HomeMy WebLinkAbout20080407 - VIII-A-1VIII-A-1
MEMO
To: Honorable Mayor and City Council
From: Tom Montgomery
Date: March 31, 2008
Re: Annual Utility Rate Review
WATER RATES - CURRENT RATE: $1.55/1,000 GALLONS BASE RATE
$1.95/1,000 GALLONS SURCHARGE
RATE OVER WINTER
QUARTER USAGE
RECOMMENDED: $1.65/1,000 GALLONS BASE RATE
$2.05/1,000 GALLONS SURCHARGE
RATE OVER WINTER
QUARTER USAGE
I am recommending a $0.10 increase in water rates. Budget expenses are
projected to exceed estimated revenues by $170,000. Both the budget and revenue
numbers are estimates and last year, the Water Fund posted a positive year end cash flow
and has a healthy reserve. The proposed rate increase would cover about half of the
projected deficit, recognizing that although the Water Fund has a healthy reserve; funds
should not operate at a deficit. I would also note that this will be the first full year of
water treatment operations and there is no history to judge our treatment expense
estimates. Water rates were last raised in 2006 by $0.10 to help pay 25% of the annual
treatment plant construction debt.
WASTEWATER RATES - CURRENT RATE: $2.H5/1,000 GALLONS
RECOMMENDED $2.95/1,000 GALLONS
I am recommending a $0.10 per 1,000 gallon increase in wastewater rates to $2.95
per 1,000 gallons. At this rate, operating expenses are estimated to show a small surplus.
Sanitary sewer replacement costs over the past five years are depleting the Wastewater
Fund reserves, but after this year, no major sewer replacement projects are planned until
2011 or 2012.
WAC, SAC, & INTERCEPTOR SEWER CHARGES
Council adopted a resolution in 1993 that updated utility connection fees and
indexed these fees to the American City and County magazine construction cost index.
This index increased 2.6% last year. Accordingly, staff is recommending increasing the
connection fees as shown below. These connection fees are charged to new development
to fund expansions of the City's sewer and water system that are needed to support new
development. Examples of system expansion included new wells, water storage, and
trunk sewer and water mains.
Charges
WAC
City SAC
Interceptor Sewer
Current Rate
$2,540
$775
$400
Recommended
Rate
$2,605
$795
$410
COUNCIL ACTION REQUESTED
Council is requested to adopt the enclosed resolution that would:
• Increase the water rate to $1.65/1,000 gallons base rate and $2.05/1,000 gallons for
usage above winter quarter volumes.
• Increase the wastewater rate to $2.95/1,000 gallons
• increase WAC charge to $2,605
• increase SAC charge to $795
• increase Interceptor Sewer charge to $410
If adopted, the WAC, City SAC, and Interceptor Sewer Charge increases would
go into effect immediately for all new permit applications and fmal plat approvals. The
water and. wastewater rate increases would be implemented with the May billing.
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CITY OF HASTINGS
Dakota County, Minnesota
Resolution No.
RESOLUTION INCREASING THE WATER AND WASTEWATER COMMODITY RATES, THE WATER
ACCESS CHARGE, THE CrrY SEWER ACCESS CHARGE, AND THE INTERCEPTOR SEWER CHARGE
WHEREAS, the City of Hastings presently owns and operates the municipal water system and
the sanitary sewer collection system and sells this service to industrial, commercial, and
residential consumers, and
WHEREAS, the City of Hastings has completed an analysis of the charges of providing said
services, and
WHEREAS, the City of Hastings has determined that it is necessary to increase the cost of said
services to prevent the City utilities from operating at a loss.
NOW, THEREFORE BE IT RESOLVED SY THE CITY COUNCIL OF THE CITY OF
HASTINGS AS FOLLOWS;
i. The existing water commodity rate of $1.55/i,ooo gallons base rate and $1.95(i,ooo gallons
rate for usage above the winter quarter base usage shall be increased to $i.65/i,ooo gallons
and $2.05/1,000 gallons respectively, effective with the May 2008 billing.
2. The existing wastewater commodity rate of $2.85/i,ooo gallons shall be increased to
$2.95/i,ooo gallons effective with the May 2008 billing.
3. The existing Water Access Charge (WAC) shall be increased from $2, 540 to $2,605 effective
upon the adoption of this resolution.
4. The existing City Sewer Access Charge (SAC) shall be increased from $775 to $795 effective
upon the adoption of this resolution.
5. The existing Interceptor Sewer Charge shall be increased from $400 to $410 effective upon
the adoption of this resolution.
ADOPTED BY THE CITY COUNCIL OF HASTINGS, MINNESOTA, THIS ~'TH DAY OF
APRIL, 2008.
Ayes:
Nays:
Pau! J. Hicks, Mayor
ATTEST:
Melanie Mesko Lee, City Clerk
(Seal)