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2.c. Water and Sewer Rates
AGENDA ITEM: Water and Sewer Utility Rates 11. A ETON: L PREPARED BY: Andrew J. Brotzler, PE, City Enginee 1 Jeff May, Finance Director AGENDA NO. 2 .t�- ATTACHMENTS: Executive Summary Packet from the June 10, 2009 Council Work Session Minutes APPROVED BY: 0 L) RECOMMENDED ACTION: Discussion ROSEMOUNT EXECUTIVE SUMMARY City Council Work Session: September 9, 2009 BACKGROUND: Attached for Council consideration and discussion is a copy of the June 10, 2009 City Council Work Session packet and minutes. There have been no changes to the material previously presented to Council. SUMMARY: CITY COUNCIL At this time Staff is seeking Council direction on the proposed water and sewer rates and 2 meters. G: \Utilities \RATES \090909 CWS WaterandSewerRateStudy.docl AGENDA ITEM: Water and Sewer Utility Rates AGENDA SECTION: Rates* PREPARED BY: Andrew J. Brotzler, PE, City Enginee i Jeff May, Finance Director AGENDA NO. 2.c. 10,001— 30,000 ATTACHMENTS: Executive Summaries from the April 13 and May 11, 2009 UC Meetings; Excerpts from the April 13 and May 11, 2009 UC Meeting Minutes APPROVED BY: 04)/ RECOMMENDED ACTION: Discussion $1.90 Residential Quarterly usage (gallons) Rates* 0 10,000 $0.90 10,001— 30,000 $1.10 30,001— 60,000 $1.40 60,001 100,000 $1.90 100,000 $2.75 Commercial /Industrial Quarterly usage (gallons) Rates* 0 100,000 $1.05 100,001— 200,000 $1.30 200,001 300,000 $1.60 300,000 $2.00 !C ROSEMOUNT ISSUE: BACKGROUND: CITY COUNCIL City Council Work Session: June 10, 2009 EXECUTIVE SUMMARY In July 2008, the Minnesota Department of Natural Resources (DNR) notified public water suppliers that each City must adopt a water conservation rate structure by January 1, 2010, or prior to being permitted for a new well or increase in appropriations. In response, City staff has worked with the Utility Commission to develop new water and sewer rates that not only promote water conservation, but also maintain adequate revenue to support the maintenance and operating costs of our water and sanitary sewer systems. Water rates At the April 13, 2009 Utility Commission meeting, staff presented the Utility Commission with an updated Water Rate Analysis spreadsheet, a copy of which is attached with the Executive Summary from that meeting. Based on the information provided, the Utility Commission took action to recommend Council approval of the following tiered water rate structures: *per thousand gallons *per thousand gallons Along with the implementation of tiered rates, the Utility Commission supported an increase in the fixed rate from $8.90 per quarter to $10.00 per quarter. The water surcharge, which helps to fund system expansion, is not proposed to increase. G \Util ides\ RATES\ WaterandSewerRateStudyCWS6- 10- 09.doc Sewer rates At the May 11, 2009 Utility Commission meeting, staff presented the Utility Commission with two scenarios for proposed changes to the sewer rates: Scenario #1 Continue to allow 2 water meters for residential irrigation and increase the usage rate to $1.50/1000 gallons in 2010. Scenario #2 Discontinue use of 2n water meters for residential irrigation and increase the usage rate to $2.00/1000 gallons in 2010. Complete details for each of these scenarios are provided in the Executive Summary from the May 11, 2009 Utility Commission meeting, a copy of which is attached. Upon review of the information provided at the May 11, 2009 Utility Commission meeting, the Utility Commission recommended Council approval of Scenario #1. The attached table summarizes the proposed rate changes for water and sewer based on the 2008 average quarterly use for residential properties. Implementation Schedule Assuming the adoption of new water and sewer rates effective January 1, 2010, following is a proposed schedule for the communication of the proposed rate changes and implementation into the utility billing system. City Council review of the proposed rates City Council review of the proposed rates (if necessary) Distribute utility rate information at Leprechaun Days Public Open House City newsletter article Billing inserts City Council adoption of rates Update utility billing rates SUMMARY: Based on the recommendations of the Utility Commission, staff is presenting to Council the recommended water and sewer rates for Council consideration. The recommendations of the Utility Commission are summarized below: Implement tiered water rate structures in 2010 as indicated above. 2 June 10, 2009 July 15, 2009 July 17 -26, 2009 August 2009 September 2009 Fall 2009 October 2009 October /November 2009 Increase the fixed charge for water from $8.90 /quarter to $10.00 /quarter in 2010. Increase the sewer usage rate from $1.40 /1000 gallons to $1.50/1000 gallons in 2010. Continue to allow 2 water meters for residential irrigation. Usage from both meters will be added together to determine the appropriate tier for water billing. At this time, in addition to a review of the proposed rates, staff is requesting Council feedback and direction on the following items: 1. For sewer billing purposes, continue with the practice of allowing 2nd water meters for water billing only; or discontinue the use of 2 water meters and transition to a winter quarter basis for sewer billing. 2. Provide feedback on the proposed communication plan and process for the implementation of new utility rates beginning January 2010. 3 Quarter Gallons Billed (1000s) 2008 Actual 2010 Estimated Change 1 14 $31.98 $32.20 0.7% 2 30 $48.30 $49.80 3.1% 3 42 $60.54 $66.60 10.0% 4 18 $36.06 $36.60 1.5% Total 104 $176.88 $185.20 4.7% Quarter Gallons Billed (1000s) 2008 Actual 2010 Estimated Change 1 14 $39.60 $48.00 21.2% 2 14 $62.00 $48.00 22.6% 3 14 $78.80 $48.00 -39.1% 4 14 $45.20 $48.00 6.2% Total 56 $225.60 $192.00 14.9% Quarter Gallons Billed (1000s) 2008 Actual 2010 Estimated Change 1 14 $39.60 $41.00 3.5% 2 30 $62.00 $65.00 4.8% 3 42 $78.80 $83.00 5.3% 4 18 $45.20 $47.00 4.0% Total 104 $225.60 $236.00 4.6% Utility Rate Summary for 2010 Based on 2008 average quarterly usage Water (includes usage charges $8.90/$10.00 fixed charge per quarter $8.80 surcharge) Sewer Scenario #1 Keep 2nd Meter (includes usage charges $20 fixed charge per quarter) Sewer Scenario #2 Winter Quarter Billing Basis (includes usage charges $20 fixed charge per quarter) G: \Utilities \RATES \RAW DATA \RES BOTH 2008 STATS: Tab: water and sewer 201( AGENDA ITEM: Water Utility Rates 1 AGENDA SECTION: Old Business PREPARED BY: Andrew J. Brotzler, PE, City Engineer AGENDA NO. 6b. ATTACHMENTS: Water Rate Analysis Spreadsheet; Cost Illustrations; Water Rate Analysis Spreadsheet from February 18, 2009 Special Utility Commission Meeting APPROVED BY: RECOMMENDED ACTION: Motion to Recommend City Council Approval of Water Utility Rates. 