03-14-2018 Council Packet - Laserfiche WebLink

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STAFF REPORT TO: Mayor Keis and Members of City Council FROM: Joel Hanson, City Administrator DATE: March 9, 2018 RE: Water, Sewer, and Refuse Rate Adjustments With first quarter utility bills going out by mid-April, we need to finalize our water, sewer, and refuse rates for 2018. Here is a summary of each component: Water Fund #601: The 2017 Budget for the Water Fund anticipated a net loss of $16,655. The projected actual result anticipates a gain of $10,468. The positive variance is largely attributable to higher water usage in 2017 versus previous years. For 2018, St Paul Regional Water Service (SPRWS) is increasing the monthly fixed fee component of our rate by $2,350 ($7,800 to $10,150 or 30%). They are also increasing their volume based rates to St. Paul residents by about 4.6%. However, the percentage of that rate that we pay is dropping from 65% to 60% due to the recent rate study that was completed. The net impact is our costs of purchasing water are declining slightly. Given the wet years we have experienced the past few years, our sales of water have been trending lower than expected. 2017 was the first year water usage actually increased in quite some time. In estimating our water usage, we use a three year average of our water purchases over that time. For 2018, we are projecting our use at 46,613,288 cubic feet of water, which is about the same amount we used in 2016. Because of the decline of water usage over the past number of years and given potential ramifications the White Bear Lake lawsuit may have on water usage in the future, staff believes we should do a minimal rate increase to head off a future larger increase. Therefore, to avoid more dramatic increases in the future, staff is recommending an effective increase of 1.73% in our water rates for 2018. As a result, the winter rate would increase from $3.40 per 1000 gallons of water to $3.45 (1.47%). The summer period rate would increase from $3.51 per 1,000 gallons of water to $3.60 (2.56%). We are not recommending any change to the water service charge of $13.50 per unit. It should be noted that we are proposing a higher percentage increase in the summer rate to promote conservation. We are also recommending a daytime watering ban to avoid the excessive loss of water due to evaporation (see memo from the Public Works Director.) Finally, the budget will produce enough revenue to fund depreciation in a manner that ensures we can make debt service payments on the Public Works garage and address on-going needs associated with equipment and infrastructure needs.