HomeMy WebLinkAbout03-01-2021 Council Work Session PacketUpdated 3/1/2021
CITY COUNCIL WORK SESSION AGENDA
CITY OF LINO LAKES
Monday, March 1, 2021
6:00 P.M.
Agenda Item 1. Zoom Link:
https://us02web.zoom.us/j/87686130663?pwd=bXAvdFRNYlB4RU1VREJuWGEzRHM1Zz09
1. Preliminary Report – Recreation and Aquatic Center Feasibility Study, Isaac Sports
Group
Council Chambers – No Zoom Link
2. Springbrook Human Resources Management Module in Financial Software, Meg Sawyer
3. Easy CIP Software, Hannah Lynch
4. Smart Irrigation Controller Program, Andy Nelson
5. Outdoor Reader Boards, Rick DeGardner
6. Review Recommended 2021 Park and Trails Fund Projects, Rick DeGardner
7. Utility Rate Overview, Hannah Lynch
8. Council Updates on Boards/Commissions, City Council
9. Adjourn
WS – Item 1
WORK SESSION STAFF REPORT
Work Session Item No. 1
Date: March 1, 2021
To: City Council
From: Sarah Cotton, City Administrator
Michael Grochala, Community Development Director
Re: Preliminary Report – Recreation and Aquatic Center Feasibility Study
Background
In July of 2020, the City was notified that the YMCA would not be reopening the Lino
Lakes Facility. In November of 2020, the City retained Isaac Sports Group (ISG) to
evaluate potential facility operating options. Pursuant to a notice provided by the YMCA
on January 4, 2021, and in accordance with the development agreement between the
YMCA and the City, the YMCA will be transferring their property and building to the
City on March 1, 2021.
ISG has completed a majority of their preliminary analysis. Stuart Isaac and Duane
Proell, will join the Council via Zoom to present a preliminary report detailing potential
facility operating options.
Requested Council Direction
For informational purposes only. The Council will discuss next steps and provide
direction, if needed.
Attachments
Lino Lakes Recreation Center Presentation Outline
Page 1 of 3
LINO LAKES RECREATION AND COMMUNITY CENTER
Analysis
City Council Update
March 1, 2021
INTRODUCTION
Re-introduce the ISG Team
ANALYSIS OF CURRENT YMCA FACILITY
Evaluation of the current YMCA
o Facility Analysis
o Program Analysis
o Financial Analysis
o Why did the YMCA fail?
NEEDS, GOALS AND OPPORTUNITIES
Identify and explore the community needs, goals, and opportunities in a repurposed Recreation
center.
Potential: Lino Lakes Recreation & Community Center
How to enhance the benefits and reach of the previous Lino Lakes YMCA?
What can the Recreation Center do that the YMCA could not do?
Maximize the opportunities and access for a wider range of the Lino Lakes community
o Enhanced community programming
Youth and community organizations
School District tie-ins
Senior programming
Special Needs
Health Care providers: Health, fitness, wellness, therapy opportunities
o Programming partners
Community Ed
Outside program providers
o Lower costs to use
Lino Lakes resident membership discounts
Page 2 of 3
Daily drop-in and multi-use passes
Subsidies/scholarships for lower income users
o Program priority registration and use for Lino Lakes residents
Partnership opportunities
Optimize connection to the site and immediate area
o Economic/Business development
o Coordination with outdoor activities and park and green space
Support overall City economic development
o Attract new residents and businesses
o Create economic impact through sport tourism, regional use, or function spaces
HOW TO ACHIEVE THESE GOALS
Process to date
Market research
Meetings and interviews
Best practice, comparable, and aspirational facilities and programs
IMMEDIATE/SHORT TERM
What can and should be done in the short term
Optimizing the existing facilities
o Upgrades
o Enhancing operating efficiencies
Opening timeline
Financial cost of opening
Jump starting programs, staffing, and expertise
MASTER PLAN/LONG TERM
Longer term opportunities
Expansion opportunities
o Priorities
o Costs
o Benefits
Long term partnership opportunities
Phasing and Timeline
MANAGEMENT/PROGRAMMING OPTIONS
Exploration of Facility/Program management options
o City Management
o Total facility outside management group
o Hybrid options
BUSINESS MODEL & FINANCIAL OPERATING ANALYSIS
Membership, user fees, class costs, space rental fees, etc.