4 ROSEMOUNT UTILITY COMMISSION Utility Commission Meeting: April 13, 2009 EXECUTIVE SUMMARY BACKGROUND: In a letter dated July 31, 2008, the Minnesota Department of Natural Resources (DNR) notified public water suppliers that each City must adopt a water conservation rate structure by January 1, 2010, or prior to being permitted for a new well or increase in appropriations. Since learning of the new DNR requirements, staff has met twice with the Utility Commission (December 8, 2008 and February 18, 2009) to evaluate a number of scenarios to find one that complies with the DNR requirements while maintaining the necessary revenue to support the maintenance and operation costs of our existing water system. At the February 18, 2009 Special Utility Commission Meeting, staff reviewed a water rate analysis spreadsheet with the Commission, a copy of which is attached. Based on comments received and further staff review of the water utility fund, an updated water rate analysis spreadsheet has been prepared. The updates to the spreadsheet since the February 18, 2009 meeting are as follows: Proposed rates have been reduced for 2010 implementation. The proposed rates remain steady in 2011, increase 7% in 2012, remain steady in 2013, then increase 7% per year through 2020. The 2009 beginning balance (line 23) reflects the actual beginning balance for the water utility fund. Lines 23, 32, and 50 have been removed from the calculations in 2006 through 2008 in order to get a true beginning balance in 2009. The Capital Investment Fund balance (water surcharge revenue) is transferred into the water utility fund each year (line 47). Miscellaneous revenues (antenna leases, interest) have been added to the spreadsheet (line 48). G: \Utilities\ RATES WaterRateStudyUC4 -13-09. doc Residential Tier in tier Avg. usage 0 10,000 25% 8,000 10,001- 30,000 50% 20,000 30,001- 60,000 15% 45,000 60,001 100,000 8% 75,000 100,000 2% 110,000 Commercial /Industrial Tier in tier Avg, usage 0 100,000 65% 90,000 100,001 200,000 20% 175,000 200,001- 300,000 10% 250,000 300,000 5% 320,000 Beginning in 2016, approximately $1.1 million in annual debt has been added (line 27) to fund a water treatment plant ($12 million for 15 years at 4% interest). Two additional staff positions have been added in 2017. Debt service figures (line 28) have been updated. As noted in our previous discussions, calculations are based on the following assumptions: Annual residential growth is estimated to be 2.5% from 2009 through 2011, and 5% from 2012 through 2020. In 2010, the fixed rate charge increases from $8.90 to $10.00, and a tiered water rate structure will be implemented as indicated in the spreadsheet (includes a tier 1 rate decrease of $0.12 per 1,000 gallons) Annual CRP expense line item has been retained in anticipation of future utility relocation costs associated with the reconstruction of the 42/52 interchange. The preliminary estimated cost for this is $2.1 million. This expense line item is $422,000 in 2010. In 2011 it is reduced to $200,000 with a 3% increase per year through 2020. In calculating the usage revenue, the following assumptions were made regarding the number of accounts in each tier and the average usage on those accounts (these assumptions are based on actual usage data from 2007): Beginning in 2010 through 2017, it is anticipated that the water utility fund will need to assume debt service for recently constructed water towers and wells. Due to the current slowdown in development, there has been a decrease in revenue for the water core fund. The model assumes 150 units per year for connection fees to pay the debt service amount. An increase above this amount will reduce the debt service obligation of the water utility fund in the future. Rates will be reviewed annually to track actual vs. projected expenses and revenues. 2 In addition to the revenue and expense worksheet, included for your review are the following items: (1) An illustration of what the quarterly costs will be in 2010 compared to neighboring cities (2) An illustration of what the 2010 charges will be, broken out by quarter. SUMMARY: Staff is requesting Utility Commission recommendation to the City Council to approve the proposed utility rate changes. 3 O (NO d) J Wg N tA0 Oo V OAi N A W N O J 00) 0) CO 0) N- O (00 m J 00) (N)1 A 8 N N O (O Oa J O) ut A W N O m V 0) C 9 4 0 (0 N 4 N a 00 (O 0 N 4 N 0 V 4 4 N N O m A O N W V 40 44 4 N O p V pp O 4 pp Ol 4 4 IV IV IV V CO 0) Co IV j 8 V CD CA CA 4 4 4 (per N N m N n IV 0) W V W co 0 a 4 4 4 28 01 N 01 p V (�'1 p�pDp1 W W W 8�°8 4 4 01 (O 0) OD CO m V N 4 4 4 4 in 4 40 in 4 V W 0 p GG -0 g j T A T 4 4 01 8 A V CO -a 4 4 0) N s 4 CD O 8 4 N CO CD 0 4 4 4 W W p A O 4 4 8 8 4 4 8 4 4 0I p N O 4 o U 8 4 CO co 0 N d fi TI 0 0 0 D w D 0 R c o g to 0 0 0 0 a 3 3 d 0) 0) w (D m (0 N 0 0 0 C T 1D 3 11 (n m cn o v a° 4 O 4 8 4 8 O 4 0 8 O 4 CD V O O 4 4 00 O O O 4 m 8 8 4 O O 4 N 8 4 co O 4 4 4 N (NO 0 0) 4 Qr A 0 V 4 4 N CD O E (n O 4 4 co CO 4 (O 01 N W (°A W N 4 4 (0 01 CO co V 0) N 4 4 pJ a A 4 4 pO! N W N CD A (0 r (0 4 4 01 N W 01 CO 4 4 ca N O E g AA m W 4 4 W 01 O a 8 co (1) O 44 4 61 W v f!1 N N ae to 0( 8 ae 8 8 0 4 4 N N 4 O co 01 4 N 4 Of Co 4 W 01 V v 4 N �p A 4 4 N 4 4 4 60 8 8 4 O O 4 O W 4 N 0 th 0 01 N N V OD J OD CO CO CA 0( O 8 W J M W. M N J N W N CO CO N W c m 4 0 OD p O O 4 A 4 O 0 O 4 p V 8 8 4 4 A 0 0 0 in 4 4 4 in O 8 4 W A 8 4 8 4 O O 4 N O O 4 N W 4 8 4 co aD 4 r 2 69 4 V W N ia V 0) 3 0 7 4 4 4 4 4 4 UI CD in N V 4 N A O 4 N 4 OD 0 4 W V 4 o N N m W 4 N L] V co m 4 4 N V N 4 4 4 A 8 0 0 4 N W A V 4 O IV O O N 0 �o 4 N N V 4 O W 44 0 O CO 4 0) O 8 4 4 4 4 4 4 IV 8 4 8 O 4 4 8 0 O 4 N 0 O 4 p O O 4 CD CO N O 4 (O O 8 4 (O N 8 4 na N O 0 O 4 (0 0 4 8 4 8 4 (0 O 4 1 o 4 00 N 8 4 N 4 co co O O N 0 V 4 W 8 4 -1 N 8 4 4 N .pp 8 4 O 4 fA 0 3 (0 W O O 0 0 0 0 0 m 8 4 8 O 4 p O 4 p N CD 8 y CO 4 8 8 co O O 0 0 0 0 O 4 4 4 4 -1 0 3 3 a A O o o O 0 (4 4 p N fJ 4 CO 4 co V w N N' f0 O V O 4 4 m W 8 4 A V CO O 8 N 4 4 0 N co 4 W. 4 N N W N 4 4 8 w 4 4 N 4 W 01 00 4 N 4 4 N V 4 44 4 CO 0 m N W 0 CD a m 0 O O C) 4 4 A 4 co A 4 4 4 8 4 on O O 4 4 4 4 p p tl) O 4 CO V J W 8 4 0 0 O CO m c to 2 k T B g1 O 1 3 ((0 a 4 N 4 4 4 co N 4 J O N N a 4 J J CO 4 a W 4 4 q y q 4 V 00 4 P 4 N m V co 4 3 y 0 D Y N 01 4 N CO O O 4 W ow p O O 4 W 0 O N W N O O 4 4i N O O 4 co 1 0 0 w w N W IV V O O O N 10 4 N J 8 0 O 4 W O 0 0 4 0 O 4 10 0 0 4 0 O 4 SA 8 8 8 o. 8 8 3 CD 13 8 cn in 8 ER 8 8 8 8 0 8 8 44 3. 0 0 CD 8 8 8 co 8 8 8 Cal 8 CA th OD 8 8 -4 8 in -4 0 co iD 8 0 8 to CO ha CD ite 01 th 8 8 fA 8 0 8 8 EA 8 8 8 8 8 8 co e. th CA cn 8 8 CA 8 8 8 8 8 in 8 8 8 8 8 8 8 44 69 8 8 cn 8 8 co 8 8 8 8 69 8 8 CD (1) 3 8 8 8 OD 0 8 0 3 3 0 Oi 0 0 3 3 0 8 EA co EA co 0 3 3 co 3 3 0 0 8 0 EA CD cn EA co ER CA 8 EA CD ft 0. ft 0 0 EA 0 0 44 Le co En 0 co 0 .0 0 0 to 0 cn cn 8 3 3 3 0 cn CO Sn co oo co 03 ae ae co ae CD CO OD co 8 cri 01 40 1 0 Savage* $149.76 Prior Lake $126.75 Inver Grove Heights $110.18 Burnsville $95.70 Rosemount Proposed 2010 $70.80 Farmington $67.50 Apple Valley $65.85 Rosemount Current $63.60 Eagan $63.50 Lakeville $58.00 Residential Comparison with Other Cities (based on 2008 rates from other cities) (assumes 45,000 gallons per 3 -month usage) (includes usage charges fixed charge surcharge) Savage bills the full amount at the highest applicable tier G:tUtiiities1RATES1Water Rates 4- 13- 09.xls Tab: Comparison lower rates Quarterly Usage Current Total Proposed Total Change (Q1) 14,000 gal $31.98 $32.20 0.7% (Q2) 18,000 gal $36.06 $36.60 1.5% (Q3) 43,000 gal $61.56 $68.00 10.5% (Q4) 29,000 gal $47.28 $48.70 3.0% Total 104,000 gal $176.88 $185.50 4.9% usage charges $106.08 $110.30 4.0% per 1,000 gallons $1.02 $1.06 4.0% Rosemount Customer Comparison for 2010 Based on 2007 average quarterly usage (includes usage charges fixed charge surcharge) G:UStilities\RATES\Water Rates 4- 13- 09.xls Tab: Comparison lower rates TI w p, co O 1 0 o G) N Qj n 'Water Treatment Facility Capital Reserve IWTF Expense Total Water Surcharge Revenue Calc Water Surcharge rge 6" 1 WSB Calc. Water Surcharge Single Family 5/8" 1 WSB Calc. Water Surcharge Multi Family 5/8" 1 WSB Calc. Water Surcharge 1° WSB Calc. Meter Maintenance 6" Total Revenues excluding