 5188 $183 $178 $168 $160 5148 $140 $128 $110
Victoria $204 Flat 1,780 5192 $192 $152 $152 5152 $152 $152 $152 $152
Waconia $243 BaseNnrform 2,661 5228 $252 $198 $190 $165 $165 $155 5155 5155
Wazyata 5199 Basellnc Block 1225 5194 $190 $189 $173 5160 $148 $145 5120 $104
West St Paul $185 Flat 5,091 $176 $164 $157 $157 $145 5118 5110 $110 $98
White Bear Lake 5169 Uniform 7,492 $168 $169 $159 $153 5127 $127 $116 $116 $105
While Bear Township $209 Flat 4,248 $209 $209 $1S6 $186 $182 NR $192 5122 596
Willernie $192 Flat 234 $168 $168 $168 $128 $128 NR 5110 $72 $72
Woodbury $175 BaselUnform 15,883 5151 $155 $159 $159 $155 $135 $137 $96 $64
Median Rates 5180 5172 5168 5166 $159 $145 $132 5120 1110 598
2- year %.change 4.4% 2.4% 12% 4.4% 97% 9.8% 10.1% 91% 122°/
Weighted Avgs. 5186 $177 5171 $167 nla nla n/a nla nla n/a
2-year change 4.8% 14% 23%
Previously Used Community Averagest 5167 $153 5140 5127 5118 $104
(1) Number of residential (one- and two family) households as reported on surveys
(2) The weighted average of each community's retail rate, weighted for the number of households served (see
page 7 for further explanation).
(3) The simple average of each community's retail rate, without regard to the number of households.
20 Study of 2002 Municipal Wastewater Rates
Exhibit 2
2001 National Comparisons: Retail Wastewater Charges
Agencies with influent rate greater than 100 million gallons per day (mgd)
Average Retail Influent Flow
Agency Rate Rate (mgd)
1 Memphis, Tennessee 160 0 54 00
2 Los Angeles County, California 522.5 99 00
3 Orange County, California 246 0 $122 00
4 Chicago, Illinois 1409.0 $128 97
5 Trinity River, Texas 168 8 $172 80
6 MCESIRetail rates in Metro Twin Cities' 289.0 $174 00
7 Phoenix, Arizona 209 1 5174 72
8 St Louis, Missouri 312 0 $175 32
9 Denver, Colorado 154.0 $175 50
10 Louisville /Jefferson, Kentucky 1326 $184 92
11 Kansas City, Kansas 109.2 $185 52
12 Philadelphia, Pennsylvania 454.3 $196 92
13 New Orleans, Louisiana 110.0 $201 66
14 Middlesex County New Jersey 115 3 $212 00
15 Columbus, Ohio 160 2 5228 64
16 Hampton Roads, Virginia 147 7 $230 00
17 Fort Worth, Texas 100 0 5232.56
18 Dallas, Texas 228 9 $235 15
19 King County, Washington 2160 $237 00
20 Detroit, Michigan 695 0 $239 32
21 Los Angeles, California 442 0 $240 00
22 Houston, Texas 265 0 $241 84
23 Sacramento, California 164 0 $269 00
24 DC Sewer Authority, Washington D C 317 5 $270 90
25 New York City, New York 1301 0 $278 46
26 Northeast Ohio 230 4 $286 20
27 Cincinnati, Ohio 174 0 $307 30
28 San Diego, California 220 0 $324 84
29 Nashville, Tennessee 138 0 $328 00
30 Honolulu, Hawaii 113 3 $403 80
31 MWRA Boston, Massachusetts 348 7 $411 01
*This number is from the AMSA survey, Our region is listed as St Paul, Minnesota
Source Association of Metropolitan Sewerage Agencies (AMS) Financial Survey/2002
Stung of 2004 Municipal Wastewater Rates 21
Exhibit 3
State Law on Cost Allocation (Minnesota Statutes 473.517)
Subdivision 1. Allocation method Except as
provided in subdivision 3, the estimated costs of
operation, maintenance, and debt service of the
metropolitan disposal system to be paid by the council
in each fiscal y ear, and the costs of acquisition and
betterment of the system which are to be paid during
the year from funds other than bond proceeds, Including
all expenses
incurred by the council pursuant to sections 473 501 to
473 545, are referred to in this section as current costs,
and shall be allocated among and paid by all local
government units which will discharge sewage, directly
or indirectly, into the metropolitan disposal system
during the budget year according to an allocation
method determined by the council The allocated costs
may include an amount for a reserve or contingency
fund and an amount for cash flow management. The
cash flow management fund so established must not
exceed five percent of the council's total waste control
operating budget
Subd 2. Repealed by amendment, 1997 c 181 s 2
Subd 3 Allocation of treatment, interceptor
costs; reserved capacity. In preparing each budget the