Opening/Start-up costs
Long term development costs
Page 3 of 3
Annual operating budget
o 5-year annual operating budget
Facility Revenue
Program Revenue
Facility Operating Costs
Program Expenses
Annual P & L
Long term Capital Replacement and Maintenance projection
o City managed facility
o Impact on operating budget with outside management or hybrid management
scenarios
LONG TERM MASTER PLAN FUNDING
Review of current bond issue that financed original construction
Extending that millage?
Other funding sources?
WRAPPING UP THE STUDY
NEXT STEPS
CITY COUNCIL
AGENDA ITEM 2
STAFF ORIGINATOR: Meg Sawyer, Human Resources Manager
MEETING DATE: March 1, 2021
TOPIC: Springbrook Human Resources Management Module
VOTE REQUIRED: 3/5
INTRODUCTION
The Council is being asked to consider the approval of the addition of the Human Resources
Management Module to our Springbrook Financial System.
BACKGROUND
The estimated implementation and training cost of the Springbrook Human Resources
Management Module is $6,265 and the annual subscription fee is $5,200. These initial costs
would be funded through the Office Equipment Replacement Fund. The Office Equipment
Replacement Fund has $17,760 of reserves designated for finance software implementation.
The funds were originally designated back in 2014 for the initial implementation of
Springbrook Software.
Currently, the City has four Springbrook modules which include Finance Suite, Payroll,
Accounts Receivable, and Utility Billing. The subscription fee for those modules total $25,572
in 2021 and is funded through the Finance Department General Fund budget.
Springbrook’s Human Resources module is a comprehensive solution to manage all employee
information. Reporting capabilities meet all OSHA, FMLA, and EEOC requirements well as
other human resource demands faced by governmental entities today.
• Applicant Screening – evaluate and hire internal and external applicants
• Bulk Deductions – apply multiple benefits and deductions to multiple employee records
• COLA – adjust pay step amounts to apply cost of living adjustments
• Open Enrollment – set up and maintain deduction and benefit enrollment cycles for
employees
• Pay Adjustments – update employee grade, step, and pay schedule information
• Personnel Action Forms – create and maintain customized forms used to guide
employees through various HR processes
• Web Approvals – approve or reject changes or requests submitted by employees
through Employee Self Service
• Reporting – generate reports and display HR data
• Maintenance/Utilities – create and maintain HR units and execute specialized HR tools
In 2022, a budget increase of roughly $6,060 would be required to continue funding the
Springbrook subscriptions with the addition of the Human Resources Management Module.
RECOMMENDATION
Please consider the approval of the implementation of the Springbrook Human Resources
Management Module.
ATTACHMENTS
Item 2B, Attachment Springbrook Human Resources Management Module Pricing and
Implementation.pdf
Order Form
Lino Lakes, MN - City of
02-01-2021
Lino Lakes MN - HR Module pricing
springbrooksoftware.com | info@sprbrk.com | 866-777-0069
2/6
Dear Meg,
Here is the pricing for the HR Module as requested. The service hours are billed just for the hours used
(in the event all 35 hours are not necessary).
All of us at Springbrook are working to provide the best possible solutions for your agency and your
citizens.
Our goal is nothing short of your 100% satisfaction.
Thank you for being a valued customer.
Sincerely,
Hope Sampson
Hope Sampson
springbrooksoftware.com | info@sprbrk.com | 866-777-0069
3/6
Annual Product Pricing
Item Name Rate Quantity Net Price
Human Resources Management Subscription $5,200.00 1 $5,200.00
Products Total Net Price $5,200.00
Estimated Professional Services Pricing
Item Name Rate Description Quantity Net Price
Standard Professional Services $179.00 Human Resources Implementation and Training 35 $6,265.00
Estimated Professional Services Total Net Price $6,265.00
Grand Total: $11,465.00
springbrooksoftware.com | info@sprbrk.com | 866-777-0069
4/6
Order Detail
General Information
Customer Name: Lino Lakes, MN - City of
Customer Contact: Meg Sawyer
Customer Address: 600 Town Center Pkwy, Lino Lakes, Minnesota, United States, 55014
Governing Agreement(s):
This Order Form is governed by the applicable terms found at:
MSA: https://sprbrk.box.com/v/sprbrk-saas-terms
MLA: https://sprbrk.app.box.com/v/sprbrk-onpremise-terms
Professional Services: https://sprbrk.app.box.com/v/sprbrk-svcs-terms
Term(s): 3 year
Order Terms
Items Ordered Order Start Date
Professional Services Orders Date of the last signature on the Order Form
Software Licenses, Subscriptions,
Maintenance and Hosting (New)
The earlier of a) date of delivery** of software or log-in
to hosted software to Customer or b) 60 days after last
signature on the Order Form
Software Licenses, Subscriptions,
Maintenance and Hosting (Renewal)
The day after expiration of your last order of the same
product
Special Order Terms None
**The date of delivery of software to the Customer is the date the software is made available to the
customer, either by delivery of software or delivery of first log-in to a hosted environment, which may
be either a test or production environment. This date of delivery is frequently earlier than the dates
professional services are completed, the Customer completes user acceptance testing, the Customer
distributes additional log-ins to end users, and the Customer go-live in a production environment.
