2007-099 Council Resolution - Laserfiche WebLink

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• • AGENDA ITEM 2D STAFF ORIGINATOR Al Rolek MEETING DATE June 25, 2007 TOPIC Consider Resolution 07 -99 Authorizing a Utility Rate Study VOTE REQUIRED Simple Majority The city staff periodically reviews and suggests adjustments to the utility rates charged to customers for the water and sewer utilities. The last time rates were adjusted was in 2004. Utility rates are set based upon a number of factors. Among these are the cost of providing the service, or operations costs; the cost of extending the utility network, or infrastructure costs; financing and servicing of debt; and the cost of replacing worn facilities and systems, referred to as depreciation or replacement costs. Other considerations in setting rates are regulatory guidelines, conservation measures and rate comparisons with other area communities. A key element to be considered in establishing water rates is conservation of the resource. The city is currently in the process of completing a Water Emergency and Conservation Plan. This plan, required by the MN DNR, establishes methods for the city to conserve its water usage to the greatest degree possible and, importantly, plans future infrastructure needs, including sizing of trunk water mains, new wells, storage capacity and water treatment facilities. In addition, the plan establishes guidelines for residential consumption of water. A recommendation will be included in the plan to structure water rates in tiers to encourage water conservation. TKDA is also in the process of completing a feasibility study for water treatment facilities in the city. The measures included in the conservation plan are important to the sizing of the treatment facilities and, therefore, influence the cost of construction. In September, 2006, the city requested and received a proposal from Springsted, Inc. to conduct a comprehensive utility rate study. The proposal has recently been refreshed. The study would include reviewing current and background utility data, including historical financial information, volumes, capital improvements, debt service requirements, policies and practices, growth trends and reviewing engineering studies, including the recent conservation plan and water treatment feasibility study. Springsted then would evaluate the current data and consider future needs in developing a comprehensive report which would recommend and justify any future rate adjustments. It is necessary to undertake the study at this time to complement the conservation plan and to implement rate structure recommendations and any rate adjustments in 2008. Springsted would need 12 to 16 weeks to complete the study, and would then present their formal report to the City Council. The cost of the study is $27,750, plus expenses, which would be financed equally from the water and sewer funds. A copy of the proposal is attached for your review. Staff is recommending Council adopt Resolution 07 -99 authorizing Springsted, Inc. to complete a utility rate study. A -3