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515 Little Canada Road, Little Canada, MN 55117 -1600 (612) 484 -2177 / FAX: (612) 484 -4538 MEMORANDUM TO: Mayor Hanson & Members of the City Council FROM: Joel Hanson, City Administrator DATE: March 9, 1994 RE: 1994 Water and Sewer Rate Increases MA YOR Raymond G. Hanson COUNCIL Beverly Scalze Jim LaValle Steve Morelan Bob Pedersen ADMINISTRATOR Joel R. Hanson As noted in the agenda packet, the water fund is projecting a net loss totaling just under $19,000 for 1994. This is a result of an approximate 3% rate increase received from the City of St. Paul for water purchases. Staff is not recommending any increases in the water rates at this time. Our reasons for not doing so are two fold. The first is that 1993 was a very wet year that resulted in lower water consumption and a reduction in revenues. Under a year with more normal precipitation, revenues would be higher thereby offering the opportunity to eliminate the projected loss. The second is a potential rebate from the City of St. Paul caused by overcharges in 1991 and 1992. While this not fully resolved at this time, it is my opinion that the rebate could eliminate the deficit by itself. If the Council wants to ensure elimination of the deficit, an increase in the water service charge of $1 per SAC unit from $13.32 to $14.32 would accomplish that goal. However, staff is not recommending that option at this time. The sewer fund is projecting a loss of just under $60,000 for 1994. This is attributable to MWCC increases in charges for sewer treatment. That cost has increased by over $83,600 for 1994. The increase is based on the following factors: Rate increase of 3.5% accounting for $16,645. * Increase in estimated usage of 6.3% based on flow data. This accounts for $31,081. * Adjustment factor for 1992's final cost allocation accounting for $35,915. PAGE 17