03-12-08 Council Agenda - Laserfiche WebLink

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The 2008 Survey of Sewer Fees is attached as Exhibit B. The City's 2008 rates are comparable to the surrounding cities. WATER Attached is the revised 2008 Budget for the Water Utility Fund (Exhibit C). In 2007 we budgeted a net loss of $37,987 in the Water Fund. The estimated actual 2007 operations resulted in a loss of $15,340. This positive variance of $20,647 was essentially the result of a 7.4% increase in water usage over projected (attributable to dry summer conditions), less a 1.75% increase in unaccounted for water use. The 2008 water usage is projected at 4.32 % less than 2007 (assumes average summer conditions), with the unaccounted for water use projected to be 5.75% (2007 actual rate). The 2008 budgeted operations are expected to produce a loss of $20,822. The expected loss factors in the St. Paul Regional Water Services (SPRWS) rate increase of 15.2 cents per 1,000 gallons. The 2008 revenues include a proposed 16 -cent increase in the usage rate, which matches the SPRWS cost increase grossed up for unaccounted for water. Additionally there is a proposed 4.25% increase in the water service fee from $10.26 to $10.95. The increase in the water service fee offsets the inflationary increases in operating costs along with reducing the overall operating loss. These increases would result in a quarterly cost increase of $3.65 on an account averaging 20,000 gallons in usage (6.48% increase). The increases proposed for 2008 are not at the level to breakeven but are sufficient to keep the expected loss at a reasonable level. The 2008 Survey of Water Fees is attached as Exhibit D. The City's 2008 rates are comparable to the surrounding cities. GENERAL Information regarding late fee charges was included in the 2008 surveys. As you can see there are a number of surrounding cities that charge a late fee of 5% per quarter. Currently, the City of Little Canada charges a 10% penalty on water and sewer charges and 5% on trash services (late fee on trash charges limited by State to 5 %). The City collected $14,600 in late fees for Water and $13,600 for sewer in 2007. The 2008 Water and Sewer budgets include similar amounts for late fees. There are very little collection efforts that the City performs with regards to past due account since delinquent bills are simply certified to taxes. Therefore the amount received for late fees has a very high profit margin. Given the practices of some neighboring cities and the current economy the Council may want to consider the pros and cons of reducing late fees from 10% to 5 %. Staff is comfortable with reducing the late fee to 5 %. 2