03-10-2004 Council Agenda - Laserfiche WebLink

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These factors combined with the significant flow increases over the last two years and escalating Met Council rates have severely impacted the Sewer Fund results. Met Council rates have increased by 3.25 %, 5.7% and 4.2% over the last three years. As mentioned in the final budget memo for 2004 the City Staff and Engineer will be investigating whether the increase in flows is due to inflow or infiltration. Metering of these flows is scheduled to coincide with spring run -off. A review of the sewer rate survey would indicate an average range of sewer flat rates of approximately $45 to $50 and those which bill based on usage alone have average bills ranging from $45 to $66. The City's minimum charge has been held constant at $37.50 since 1995. See attached rate history. Given the distribution of accounts, it appear it will be necessary to raise the amount of the minimum charge to generate the revenues we need. The combination of minimum increases and rate enhancements illustrated below would produce additional revenues estimated as follows: Option A Minimum $41.25 Rate $ 2.75 Estimated Additional Revenues = $67,640 Option B Minimum $45.00 Rate $ 2.75 Estimated Additional Revenues = $105,380 Option C Minimum $45.00 Rate $ 3.00 Estimated Additional Revenues = $134,750 Option D Minimum $50.00 Rate $ 3.00 Estimated Additional Revenues = $185,150 Given the rate survey and the projected level of fund losses, option B would be a reasonable choice. The Sewer Fund does expense approximately $90,000 in depreciation expense each year. Combining the additional revenues of $105,380 with non -cash depreciation would have the fund losing approximately $17,000 on a cash basis. With option C the fund would have cash basis income of $12,750. Option A is considered to produce insufficient revenues and Option D's rates are considered too high in comparison to other cities. F: \SheliyR \Budget 2004 \FfNAL MEMO RE WS RATES.doc