03-12-1997 Council Agenda - Laserfiche WebLink

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cetkfr 29a74 C ((flaw 515 Little Canada Road, Little Canada, MN 55117 -1600 (612) 484 -2177 / FAX: (612) 484 -4538 MEMORANDUM TO: Mayor Fahey & Members of the City Council FROM: Joel R. Hanson, City Administrator DATE: March 7, 1997 RE: Water & Sewer Rates MAYOR Michael I. Fahey COUNCIL Beverly Scalze Jim LaValle Steve Morelan Bob Pedersen ADMINISTRATOR Joel R. Hanson In the 1997 budget process, I identified the fact that both the water and sewer funds were projecting net losses for the 1997 fiscal year. The Water Fund was projected to lose approximately $53,000 based on estimated revenues reflecting an average rainfall year. (Note that 1995 was a wet year and revenues were down whereas 1996 was a dry year and revenues were up. I have averaged the two of those years to arrive at my estimated revenue figure.) It has been four years since we have increased our water rates and it is probably time that some adjustment be made in order that we preserve the integrity of the fund. (You will note that the Water Fund balance has declined somewhat since 1991. See attached information.) To offset the projected deficit in the Water Fund, we would need a rate increase of approximately 6.3 %. This would require an increase of 11 cents per 1,000 gallons in both our summer and winter rates. (Winter rate is currently $1.71 per 1,000 and summer rate is $1.77 per 1,000) Based on surveys of neighboring communities, this rate is competitive given the fact that the water we provide is already softened. Our sewer budget projected a deficit of approximately $63,000. This is due to the increase in costs from Metropolitan Water Water Services Division of almost 25% over 1996. Given the fact that 1996 was a dry year, I would expect our costs to be reduced in 1998. Also, the Sewer Fund balances have continued to grow since 1991. Therefore, I feel we can absorb this increase in expenditures in the 1997 budget year based on the fact that we anticipate treatment costs to be less in 1998 and given the infiltration and inflow analysis study that is presently underway. Hopefully, this will result in a decrease in sewer treatment volumes in future years. Therefore, it is my recommendation that we increase our water rates by the amount indicated below: Page 36