surcharge Balance after Revenues (Year End) Balance change amount Balance change WSB Calc. Meter Maintenance 1" Water Use Comm Ind Inst Tier 4 Water Use Comm Ind Inst Tier 3 'Surcharge 6" ($/account) Meter Maintenance -1' /account/quarter) Meter Maintenance 6" ($/account/quarter) Beginning Balance Total Operating Expenses Total Well and Tower Expenses Debt Service Utility Equipment Purchases (3% increase/yr) 'Total Expenses Balance after Expsenses Calculated Fixed Charges Water Use Residential Tier 1 Water Use Residential Tier 2 Water Use Residential Tier 3 Water Use Residential Tier 4 Water Use Residential Tier 5 Water Use Comm Ind Inst Tier 1 Water Use Comm Ind Inst Tier 2 Water Use Comm Ind Inst Tier 4 'Surcharge Single Family 5/8" ($/account) 'Surcharge Multi Family 5/8" ($/account) 'Surcharge 1" /account) Water Use Comm Ind Inst Tier 3 1 Water Use Comm Ind Inst Tier 2 Water Use Comm Ind Inst Tier 1 Water Use Residential Tier 5 Water Use Residential Tier 4 Neter Use Residential Tier 3 Neter Use Residential Tier 2 Neter Use Residential Tier 1 Neter Fixed Charge /account/quarter) Residential Connections Commercial Connections nstitutional/Industrial Connections Business Park/Air Cargo Connections )escription Nater Demand (MG) percent of System Expansion 41 1 1 4A 1 fA es 40 0 co N r 4 p j N N cpp N 5 t0 p V N A O W 4 to fR f!1 fA _I�O OD o O Napo c7 cpa� W 00 (J1 p W Up O 1 1 O O 1.02 8.90 5,817 145 42 0 2006 Actual 944.07 238,674.00 4D 1 25,872.00 238,674.00 196,961.60 8,010.40 7,830.00 I N N 40 N 44 49 EA fA 40 60 64 44 4/3 69 En 1.02 8.90 5,890 145 42 0 2007 Actual 937.54 1.2% 1 488,498.40 4A 32,032.00 247,824.40 200,405.92 8,150.48 7,236.00 W H; O g V O V y CO V Nf9 p 0 N W O W j W t3 ti 1.02 8.90 1 5,993 134 52 0 2008 Actual 903.00 1.7% 739,698.71 w 1 32,032.00 253,200.31 205,416.07 8,354.24 7,398.00 49 41 N i m N di d 0 0 CO 0 1.02 1 8.90 1 6,143 137 52 0 2009 Bud 925.33 2.5% 999,021.28 49 32,648.00 259,322.57 210,551.47 8,563.10 7,560.00 CA N H N N W C �1 �6 N W 8 1• S N O 3 e A W O 24,318.00 16,791.00 18,500.00 21,200.00 1,325,122.26 2,750 899.54 191,377.74 -6.50% 49 GO 03 ift 41 H 44 49 N 44 40 69 N 40 04 N t p 63 NN V CO -4 O 01 P p D∎ o O O (0 Cp 01 m co N W O CD V W C A p W O.)1 0 i W 0pp I O N A N W ODD N 8 p p 1.601 1.30 1 3.00 1.05 2.00 1 1. 1.30 1 1.05 1 10.00 O N 8 CA 2010 948.38 2.5% 1 1,264,091.71 40 32.648.00 285,070.43 215,815.26 8,777.18 7,830.00 41 N di N .pP y Eo o Si N- +4 m pp O a W 4 O 26,650.80 18,406.08 18,625.00 21,200.00 1,448,049.22 2,267 778.76 483,120.78 17.56% 40 FA 41 49 40 N 44 49 N 60 40 40 49 W 63 �1 pp Aa V N O t g V O A S oD A pp 7 N 7 p b (:A W p A W W O11 co p S A N 4 N A O CD A INl1 S O O 1.71 1 1. 39 1 3.21 1.12 2.14 1 1.71 1 1.39 1 1.12 1 10.70 1 t o O W P N e9 P 2011 972.10 2.5% 1 1,541,277.76 0 1 33,264.00 277,186.05 226,606.02 9,216.03 8,100.00 j 69 N FA N 1 Q C) -3 p NJ1 m 0 6D CO O 29,416.80 20,310.24 18,750.00 21,600.00 1,620,908.82 1,485,537.58 782,241.18 34.49% fH fA fA G fA 4 4A fA d1 EA fA fA 60 Pp i� 1 a V r 0 A C ci Ln V p P i n j 4 N (W OO S O A W b v 01 m A 1.83 1.491 3.43 1.20 2.29 1 1.83 1 1.49 1.20 1 11.45 1 O r g w 2012 1,020.13 4.9% j 1,830,524.92 4A 33,264.00 289,247.16 237,936.32 J 9,676.84 8,370.00 N 49 EA rCpp CD f N I tpnp Op co j 1. W O A W O 32,186.00 22,237.60 18,875.00 21,600.00 1,809,583.83 799,511.41 686,026.17 46.18% in 49 49 69 tit fA tO 69 40 in 40 49 69 in to tO in 40 40 in 69 N N m co 52 A i u6.�� N t�1p� N O p 2 1 O f0 W O N S o fJp Wp� W C V O O O O 0 J OD W O CJ o O 8 i 1.96 1.591 3.67 1.28 2.45 f 1.961 1 .59 1.28 1 12.25 7,115 155 54 0 2013 1,070.38 4.9% 1 2,133,037.73 4D O 49 GG,� pay OD 0 O 33,880.00 302,513.81 1 1 1 1 249,833.14 10,160.68 8.640.00 N N 41 49 41 44 N N 10 F. 8 N p FAA a 44 44 N 2 34 -.0 O V O O A N co O O W N O O O S 4A no 40 04 K en 40 40 CO 49 40 in 1 N A O1 p rn t Oo 1 N W 103 p 22 N p p X N p p 0, 0) CO w A A O N A W N O O O O O O C O O W O A N V O S O S O S C 2.62 8.80 6.80 13.50 154.00 6.25 100.00 799,511.41 1,408,270.00 376,200.00 815,000.00 5,800.00 2,605,270.00 (1,805,758.59) 402,995.67 81,883.11 458,724.72 355,026.04 358,612.16 152,290.63 68,924.70 45.494.00 2.10 1 44 co 4 3.93 1.37 40 N N 49 1 o 1.70 I 2.10 1.371 13.11 7,471 160 55 0 2014 1,123.25 4.9% l$ 2,448,819.24 44 W ((,,yy W p 33,880.00 315,783.50 1 I f f 262,32479 10,6$8.71 8.910.00 4A 40 N 4A 40 to fA N NN A N N N CO WW OD 8, IA OD W O (II O i N W A O S O O 4.3 in 44 60 4D 44 4A 44 44 N N in 44 40 in N W Eo 40 in ,pp N m p tV71 W m P p pp co t0 p 8 N 01 0 O O O O w O O N O V g8 O O O W C ee in to to to 49 to -J Y V 6A 49 44 N 34 N co in -3 V .43 40 A co W 7,845 165 55 0 2015 1,178.57 4.9% .S 2, [A O 4A WW P C 3 C 34 ,498.00 3 30,319.18 4 1 I 27 5,441,03 1 1,202.15 9.1Rn m 69 N 41 di EA 49 40 40 N O 4A �1 N M m �J O t O UD 0 0 0 A C� 1C p a' p F W V O O O O 44 49 49 EA in 41 40 44 4i 49 N 69 40 40 p1 p1 U N V OD W O O IV U1 W N OD O W OD W p �p CA V J W A N CCR 10 W NO 1g S O o V n p� o O O U O co UO p O W A 882388 T N 91 W O S S S S W O CNJ, S< 3.00 8.80 6.80 13.50 154.00 6.25 100.00 (55,208.23) 1,582,220.00 410,200.00 650,000.00 6,200.00 2,648,620.00 (2,703,828.23) 508,019.61 103,455.12 579,875.86 448,991.95 453,357.49 192,413.35 83,027.88 54.R,7 Rrl AO 69 N 44 to V W w O EA 44 t7+ N 44 N 4 y V 15.01 1 8,237 170 58 0 u 1 J 3,124,052.76 fA P CA 4 W 4 O C C J (J O f 34,496.00 344,921.34 289,213.08 11,762.25 3 o 4..n nn 4A N N 40 40 4N in 40 p0pp N OW1 s NC� j O N N m N 6 N J fJ (V� N CJ 1 CJ1 p O (V A p p co Om N W O O A O 40 69 40 49 40 49 4A 4M N 40 in 60 60 N 40 49 W 49 to to O� N N N O O N N la W A W p V N V M N O W f0 A N 01 O m W CO m O A N m 1.3 S S O V p (J1 p O V N W C i 1 m O O O O O tyyD O co A C W (T O N: V Om W fVJ1 2 O S O S O J O N O O" N p O 69 p O p o 49 W 40 69 N g C N EA fA Q 1>• OD N W 49 W to 40 N N OD 1 CO fa p W O W N pp �N A cO CQ 3K OD NN O J ;J1 3,484,903.86 1 EA 4 ww U( U N C C O C 1 35,112.00 360,856.11 303,673.74 12,350.37 R o7)nnn 49 N W 4D E9 40 4A •t co tpp 1 C 00 O W N 0 1 0 1 t/1 Cf. .�1 co lo 71 Wp O ypap O,D Cppp 4 N O O W p 1 t N O a O ''01288888 41 00 EA 4A 44 in 40 4A N N 49 49 49 in 41 40 E9 49 in N W (.1 C N D N N N p pa V W O g W N p O l V N W N fCpa N N V pV� O O J N O (n O O O O A UD p� �I Q pp U p Q1 O p p p N O O A 0 W N N O W So O O O O N S N S O 69 W O 4A oo p O in 4A 6) W N O 44 EA N A in in Ut p W 8 in W W 60 an N N illA in O V a O V O t0 A W o O N 0,, 3,861,825.17 Y4 Eft 4 Jai 1 U 1 G D C 1 35,112.00 376,92731 318,857.43 12,967.89 4 0 oon nn 4A N 40 69 41 49 40 44 N U 01 Al W O O N N CO 00 C)1 O m o O O 74 N e co V W O O W iJ 41 4D 41 49 41 EA 40 N N 4A 69 40 40 41 40 4E 40 41 N 0 V V p� C W N A C o w W OD N CO o Oo U1 V 6 6 0 N 01 V C. U1 IV O p N f0 c.4 •00 C 0 p O p O p O OD p O A 0 O A N O A v O O O O O N O p 49 co O 49 0 p3 U O 44 ,W 1 10 V 44 N 44 N 4a c0 O 41 4A 60 (n W N 64 O 10 V 4A 4A A CD N O W CCT 44 OD O V Q p U1 N O 1 4,256,222.751 A A 6 T C V n V 3 C 35,728.00 394,404.58 334,800.30 13,616.28 in "An nn 44 N 41 E9 49 44 44 EA A W A 0 Cp t0 N A jI co V W CD N 60 co V O N na V t V m N r O p O C9 N AA O C O D S S 01 0 a° 49 49 49 49 49 40 4A 49 41 40 40 H 4i 41 49 41 44 EA N N N (C,��1 p V N O N N O O O l7D O o O 0/ W V 6D 01 V W W V O 0o O CO p U p 1 (00 .34 V A U p1 O O A N Al p O p Ol O N !.v O O4 p QU O p 0 0 p O p O 00 p O W .P (U 0 A v A m S O V O S I O O V S O O O 40 pp O 40 QC O 49 W W 44 4A W O 4A N V 49 N So O 60 EA W W 44 69 W N W V 60 N O V P W N g 8 O N 0. A A N o O v N A C; O i0 tri J g N A W N O N 'CO J Si N A W N o (0 NW J 8 A W N 8 V) [n V 61 N A W N 0 10 0' V W 0 A W N 0 R. AGENDA ITEM: Sewer Utility Rates AGENDA SECTION: New Business PREPARED BY: Andrew J. Brotzler, PE, City Engineer AGENDA NO. 7b. ATTACHMENTS: Sewer Rate Analysis Spreadsheet; 2007 Memorandum; 2 Meter Credit Calculation; Sewer Rate Comparison APPROVED BY: RECOMMENDED ACTION: 1) Motion to Recommend City Council Approval of Sewer Utility Rates for Scenario #1 and Continue Allowing 2 Water Meters for Irrigation. -OR- 2) Motion to Recommend City Council Approval of Sewer Utility Rates for Scenario #2 and Discontinue the Use of 2 Water Meters for Irrigation. -OR- 3) Motion to Table Item to June 8, 2009 Regular Utility Commission Meeting. 