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Additionally, staff recommends that the Council re-examine these changes after receiving the 2006 CAFR to determine if an additional increase is necessary at that time to ensure that the Fund revenue is adequate. Sanitary Sewer Fund: The Sanitary Sewer Fund has not increased fees in at least 10 years. The fees collected for the Sanitary sewer fund are used to provide water treatment, conveyance of waste, and repair or replacement of sanitary sewer infrastructure. Currently, the Fund has a balance of $1,497,747. While this means that the fund has adequate cash on hand for ongoing projects and maintenance, it is prudent to have a modest increase occasionally to ensure that the city is covering operational costs, and is not compromising its bond rating. An adjustment to the quarterly fee for this service would make the fund more self- sustaining, better representing the cost for this service, and would bring Falcon Heights more into line with other communities in the North Metro. Our current fee is $35 every quarter for a residential household. The few commercial businesses in Falcon Heights are billed on usage based on water meter readings. The U of M St Paul Campus and the State Fair's sanitary sewer charges are based upon water meter readings. The rate is .010325 per cu/ft. Recommendation: We recommend that the Council consider raising the Sanitary Sewer fee 11.4% for homes and • commercial accounts (this amounts to approximately $4.00 per quarter for residential properties). Analysis Our fee structure is very low compared to our surrounding communities. Our costs continue to increase while the revenue remains static. We recommend revising our fee structure to help cover our annual operating costs, especially in the Storm Drainage Fund. We have enclosed examples of survey data from a consulting engineering firm named Advance Engineering and Environmental Services Incorporated. We participated in their survey and they shared the data with the cities that participated. Data from 2004 and 2005 is attached. In these surveys, Falcon Heights ranks near or at the bottom of the survey for cities in terms of costs for services. The recommendations in this staff report will still ensure that the City continues to place in the lowest third of the Metropolitan area for utility fees. ATTACHMENTS: • 2004 and 2005 Storm water and Wastewater Utility Rate Surveys • Estimated Statement of cash flows for Sanitary and Storm Drainage Funds ACTION REQUESTED: Increase storm water fee to $6.00 for residential customers and 60.4% for commercial customers; and raise sanitary sewer fees 11.4% for residential and commercial customers (approximately $4.00 per quarter for residential customers). 4 ~CHG02:40069922.v1 ~9/28/OS 11:33 AM