Management Report and Recommendations 12/31/1987

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City of Lino Lakes, Minnesota Management Report, Page 42 There are two basic factors which contribute to increased billings from the MWCC. The first is increased use of the system. The estimated increased usage for 1988 over 1987 for the City of Lino Lakes is 7.1 %. The second factor which increases the billings from MWCC is their increased cost to process gallonage. Their cost to process (per million gallons) increased from an estimated $901 to an estimated $919. This represents an increase of 2 %. The combination of these factors increased the City's estimated cost in 1988 by 9 %. As the system gains users, the increased usage part of the overall increase should be offset by the billings to new users. The per unit portion of the increase, however, must be borne in full by existing users or be subsidized by overall City operations. The City has no control over the billings from the MWCC for the sewer treatment costs. This operating expense comprises 67.5% of the 1987 customer billings for sewer service charges. The City must set rates at levels adequate to pay for the pass through costs from MWCC plus other City expenses. . In view of this arrangement with MWCC, the City's ability to exercise control over its sewer operations is limited. The City can be construed to be acting as an agent for the MWCC with regard to sanitary sewer opera- tions. The MWCC has approved a change in the district structure and will be converting rates and other operating procedures over the next several years. We recommend that the City monitor the effects of these changes and consider such changes on the City's sewer rates.