4 ROSEMOUNT UTILITY COMMISSION Utility Commission Meeting: May 11, 2009 EXECUTIVE SUMMARY BACKGROUND: At the April 13, 2009 Utility Commission meeting, the Utility Commission recommended for Council approval a tiered water rate structure that satisfies the Minnesota Department of Natural Resources (DNR) requirement that all public water suppliers implement a water conservation rate structure by January 1, 2010. Since then, staff has been evaluating the sewer rates and the possible elimination of second water meters used for residential irrigation. As previously noted, in addition to reviewing the sanitary sewer rates, the City Council requested that the Commission review the continued use of ta water meters for irrigation by property owners. The attached August 7, 2007 memorandum to City Council provides background information on the City's current practice of billing for sewer service. At this time, 670 residential 2' meters are installed within the City. For the review of sanitary sewer utility rates, two scenarios have been prepared for review and consideration by the Commission. Scenario #1 Continue to allow 2 water meters For this scenario, the basis of billing for sewer service would remain unchanged. The current basis of billing for sewer service is to bill sanitary sewer service for the volume of metered water consumed by a property owner. As noted in the attached August 7, 2007 memorandum, the City G: \Utilities\ RATES \SewerRateStudyUC5- 11- 09.doc previously implemented a policy to allow property owners the option to install 2n water meters for outside use. As the water consumed through the 2 water meter does not contribute flow to the sanitary sewer system, property owners are not charged for sewer service on water consumed through the 2n water meter. As shown in the attached spreadsheet, based on projected expenditures, rate increases are proposed for 2010 to 2015. The proposed rate increases are as follows: 1999 2009 Rate $1.40/1,000 gallons 2010 Rate $1.50/1,000 gallons 2011 Rate $1.60/1,000 gallons 2012 Rate $1.70/1,000 gallons 2013 Rate $1.80/1,000 gallons 2014 Rate $1.85/1,000 gallons 2015 Rate $1.90/1,000 gallons Scenario #2 Discontinue 2 water meter use For this scenario, the basis of billing for sewer services would change to a winter quarter usage basis. By this billing basis, sewer service will be billed quarterly based on a minimum volume to be determined, or the actual winter quarter volume, whichever is greater. Other neighboring cities apply the following minimums for sewer billing: Eagan 3,000 gallons /quarter Lakeville 5,000 gallons /quarter Inver Grove Heights 6,000 gallons /quarter Farmington 10,000 gallons /quarter Burnsville 15,000 gallons /quarter (5,000 /month) Based on historical data, winter quarter water usage is approximately 13% of our overall annual water demand. The sewer usage revenue in line 55 of the spreadsheet is calculated using estimated winter quarter demand (line 3) x 4 quarters x rate (line 13). Depending on the minimum volume determined for billing, actual revenue will be greater than what is shown in the spreadsheet due to the increased volume billed to any users that fall below the minimum. As this basis of billing will result in less total volume of sewer flow being billed, the per thousand gallon rate will need to increase significantly to maintain consistent revenue for the sewer utility fund. The proposed per thousand gallon rates for 2010 to 2015 are as follows: 2010 Rate $2.00 /1,000 gallons 2011 Rate $2.05/1,000 gallons 2012 Rate $2.10/1,000 gallons 2013 Rate $2.20/1,000 gallons 2014 Rate $2.25/1,000 gallons 2015 Rate $2.30/1,000 gallons While Scenario #2 results in the need for higher per thousand gallon rates, it should be noted that over the course of a year, the total volume billed for the average customer will be less than the 2 current billing practice. The one other matter that has been considered with Scenario #2 is the expenditure by property owners to install 2nd water meters. Based on average numbers, staff has assumed that within three years from installation, a property owner has recovered their cost for installing the 2n water meter with saved costs on sewer service charges. Therefore, for customers who have purchased and installed a 2n water meter in 2007, 2008 or 2009, a pro -rated credit of $45,000 has been calculated. The basis for calculating this credit is shown in the attached spreadsheet. The model indicates the rates that would be necessary in each scenario to maintain a fund balance of approximately $2.4 million through 2020. The largest variable in the model is the amount payable to the Met Council for sewer service charges (line 30). It is difficult to predict the rates that the City will be charged by the Met Council because their rates are based on total volume as measured from July 1 through the following June 30 each year. To compensate for this unknown, our model includes a 6% increase per year, beginning in 2010. A summary of the proposed rates and effect for the average user is shown on the attached sheet. This model assumes the same demands and residential growth as the Water Rate Analysis model. SUMMARY: Staff will review the proposed sewer utility rates with the Utility Commission. The Commission may consider the following options: 1. Recommend City Council approval of sewer utility rates for Scenario #1 for $1.50/1,000 gallons and continue allowing 2nd water meters for irrigation. 2. Recommend City Council approval of sewer utility rates for Scenario #2 for $2.00/1,000 gallons based on a minimum volume or winter quarter usage, whichever is greater, and discontinue the use of 2' water meters for irrigation. 3. Table item to June 8, 2009 Regular Utility Commission Meeting and provide direction to staff. 3 I I Sanitary Sewer Rate Analysis City of Rosemount, MN City Acct. Description 2006 Actual 2007 Actual 2008 Actual 2009 Budgeted 2010 2011 2012 2013 2014 2015 2018 2017 2018 2019 2020 Water Demand (MG) 944.07 937.54 910.00 932.51 955.71 979.63 1028.04 1078.67 1131.95 1187.70 1246.35 1307.74 1372.31 1439.92 1511.02 Q1 Water Demand (MG) -13% of total demand) 133.19 121.14 120.49 121.23 124.24 127.35 133.65 140.23 147.15 154.40 182.03 170.01 178.40 187.19 196.43 Projected Sanitary Sewer Flows (MG)' 435.8 472.50 462.80 482.60 494.61 508.99 532.04 558.24 585.82 614.67 645.02 678.79 710.20 745.19 781.98 Demands and Percent of System Expansion 2.5% 1.2% 1.7% 2. 