01/13/1997 Council Minutes - Laserfiche WebLink

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COUNCIL MINUTES JANUARY 13, 1997 operate on its own and not be supplemented by tax dollars. Considering this, staff has been careful in determining utility rates for the next three years so that each utility is self-sustaining. Mr. Ahrens noted the study considers revenues received for both the water and sewer departments including billings received, penalties, hook-up charges, and interest on investments. Expenses such as the Metropolitan Council Environmental Services (MCES) sewer charges, operating costs, and bond expenses for the water tower 1 are considered. Mr. Ahrens used an overhead diagram to explain the City's sewer bill which is based on a flat rate per connection. Since the Sewer Department has a history of being slightly low on its revenues, staff recommends a slight increase of $1 per year in the utility rate from the 1996 rate of $48 per quarter. Mr. Ahrens stated they assume a per year growth of 150 homes which they believe is conservative since the City has seen about 200 housing units in 1995 and 1996 and higher in preceding years. Mr. Ahrens advised that commercial, industrial and institutional users will be charged a flat rate times the number of residential equivalent unit connections rather than on water usage. This change is considered to be more equitable in that sewer bills will not increase due to higher waste consumption from lawn watering during summer months. Mr. Ahrens explained the water bill is based on two components, a charge on water usage and a flat rate per 1,000 gallons of water used. The water utility rates have been increased 5% per year over the past three years and staff believes that the current rate charged for water use is adequate and the flat rate can be gradually phased out over the next three years. The number of users is increased at a conservative estimate of 150 additional connections per year for the next three years, as done for the sewer connections. Mr. Ahrens explained that an average water use of 96,000 gallons per year per connection is assumed to calculate the revenue from billings. The expenses to the Water Department includes the payment of the bond for water tower one and operating expenses. The result of the proposed utility rate of $1.63 per 1,000 gallons will provide sufficient revenue to the Water Department. Since revenue from the water usage portion of the billing is capable of paying off this bond, and the bond for water tower 2, it is proposed the flat rate be phased out. Council Member Kuether inquired regarding the use of the term "section 8." Mr. Ahrens explained it means federally assisted, as is senior housing. Council Member Bergeson explained the initial discussion on discounted rates centered on seniors but now it appears to be written to apply to anyone who lives in assisted housing. Mr. Ahrens explained it would include all federally assisted housing. Ms. Vaske clarified if the housing is backed by the federal government the City would assist. For instance, if an apartment is backed by the federal government, they would get a reduced rate. Mayor Landers asked if the only way to offer reduced rates to seniors is to include both senior citizens and Section 8 housing. Ms. Vaske explained this would include anyone assisted who could show proof of subsidy, not just the owner of the unit. PAGE 6