02-04-13 Council Packet - Laserfiche WebLink

Home Search

Conclusions and Recommendations 47 City of Lino Lakes, Minnesota – Water and Sewer Rate Study Update 6. Conclusions and Recommendations This study was undertaken to review a nd analyze the City’s Water and Sewer Funds to determine the appropriate rate structure needed to pay for anticipated operating expenditures, to provide for anticipated capital improvements, to provide operating cash flow, and to ensure an adequate level of cash reserves. In addition, water rates recommended were set to achieve water demand management as required by Minnesota Statutes. The following conclusions were determin ed as a result of this study and the financial projections prepared for the years 2012 through 2022. 1. The Water and Sewer Fund’s histor y shows revenues and expenditures, have remained fairly stable over tim e. Operating income in the Water Fund is projected to decrease from $324,865 in 2009 to $217,713 in 2012. Operating income in the Sewer Fund is projected to decline more rapidly from $70,057 in 2009 to ($56,275) in 2012, thereby not funding depreciation. 2. The City should maintain a minimum cash balance in each Utility fund of at least three months of anticipated operating expenses and one year’s debt service at the end of each year. Current and projected cash levels support this recommendation 3. The current Water Availability/Trunk Charge of $3,854 is adequate to fund projected capital costs through our planning period of 2022. However, should growth be expedited and the need for the new water treatment plant currently projected for 2025 be moved up, we recommend the City revisit this charge to in clude the capital and associated borrowing costs of this large capital expenditure. 4. Water user rates should be set to encourage demand reduction as well as provide for simplicity in understanding. After analyzing current and historical consumption patterns, we have provided four scenarios for water rates. They are: Scenario 1 – Keep Current Block Structure and Adjust Rates Residential Rates 2012 Rate per 1,000 Gallons 2013 Rate per 1,000 Gallons Flat Fee of $10 per Residential Equivalent Unit (REU) Same 0 - 20,000 gallons $1.80 $1.84 20,001 – 40,000 gallons $2.00 $2.04 40,001 – 80,000 gallons $2.50 $2.55 80,001 – 120,000 gallons $3.00 $3.06 Over 120,000 gallons $3.50 $3.57 Non-Residential Rates 2012 Rate per 1,000 Gallons 2013 Rate per 1,000 Gallons Flat Fee of $10 per Residential Equivalent Unit (REU) Same 0 - 20,000 gallons $1.80 $1.84 20,001 – 40,000 gallons $2.00 $2.04 Over 40,000 gallons $2.25 $2.30