2.5% 2.5% 4.9% 4.9% 4.9% 4.9% 4.9% 9 Family 4.9% ,623 ,054 ,50 4.9% Connections Residential Single Famil Connections 5,800 5,873 5,975 8,124 6,277 6,434 6,756 7094 7,448 7,821 8,212 8,623 9,054 9,507 9,982 Commercial Connections 145 145 134 137 140 145 150 155 160 165 170 175 180 185 190 I nstitutional /Industrial Connections 42 42 52 52 53 Business Park/Air Cargo Connections 0 0 0 0 0 0 0 0 55 0 0 0 57 0 0 0 Projected Rates Sanitary Sewer Fixed Charge ($/accounttquarter) 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 Scenario #1 rates 1.40 1.40 1.40 1.40 1.50 1.60 1.70 1.80 1.85 1.90 1.90 1.90 1.95 1.95 1.95 Scenario #2 rates 1.40 1.40 1.40 1.40 2.00 2.05 2.10 2.20 2.25 2.30 2.35 2.40 2.45 2.50 2.55 602 49450 Beginning Balance Scenario #1 2,492,429.88 2,420,807.08 2,348,000.97 2,282,840.70 2,270,276.53 2,314,057.29 2,378,734.65 2,463,347.60 2,523,859.68 2,466,524.48 2,420,421.86 2,333,103.22 603 49450 Beginning Balance Scenario #2 2,492,429.88 2,420,807.08 2,370,576.87 2,335,943.47 2,311,404.70 2,325,533.47 2,349,007.73 2,381,741.77 2,424,106.93 2,385,812.49 2,349,700.30 2,314,794.73 100's Salaries and Benefits (8 (add 1 pos. in 2017) 391,992.67 407566.22 395,806.44 433,600.00 468,300.00 505,800.00 546,300.00 590,100.00 637,400.00 688,400.00 743,500.00 893,000.00 964,500.00 1,041,700.00 1,125,100.00 200's Materials and Equipment 5,840.37 12,008.80 7,617.98 11,800.00 12,100.00 12,500.00 12,900.00 13,600.00 14,300.00 15,100.00 15,900.00 16,70000 17,600.00 18,500.00 19,500.00 300's Communications, Computer, Engineering, Prof. Services 64,503.92 61,656.62 67,244.33 73,800.00 75,700.00 77,600.00 79,600.00 83,600.00 87,800.00 92,200.00 96,800.00 101,60000 106,700.00 112,000.00 117,600.00 400's Other 2,360.66 4,787.64 1,206.82 5,700.00 5,900.00 6,100.00 6,300.00 6,700.00 7,100.00 7,500.00 7,900.00 8,300.00 8,800.00 9,300.00 9,800.00 521.00 Building and Other Structures 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 10 10,000.00 10,000.00 10,000.00 530.01 Misc Improvements 5,058.80 433.84 10,000.00 10,300.00 10,600.00 10,900.00 11,500.00 12,100.00 12,700.00 13,40000 14,100.00 14,800.00 15,60000 16,400.00 530.02 Misc Improvements/Repairs 4,538.16 530.03 CRP (3% increase /yr) 76,920.00 200,614.75 150,000.00 154 159,200.00 164,000.00 169,000.00 174,100.00 179 184,800.00 190,400.00 196,200.00 202,100.00 208,200.00 530.04 530.08 Improvements Other than Bldgs. 4,851.03 60,486.72 540.00 Heavy Machinery 2,869.43 560.00 Fumiture and Fixtures 500.00 600.00 700.00 80000 900.00 1,000.00 1,100.00 1,200.00 1,300.00 1,400.00 1,500.00 1,600.00 570.00 Office Equipment 500.00 500.00 600.00 700.00 800.00 900.00 1,000.00 1 1,200.00 1 1,400.00 1 1 602.00 Sewer Service Charges (6% increase/yr) 672,585.24 721,350.36 785,282.76 846,622.80 897,500.00 951,400.00 1,008,500.00 1,069,100.00 1,133,300.00 1,201,300.00 1,273,400.00 1,349,900.00 1,430,900.00 1,516,800.00 1,607,900.00 611.00 Interest on Lease Payments 4,696.79 4,431.63 4,153.21 Equipment Replacement 30,000.00 30,000.00 30,000.00 30,000.00 30,000.00 30,000.00 30 30,000.00 30,000 00 30,000.00 Lift Station #1 (ex. Electrical) 1,887.86 1,038.18 8,731.28 2,200.00 2,300.00 2,400.00 2,500.00 2,600.00 2,700.00 2,800.00 2,900.00 3,000.00 3,100.00 3,200.00 3,300.00 Lift Station #7 (ex. Electrical) 1,752.94 2,398.78 5,249.97 2,200.00 2,300.00 2,400.00 2,500.00 2,600.00 2,700.00 2,800.00 2,900.00 3,000.00 3,100.00 3,200.00 3,300.00 Lift Station #3 (ex. Electrical) 9,453.31 3,043.75 11,381.76 6,400.00 6,600.00 6,800.00 7,100.00 7,400.00 7,700.00 8,000.00 8,300.00 8,600.00 8,900.00 9,200.00 9,500.00 Lift Station #4 (ex. Electrical) 2,852.43 3,402.50 6,425.07 6,400.00 6,600.00 6,800.00 7,100.00 7,400.00 7,700.00 8,000.00 8,300.00 8,600.00 8,900.00 9,200.00 9,500.00 Lift Station #5 (ex. Electrical) 6,094.64 20,338.45 6,664.02 6,400.00 6,600.00 6,300.00 7,100.00 7,400.00 7,700.00 8,000.00 8,300.00 8,600.00 8,900.00 9,200.00 9,500.00 Lift Station #6 (ex. Electrical) 6,933.63 1,486.84 7,592.59 2,200.00 2,300.00 2,400.00 2,500.00 2,600.00 2,700.00 2,800.00 2,900.00 3,000.00 3,10000 3,200.00 3,300.00 LiftStation#9 447.26 1,276.46 1,014.60 1,900.00 2,000.00 2,100.00 2,200.00 2,300.00 2,400.00 2,500.00 2,600.00 2,700.00 2,800.00 2,900.00 3,000.00 LiftStation 1,224.23 718.49 598.70 1,900.00 2,000.00 2,100.00 2,200.00 2,300.00 2,400.00 2,500.00 2,60000 2,700.00 2,800.00 2,90000 3,000.00 Lift Station #10 1,221.69 355.71 1,900.00 2,000.00 2,100.00 2,200.00 2,300.00 2 2,500.00 2,600.00 2 2,800.00 2,900.00 3,000.00 Total Expenses 1,262,304.57 1,512,886.68 1,309,759.08 1,574,022.80 1,698,200.00 1,798,500.00 1,905,500.00 2,022,300.00 2,146,500.00 2,278,700.00 2,419,500.00 2,659,500.00 2,826,700.00 3,004,900.00 3,165,100.00 Fixed Charges 478,960.00 484,800.00 492,880.00 505,070.00 517,638.75 530,593.72 556 584,235.97 613 643 675,050.68 708 743,270.18 779 818,391.97 Sewer Use Charges (-65% of water demand billed) 817,018.78 858,516.89 835,620.55 853,930.00 931,820.08 1,018,816.76 1,133,309.87 1,260,478.99 1 1466 1,539,24580 1615,062.23 1,739,406.05 1 1,915,213.88 Scenario #1 Miscellaneous Revenue -12% of usage revenue) 168,717.00 206,581.44 172,404.53 143,400.00 173,935.06 185,929.26 202,814.55 221,365.80 236 253,212.10 265,715.58 278,803.37 297,921.15 312,598.00 328,032.70 Keep 2nd Total Revenues 1,464,695.78 1,549,898.33 1,500,905.08 1,502,400.00 1,623,393.89 1,735,339.73 1,892,935.83 2,066,080.76 2,211,177.35 2,363,312.95 2,480,012.06 2,602,164.82 2,780,597.38 2,917,581.37 3,061,638.55 Water Meters Balance after Revenues (Year End) 2,420,807.08 2,346,000.97 2,282,340.70 2,270,276.53 2,314,057.29 2,378,734.65 2,463,347.60 2,523,859.66 2,466,524.48 2,420,421.86 2,333,103.22 2,229,641.78 Balance change (71,622.80) (74,806.11) (63,160.27) (12,564.17) 43,780.76 64,877.35 84,612.95 60,512.06 (57,335.18) (46,102.62) (87,318.63) (103,461.45) change -2.87% 3.09% 2.69% -0.55% 1.93% 2.79% 3.56% 2.46% -2.27% -1.87% -3.61% -4.43% Fixed Charges 478,960.00 484,800.00 492,880.00 505,070.00 517,638.75 530,593.72 556,811.40 584,235.97 613,091.77 643,286.36 675,050.38 708,299.21 743,270.18 779,885.68 818,391.97 Sewer Use Charges (billed for Q1 water usage x 4) 817,018.78 858,516.89 835,620.55 853,930.00 993,941.42 1,044,287.18 1,122,618.27 1,234,004.00 1,324,385.24 1,420,494.03 1,523,043.21 1,632,062.89 1,748,326.09 1,871,895.05 2,003,608.37 Miscellaneous Revenue (-12% of usage revenue) 168,717.00 206,581.44 172,404.53 143,400.00 181,389.62 188,985.71 201,531.56 218,188.80 232,497.24 247,653.65 263,771 280,843.45 298,991.55 318,213.69 338,640.04 Scenario #2 One -time pro-rated credit for customers with 2nd meters installed in 2007 or later (45,000.00 Winter Quarter (45,000.00) Credit (Q1) Total Revenues 1,464,695.78 1,549,898.33 1,500,905.08 1,502,400.00 1,647,969.79 1,763,866.60 1,880,961.23 2,036,428.77 2,169,974.26 2,311,434.04 2,461,865,16 2,621,205.56 2,790,587.81 2,969,994.43 3,160,640.38 Balance after Revenues (Year End) 2,420,807.08 2,370,576.87 2,335,943.47 2,311,404.70 2,325,533.47 2,349,007.73 2,381,741.77 2,424,106.93 2,385,812.49 2,349,700.30 2,314,794.73 2,310,335.11 Balance change (71,622.80) (50,230.21) (10,057.50) 28,564.00 55,256.94 34,950.44 3,007.12 (39,240.67) (138,047.17) (116,824.18) (105,627.13) (22,768.12); change -2.87% 2.07% -0.43% 1.25% 2.43% 1.51% 0.13% -1.59% 5.47% 4.74% 4.36% -0.98% CD CD o cn co u l N O l O) J Oa s A s N+ O t 8 8 A W N A 8 l 8 J 8 A N C O to Oo J T 1 6 3 P W QI J co V1 A W IV W W 30 03 J CO CO A 4a N CD CD o cn co u l N O l O) J Oa s A s N+ O t 8 8 A W N A 8 l 8 J 8 A N C O to Oo J T 1 6 3 P W QI J co V1 A W IV W W 30 03 J CO CO A 4a N ROSEMOUNT PUBLIC WORKS DEPARTMENT M E M O R A N D U M To: Honorable Mayor and City Council Members Jamie Verbrugge, City Administrator From: Andy Brotzler, City Engineer ice" Jeff May, Finance Director Date: August 7, 2007 Re: 2 Water Meter vs. Sewer Credit Billing In the past year, there have been several inquiries about the city's sewer billing