council shall estimate the current costs of acquisition,
betterment, and debt service, only, of the treatment
works in the metropolitan disposal system which will
not be used to total capacity during the budget year, and
the percentage of such capacity which will not be used,
and shall deduct the same percentage of such treatment
works costs from the current costs allocated under
subdivision I The council shall also estimate the
current costs of acquisition, betterment, and debt
service, only, of the interceptors in the metropolitan
disposal system that will not be used to total capacity
during the budget year, shall estimate the percentage of
the total capacity that will not be used, and shall deduct
the same percentage of interceptor costs from the
current costs allocated under subdivision 1 The total
amount so deducted with respect to all treatment works
and interceptors in the system shall be allocated among
and paid by the respective local government units in the
metropolitan area for which system capacity unused
each year is reserved for future use, in proportion to the
amounts of such capacity reserved for each of them
Subd. 4. Repealed, 1987 c 53 s 8
Subd. 5. Repealed, 1987 c 53 s 8
Subd. 6. Deferment of payments. The council
may provide for the deferment of payment of all or part
of the allocated costs which are allocated by the council
to a local government unit in any year pursuant to
subdivision 3, repayable at such time or times as the
council shall specify, with interest at the approximate
average annual rate borne by council bonds outstanding
at the time of the deferment, as determined by the
council Such deferred costs shall be allocated to and
paid by all local government units in the metropolitan
area which will discharge sewage, directly or indirectly,
into the metropolitan disposal system in the budget year
for which the deferment is granted, in the same manner
and proportions as costs are allocated under
subdivision 1
Subd. 7. Repealed, 1987 c 53 s 8
Subd. 8. Repealed, 1994 c 628 art 3 s 209
Subd. 9 Advisory committees. The council may
establish and appoint persons to advisory committees to
assist the council in the performance of its wastewater
control duties If established, the advisory committees
shalt meet with the council to consult with such
members concerning the acquisition, betterment,
operation and maintenance of interceptors and
treatment works in the metropolitan disposal system,
and the allocation of costs therefor Members of the
advisory committee serve without compensation but
must be reimbursed for their reasonable expenses as
determined by the council
Copyright 1999 by the Office of Revisor of Statutes,
State of Minnesota
2. Study of 2002 Munic; pal Wastewater Rates
Exhibit 4
State Law on Federal Water Pollution Control Act Amendments of
1972: System of Charges (Minnesota Statute 473.519)
Each local government unit shall adopt a system of
charges for the use and availability of the metropolitan
disposal system which will assure that each recipient of
waste water treatment services within or served by the
unit will pay its proportionate share of the costs
allocated to the unit by the council under section
473 517 as required by the federal Water Pollution
control Act amendments of 1972, and any regulations
issued pursuant thereto Each system of charges shall be
adopted as soon as possible and shall be submitted to
the council The council shall review each system
of charges to determine whether it complies with the
federal law and regulations If it determines that a
system of charges does not comply, the adopting unit
shall be notified and shall change its system to comply,
and shall submit the changes to the council for review
All subsequent changes in a system of charges proposed
by a local government unit shall also be submitted to
the council for review
HIST 1975 c 13 s 84, 1994 c 628 art 3 s 171
Copyright 1996 by the Office ofRevtsor of Statues,
State ofMi nesota
Study of 2002 Municipal Wastewater Rates 23