03-07-11 Council Minutes - Laserfiche WebLink

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MINUTES CITY COUNCIL MARCH 7, 2011 system, but pointed out that it will not be possible to eliminate inflow entirely. The Finance Director then reviewed the 2011 Water Utility Fund Budget noting that the 2010 budget anticipated a net loss of $28,601, with estimated actual resulting in a loss of $36,890. The negative variance of $8,289 was comprised of a $14,595 improvement in gross margin on water sales, offset by a greater depreciation expense of $17,500 and a decrease in anticipated investment earnings of $4,250. The Director reported that the 2011 budgeted operations are expected to produce a loss of $22,761. This loss factors in an increase of 5.5% from St. Paul Regional Water Services (SPRWS). The Director indicated that the 2011 budget proposes a rate increase of 5.5% as well as a 5% increase in the water service fee from $12.00 to $12.60 per quarter. These increases result in an average quarterly cost increase of $3.70 for 20,000 gallons in usage. While the increases are not at a level to breakeven, they are sufficient to keep the expected loss at a reasonable level. The Director then reviewed a 2011 water fee survey of some metropolitan cities, noting that SPRWS's wholesales customers (of which Little Canada is one) are fairly close in the rates being charged. The City Administrator indicated that SPRWS is considering a tiered rate system to its wholesale customers. He noted that SPRWS has factored some costs financed by a $30 million bond issue into their rates which are not production costs. Little Canada does not feel it appropriate that SPRWS pass these costs on to its wholesale customers. Under a tiered structure, SPRWS would likely do a rate study which should ensure that Little Canada is paying predominantly for production costs. He further noted that the City is in discussions with St. Paul about being included in their meter change -out program. The St. Paul City Attorney is looking into these issues, and another meeting on the issue should be held soon. The Director then summarized the 2011 rates being proposed as follows comparing to 2010 rates. She noted that the overall percentage increase is 5.4% for water and 6.85% for sewer based on the average usage of 20,000 gallons. Sewer Minimum Sewer Use Rate Winter Rate Summer Rate Water Service Fee 3 2010 2011 $46.50 $50.00 $3.10 $3.25 $2.73 $2.88 $2.82 $2.98 $12.00 $12.60