practices. As previously discussed, the city currently does not utilize a summer sewer credit for billing. Instead, property owners have the option to purchase and install a 2n water meter for outdoor use. With this 2n water meter, only water usage is billed and there is no sewer charge associated with the water usage. Prior to July 1994, the city billed sewer based on the winter quarter usage. The sewer rate was $1.85/1000 gallons. The city was regularly making adjustments for "snowbirds" who had no winter quarter usage and for "summer cabin people" who did not have usage in the summer but were billed for sewer based on the winter quarter usage. After July 1994, the city modified the sewer billing procedure. The winter sewer credit was eliminated and sewer billing was based on water billing. The sewer rate was reduced to $1.35 /1000 gallons. The city initiated a program for property owners to install 2n meters for outdoor usage to be billed for water only. The current sewer rate since April 1, 2000 is $1.40 /1000 gallons. The estimated cost for a 2n meter installation is as follows: o Permit $50.50 o 1" Meter $300.00 o Installation $300.00 (estimated cost that may vary) Should the city consider reinstating a summer sewer credit, several items will need to be considered. 1. As of July 1, 2007, 592 residential 2n meters have been installed. Two to six second meters are being purchased per week this year. If a summer sewer credit is H: \Utility Rates \080707.2nd Meter vs. Sewer Creditdoc reinstated, these 2n meters will no longer be of use and a credit to property owners may be considered. 2. Since October 1, 2006, the city has utilized cycle billing With cycle billing, there are variations in winter quarters that would need to be considered to establish a fair and equitable winter quarter sewer usage rate. 3. Should the city switch back to a summer sewer credit, it is anticipated that the per 1000 gallon sewer rate would need to increase to account for a decrease in total sewer usage billing. It would be difficult to predict any changes in rates until a program is implemented and a usage and billing history established. Attached for Council information are the results of a survey of surrounding communities with policies for sewer billing. Should Council want additional information or wish to discuss further, please notify staff and a discussion item will be prepared for a future Council work session. H: \Utility Rates \080707.2nd Meter vs. Sewer Creditdoc DO YOU SUPPLY OR CHARGE FOR DEDUCT /SECOND METERS Most commercial accounts and many multi family unit buidlings have purchased a separate meter for irrigation. Sewer is not charged on those accounts. Don't allow second meters in residential areas, only commercial. Generally don't let them have two meters, tell them they aren't being billed their summer consumption, it's based on winter usage. New residents are set at 20,000. Commercial and housing associations that have second meters are charged for the meter based on our fee schedule. Not answered. IF NO, SEWER RATE HOW BASED Base charge per month $5.85; Billed actual up to winter quarter. Winter quarter based on Jan March. Rates for 2007 usage: 0- 10,000 1.79; 11- 15,000 @1.90; 16- 35,000 @2.02; 36,000 —+2.27 Sewer lock based on winter quarter. The minimum use is 15 (lock). If they use less than 15 they would pay Tess. Based on winter consumption or the current quarter, whichever is lower. Set residential on winter quarter water usage and set that dollar charge for the following year. IF YES, BASIS PROVIDE SPRINKLER (SUMMER) CREDIT? Z ON ON ON Z A110 Aallen shay alllnsuun8 c co m W c o a c E m ti s6ugseH G:\2006 Sewer Water Rate Study\RESULTS-SanitarySewerSurvey.xls SURVEY FOR SEWER BILLING DO YOU SUPPLY OR CHARGE FOR DEDUCT /SECOND METERS There would be a charge for additional meters. They need to purchase all meters. Don't supply meters, St. Paul Water supplies water and meters to Mendota Heights. If they want the savings of a water only meter, they pay upfront for the meter and installation. IF NO, SEWER RATE HOW BASED Based on "winter quarter" water consumption. Minimum of $21.96 up to 6,000 gallons. Over 6,000 is $2.77/1000. Multi- family /mobile homes and commercial are at $7.32 per unit per month up to 2,000 gallons then $2.77/1000 after. Residential rate based on winter usage. Commercial can have deduct meters, but need to send in their readings by a due date. Rates $35 per quarter /residential usage 20 or less (100cft), above 20 is $1.45/100cft. Commercial is $1.45/100cft and a quarterly charge for meter size. IF YES, BASIS Residential based on winter quarter or whichever is Tess. Rate is $2.44/1000 $3.20 base on the consumption from inside water meter minimum of 5,000 gallons. PROVIDE SPRINKLER (SUMMER) CREDIT? 0 cn z ON l £L1D Inver G ro v e Heicihts 0 Y co w a 2 03 0 v ca) c Northfield N DO YOU SUPPLY OR CHARGE FOR DEDUCT /SECOND METERS Sprinkler meters are separate for commercial users. We do not allow deduct meters. Don't provide meters. Go through mechanical contractor to install. IF NO, SEWER RATE HOW BASED Residential and churches rates are set on actual winter quarter consumption for the year.Minimum 5,000 is $15.60, above is $3.42/1,000 I SISVB `S3A �I Commercial customers provide monthly readings of their deduct meter. Bill based on 2.14/100cuf UV YVU PROVIDE SPRINKLER (SUMMER) CREDIT? oN SO A.ID South St. Paul West St. Paul SURVEY For SEWER BILLING 4 ROSEMOUNT PUBLIC WORKS 2875 145 Street West Rosemount, MN 55068 651 322 -2022 or fax 651 322 -2694 The City of Rosemount is conducting a survey of how our surrounding cities handle their sanitary sewer billing. Do you provide a sprinkler (summer) credit? No If yes, what is the basis for the credit? If no, what is your sewer rate and how is it based? J NNY) CET Tyr L� T Euzq /y Do you supply or charge for deduct or second meters for outdoor sprinklers and /or faucets? FYL. C:A'N1 ,;,r L. fJ-Q Prou iti n TC oc tpalcius '1l i r Depour ur C` 5Cv/\J Ali t Co CAk e f_z.. CoSr? (v 0Asi. ON OO c G: \2006 Sewer Water Rate Study Survey forSewerBiDingl2- 15- 06.doc SURVEY For SEWER BILLING 4 ROSEMOUNT The City of Rosemount is conducting a survey of how our surrounding cities handle their sanitary sewer billing. Do you provide a sprinkler (summer) credit? If yes, what is the basis for the credit? If no, what is your sewer rate and how is it based? Do you supply or charge for deduct or second meters for outdoor sprinklers and /or faucets? PUBLIC WORKS 2875 145t Street West Rosemount, MN 55068 651 322 -2022 or fax 651- 322 -2694 G: \2006 Sewer Water Rate Study \Sur eyforSewerBilling12-15- 06.doc Do you provide a sprinkler (summer) credit? SURVEY For SEWER BILLING If yes, what is the basis for the credit? If no, what is your sewer rate and how is it based? 4 ROSEMOUNT PUBLIC WORKS 2875 145t Street West Rosemount, MN 55068 651 322 -2022 or fax 651- 322 -2694 The City of Rosemount is conducting a survey of how our surrounding cities handle their sanitary sewer billing. 