10/01/2007 Council Packet - Laserfiche WebLink

Home Search

• • Water Utility 4. Water Utility 13 1 Water Rates The City has requested a review of the various water rates /fees as part of this ■ study. The City currently has a Water Connection Fee, Water Meter Fee, and a Water Availability Charge in addition to its quarterly billing charges. • In general, the Water Availability Charge should be established to recover the • capital cost associated with providing the necessary infrastructure to make these ■ services available to the customer. These should include the cost of water supply, providing treatment capacity, and the cost of the distribution system. This insures that growth pays for the costs that result from that growth. There can be overriding public policy issues that require the City to charge less than • the actual capital costs incurred to provide the service. These include, but are ■ not limited to, the desire to encourage business and residential development, to keep charges competitive with neighboring communities, and to encourage new ■ customers to connect to the system for both economic and environmental reasons. However, it is important to remember that to the extent availability charges do not cover the costs associated with providing water services directly related to growth, these costs are paid for by the Water Utility's existing • customers through higher user rates. The City's current Water Availability Charge is shown in the table below. Per SAC Unit j Amount • $3,415 w The Availability Charge should include those portions of the existing assets that will benefit new customers together with any anticipated future capital ■ improvements constructed for the purpose of providing utility services to new customers. The capital improvements planned for the Water Utility are . related primarily to the proposed water treatment facility, including wells and trunk watermains. ■ Current assets to be included in the connection fee calculation are the net assets • of the utility. The net assets are determined as follows: 1 1 ■ Capital Assets - Accumulated depreciation - Outstanding debt (principal portion) - Contributed capital =Net Assets ■ Capital assets are the total assets of the utility at their acquisition cost. Accumulated depreciation is subtracted to reflect the reduction in the value of these assets due to their use by the utility. Outstanding debt is subtracted because this will be repaid from either future user fees or availability charges. • 3pringsted City of Lino Lakes, Minnesota. Water and Sewer Study