0 74 Do you supply or charge for deduct or second eters for outdoor sprinklers and /or faucets? w/e_ .44,4 0-74_ G: \2006 Sewer Water Rate Study\ SurveyforSewerBillingl2- 15- 06.doc OEC 1 'L" (AV of 53r,010041- The City of Rosemount is conducting a survey of how our surrounding cities handle their sari sewer billing. Do you provide a sprinkler (summer) credit? SURVEY For SEWER BILLING L 4 ROSEMOUNT PUBLIC WORKS 2875 145 Street West Rosemount, MN 55068 651 322 -2022 or fax 651 322 -2694 If yes, what is the basis for the credit? If no, what is your sewer rate and how is it based? _av- .1--- 3 C,t/0...0_- ,rv� a ecow Caws Do you supply or charge for deduct or second meters for outdoor sprinklers and /or faucets? Q` p cam v ctj t uki_414 6Nc\ acia_ 0 3- G: \2006 Sewer Water Rate Study SureeyforSewerBillingl2- 15-06.doc SURVEY For SEWER BILLING 4 ROSEMOUNT PUBLIC WORKS 2875 145 Street West Rosemount, MN 55068 651 322 -2022 or fax 651- 322 -2694 The City of Rosemount is conducting a survey of how our surrounding cities handle their sanitary sewer billing. Do you provide a sprinkler (summer) credit? w c) If yes, what is the basis for the credit? If no, what is your sewer rate and how is it based? Q-1- Sar■dren SA-wur �S S �C� (S'1 ti1'-t4 a. W CL -Ur rkS o Do you supply or charge for deduct or second meters for outdoor sprinklers and /or faucets? G: \2006 Sewer Water Rate Study SurceyforSewerBillingl2- 15- 06.doc SURVEY For SEWER BILLING ,/a (J (k4i e' /0 4 ROSEMOUNT 1' PUBLIC WORKS 2875 145 Street West Rosemount, MN 55068 651- 322 -2022 or fax 651- 322 -2694 The City of Rosemount is conducting a survey of how our surrounding cities handle their sanitary sewer billing. Do you provide a sprinkler (summer) credit? D If yes, what is the basis for the credit? If no, what is your sewer rate and how is it based? Do you supply or charge for deduct or second meters for outdoor sprinklers and /or faucets? `ire tV-12.- e p cy-uva \1 SS v-- 1— r'... S\ The City of Rosemount is conducting a survey of how our surrounding cities handle their sanitary sewer billing. G Do you provide a sprinkler (summer) credit? 16 r ((Ja..A_Q O/C/1 „au)) eri fiano c 3) 2� If yes, what is the basis for the credit? If no, what is your sewer rate and how is it based? k) P r 3 "35 i ce 211 IA) c c t o ka,ue_ c C �r C ©a e-) 1 l a.I. 2_0 A 4- S ea, 1 C a c_ F4- (1, tr (�A tb Erka` L S 1 G 0 r44 Q t11 V ku ,c<:,- N-k.sLi-L-r)Si Cc-ryvLA.,i2A. r p a ..0z 1 c Ldiu 14 6TAA.__ l'`°' al 4 AP 1 w Do you supply or charge for deduct or second meters for outdoor sprinklers and /or faucets? W O (1_0(4 SLR p Lt-- NALteru sl LL-Q--DoT 1--L_E o k_CW. -R a-A-1 Cb(-U2A17_,C41, SURVEY For SEWER BILLING 4 ROSEMOUNT /714#-/ PUBLIC WORKS 2875 145 Street West Rosemount, MN 55068 651 322 -2022 or fax 651 322 -2694 G: \2006 Sewer Water Rate Study Sun -eyforSewerBilling12- 15- 06.doc kiLk.L.Q Residential Water Rates Up to 1,000,000 More than 1,000,000 Minimum Bill Residential 5,000 Water Water Test 6.36 yr Meter Charge Storm Water 5,000 Sewer Total 1 Commercial/Irrigation Water Rates 1 Up to 1,000,000 More than 1,000,000 minimum 5,000 Discounted Water Rates 9,999,999 minimum 5,000 Heavy or Wet Industry Water Rates Up to 5,000,000 5,000,000 to 10,000,000 10,000,000 to 20,000,000 More than 20,000,000 minimum 5,000 1.10/1,000 $1.32/1,000 5% $5.50 $1.59 $7.00 $7.50 $15.60 $37.19 1.10/1,000 1.32/1,000 $5.50 $.55/1,000 $2.75 $.65/1,000 $.68/1,000 $.71/1,000 $.82/1,000 $3.25 All Users Penalties 2006 RATES Residential Sewer Rates min. 5,000 9,999,999 2007 2008 $15.60 $3.1211,000 $3.42/1.000 $3.72/1.000 Note: Sewer set on winter quarter for residential and churches. Commercial/Irrigation Sewer Rates min. 5,000 9,999,999 2007 2008 min. 5,000 9,999,999 2007 2008 $3,250.00 min. 5,000 $3,400.00 9,999,999 $7,1 00.00 2007 2008 $15.60 $3.12/1,000 $3.42/1,000 $3.72/1,000 Discounted Sewer Rates $13.15 $2.63/1,000 $2.93/1,000 $3.23/1,000 1 Heavy or Wet Industry Sewer Rates $14.65 $2.93/1,000 $3.23/1,000 $3.53/1,000 SURVEY For SEWER BILLING 4 ROSEMOUNT PUBLIC WORKS 2875 145t Street West Rosemount, MN 55068 651 322 -2022 or fax 651- 322 -2694 The City of Rosemount is conducting a survey of how our surrounding cities handle their sanitary sewer billing Do you provide a sprinkler (summer) credit? 1\.) C ecs Y 0 b Amine USN S If yes, what is the basis for the credit? If no, what is your sewer rate and how is it based? S td '�T 22LU CL t" or C1t -►Jv\ L VJIV 1'' ccu_ai( t Gk. t+ r Leac Do you supply or charge for deduct or second meters for outdoor sprinklers and /or faucets? e co No+ cd \ow ase me Ar5 G: \2006 Sewer Water Rate Study SurreyforSewerBilling12-15-06.doc DEC 1 0 20 SURVEY For SEWER BILLING ROSEMOUNT PUBLIC WORKS 2875 145 Street West Rosemount, MN 55068 651 322 -2022 or fax 651 322 -2694 The City of Rosemount is conducting a survey of how our surrounding cities handle their sanitary sewer billing. Do you provide a sprinkler (summer) credit? ti- If yes, what is the basis for the credit? If no, what is your sewer rate and how is it based? COnWerc 9 0)- fUkou MOM read 'kSkjA, dui uf,4- 6a) 00 (41Lthtte.0/ (k, a Do you supply or charge for deduct or second meters for outdoor sprinklers and /or faucets? Actuk, iy\LefrviAAc;.a) Uoyt. e-f urt Shilk- R1V(Cd G: \2006 Sewer Water Rate Study Sun -eyforSewerBilling12- 15-06.doc LOS Installed Number of Meters Avg Cost Yrs of Benefit Avg Annual Savings Individual Rebate Total Rebate 2006 91 $625.20 3.5 $180.00 -$4.80 $0.00 2007 94 $623.59 2.5 $180.00 $173.59 $16,317.00 2008 68 $638.97 1.5 $180.00 $368.97 $25,090.00 2009 4 $652.25 1.0 $180.00 $472.25 $1,889.00 Average Cost $635.00 $43,296.00 2nd Meter Credit Calculation *Added cost of all 5/8" meters plus cost of all 1" meters, then divided by the total number of meters. **Average annual savings based on 2008 usage of 88,673,000 gallons. (88,673 x $1.40) 678 meters $183.10 G: \Utilities \RATES\Sewer Rates 5/8" Meter Cost 1" Meter Cost Avg Meter Cost* Permit Plumber Total 2006 $174.00 $290.00 $274.70 $50.50 $300.00 $625.20 2007 $185.00 $300.00 $273.09 $50.50 $300.00 $623.59 2008 $188.00 $302.00 $268.47 $70.50 $300.00 $638.97 2009 $197.00 $310.00 $281.75 $70.50 $300.00 $652.25 Average Cost $635.00 2nd Meter Credit Calculation *Added cost of all 5/8" meters plus cost of all 1" meters, then divided by the total number of meters. **Average annual savings based on 2008 usage of 88,673,000 gallons. (88,673 x $1.40) 678 meters $183.10 G: \Utilities \RATES\Sewer Rates Gallons Billed Quarter (1000s) 1 2008 Actual Keep 2nd Meter Change 1 14 $39.60 $41.00 3.5% 2 30 $62.00 $65.00 4.8% 3 42 $78.80 $83.00 5.3% 4 18 $45.20 $47.00 4.0% Total 104 $225.60 $236.00 4.6% Quarter Gallons Billed 2008 Actual (1000s) Winter Quarter Basis Change 1 14 $39.60 $48.00 21.2% 2 14 $62.00 $48.00 -22.6% 3 14 $78.80 $48.00 -39.1% I 4 1 14 $45.20 i $48.00 6.2% Total I 56 $225.60 $192.00 -14.9% Scenario #1 Scenario #2 Sewer Rate Comparison for 2010 Based on 2008 average quarterly usage (includes usage charges $20 fixed charge per quarter) G: \Utilities \RATES \Sewer Rates Excerpt from Approved April 13, 2009 Utility Commission Minutes 6b. Water Utility Rates City Engineer Brotzler refreshed the Commission on the February 18, 2009 meeting regarding the water utility rates. He pointed out the different scenarios for the tier rates beginning in 2010 that had changed from the previous meeting The table presented showing the rates of surrounding cities are for 2008 amounts and can't be totally compared because we know for sure that Eagan and Farmington don't have tiered rates at this point and we are also unsure if the other cities tiers are in compliance with what the DNR is expecting. We are also at a disadvantage of not knowing what other municipalities use their funds for. Finance Director May joined the meeting. The Debt Service won't show its full impact until 2016 if and when the water treatment plant is up and running by that time. The operating expenses allow for two additional employees in 2017. Mayor Droste feels that consumption will decrease if you raise rates and he doesn't feel this is taken into consideration in the years to come within the spreadsheet. It was noted that this matter has been discussed by staff and at this time there is no clear assumption to use. It was also noted that any decrease in use and therefore revenue will require a further increase in rates to cover projected expenses. The projection is anticipated to be a dynamic document that will be reviewed annually and considered for adjustment accordingly based on actual revenue and expenditure trends. Overall if we don't mow as much or do less maintaining on the ice rinks, the consumption of water the City uses would go down as would residential usage if we lead by example. With this, if we're successful in reducing consumption we may have to increase rates to cover cost of operating the system because the cost of operating will still be there. Mayor Droste asked how the City of Savage figures their per capita consumption. Staff will check into this. The City of Woodbury's rate changes were very publicized. Residents still used lots of water even though the rates were raised. Consumption depends a lot on the weather. Everyone agrees that continuing education on water conservation is the best game plan. Finance Director May wanted the Commissioners to know that the model is totally different than anything else the City has ever done. Whatever direction the City takes will be the base for the City continuing into the future. All agreed that the rates should be reviewed annually, but still go out the ten years based on what information is available. 1 Excerpt from Draft May 11, 2009 Utility Commission Minutes 7b. Sewer Utility Rates City Engineer Brotzler gave the Commission an overview of what staff had prepared for the sewer utility rates. He credited Chris Watson, the City's Management Analyst, for the work that the Commission was looking at. Scenario #1 raised rates ten cents per year starting from what we currently charge at $1.40 through 2013, then it went up five cents every year through 2015 and would not change the use of the second water meter. Scenario #2 is a substantially higher rate starting at $2.05 going up five cents every year however using a winter quarter usage basis, but eliminating the second water meter. No matter which scenario the Commission picks they have to keep in mind the City has to maintain a fund balance that will pay Met Council and the rest of the operating budget. Low water users and residents not around to establish their winter quarter would have to be considered when establishing a minimum. Commissioner Harmsen didn't feel Scenario #1 would promote conservation. Finance Director May reminded the Commission this is the sewer, not the water that is the topic. The City has to provide a fair and equitable way to provide sewer service. Back 15 years ago the Commission thought this was an innovative way to lower the sewer cost, at which time was $1.85 per thousand gallons. A second meter is a personal choice and our City is unique in presenting this concept, that's one of the reasons we've been able to maintain our rate for the past 10 years. The City doesn't require second meters; residents make their own personal choice. Commissioner Schnieder feels the City should stay with Scenario #1 because it would be less of an impact on the residents and easier to educate them on conservation along with the new rates. MOTION by Harmsen to recommend City Council approval of Sewer Utility Rates for Scenario #1 and continue allowing 2nd water meters for irrigation. Second by Mulhern. Ayes: Schnieder, Harmsen, Mulhem. Nays: None. Motion carried. On a side note President Mulhern wanted to be clear if the City Council would like a round table discussion on why the Commission is making this recommendation they would be open to a meeting with them to explain their decision. 1 Excerpt of Minutes from the June 10, 2009 City Council Work Session Proceedings 2.C. Water and Sewer Utility Rates Finance Director May summarized the information provided within the staff report. Discussion was held regarding the proposed change in the water rates and sewer rates with regards to consumptions, second water meters, and the minimums in quarterly usage. Mayor Droste did not favor forcing residents to spend the money on installing a second meter. Mr. May explained the installation of a second meter is strictly voluntary. Council Member Shoe Corrigan questioned how to change resident habits to make them more cognizant of their usage. She asked the City Council what goals they want to accomplish with the policies. Council Member Weisensel questioned how the consumption should be changed and getting the message out to residents on water usage. Mayor Droste stated that if residents are using the water reasonably the amount of wells that need to be built could be reduced. Council Member Shoe Corrigan suggested increasing the fees for residents going over 30,000 gallons. Council Member Bills suggested doubling the fees for residents using more than 100,000 gallons. He also questioned the usage at homes in relation to their household income. Mayor Droste stated that making a dramatic change would not be reasonable. Council Member Shoe Corrigan suggested having a goal in place to help determine where the City wants to be over the next three years. The City Council agreed to educating the public and moving towards a tiered system but shared concerns about the unintended consequences for the City budget and water conservation. Mayor Droste stated that a second meter would not decrease consumption. Mr. May stated that if the alternative was to eliminate the second meter and move towards a winter usage credit you still will take away the idea of promoting water conservation. He stated that a tiered system would help promote water conservation. Mr. May pointed out that a lot of communities at this time do not have a tiered system in place to use as a comparison. He added that after the City is in compliance there will be other scenarios and cities we can compare the City to and review the rates annually. City Administrator Johnson explained why the City needs to have a 5% revenue increase within the rates. Council Member Weisensel stated that the public needs to be aware of the reasons for changing the rates. Mr. May stated that most residents will not notice a change in their rates until the third quarter of 2010. He stated that staff will make an honest effort to educate and inform the residents about the changes to the water billing rates. Discussion was also held regarding the plan for the residents who have already purchased a second meter. Mayor Droste stated that the City needs to consider the addition of a water treatment plant. Mr. Johnson explained that with the proposed rate structure and pay off of current bonds it was anticipated the facility would not be constructed until 2017. The majority of Council Members favored ending the use of the second meter. Council Members talked about emails they received from residents who currently utilise a second meter. If the City would go away from second meters communication of the prorated reimbursement will be needed. Council Member DeBettignies stated that the residents need to know that rates have not been increased for over 10 years. Communications strategies were discussed along with possible dates in August for a town hall meeting. The City Council will contact Mr. Johnson with their availability in August.