springbrooksoftware.com | info@sprbrk.com | 866-777-0069
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Order Duration
The Order Duration is defined as follows:
• Any Software Licenses or Hardware are one-time, non-refundable purchases.
• Subscriptions, Maintenance, Hosting and Support (“Recurring Services”) continue from
the Order Start Date through the term listed in this Order Form (or if not listed, 1 year).
• Orders for Recurring Services auto-renew unless the Customer or Springbrook provides a
written notice of non-renewal at least sixty (60) days’ before the end of the Order Term
• Subscription Service fees and any other recurring fees will be subject to an automatic annual
increase by not more than five percent (5%) of the prior year’s Subscription Service fees
("Standard Annual Price Increase").
Invoice Timing and Delivery
Invoices are delivered electronically via e-mail to the billing contact on file for the Customer. Customer
invoices are issued for the full amount of software and services purchased as follows:
Items Ordered Invoice Timing
Professional Services Orders Monthly for services in the prior month*
Software Licenses and Hardware Customer signature on Order Form
Subscriptions, Maintenance and Hosting (New) Customer signature on Order Form
Software Licenses, Subscriptions, Maintenance and
Hosting (Renewal) 60 days in advance of the Order Start Date
CivicPay Transactions Monthly for transactions in the prior month
*Professional Services pricing is based on expected hours using Springbrook’s standard implementation
methodology. Actual hours and billings may vary from this estimate. Please note that only when
project costs exceed $5,000 of this estimate, a signed change order will be required to continue work –
changes under $5,000 will continue to be delivered and billed accordingly.
Special Order Terms
Special Order Terms None
In the event of an inconsistency between this Order Form, any governing
agreement, purchase order, or invoice, the Order Form shall govern as it pertains to this
transaction.
springbrooksoftware.com | info@sprbrk.com | 866-777-0069
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Payment Terms
Payment Terms Net 30
Special Invoicing Terms None
Billing Contact Hannah Lynch
Billing Email hlynch@linolakes.us
If the Customer requires a PO number on invoices, Customer must provide Springbrook with the PO
number and a copy of the PO prior to invoice issuance. If a PO number is not provided prior to the
invoice issuance date, invoices issued on this Order Form will be valid without a PO reference.
PO# (If required):
WS – Item 3
WORK SESSION STAFF REPORT
Work Session Item No. 3
Date: March 1, 2021
To: City Council
From: Hannah Lynch, Finance Director
Re: Easy CIP Software
Background
Easy CIP is a cloud-based application that aims to centralize, facilitate, plan, track, and
report to simplify the Capital Improvement Planning (CIP) process.
The City currently has three CIP processes/documents; the Community Development 5-
year Capital Plan, the Capital Equipment Plan, and the enterprise CIP which will be
formalized as part of the Utility Rate Study. Each of these processes are manual and
come together in separate excel spreadsheets.
Easy CIP would allow for a more standard and collaborative CIP process. After a project
is entered into the software, reports and project details can be pulled in a variety of ways
at the click of a button.
A detailed overview of Easy CIP is attached. The company set up a free Proof of Concept
(POC) for the City of Lino Lakes which I have used to tailor the application to our needs
as well as enter in our projects. I will preview our data in the POC during the work
session.
The base price of the application is $2,500/year which includes 1 user. Additional users
can be added at $500/year. Unlimited technical support is included within the price. The
amount designated for finance software in the Office Equipment Replacement fund could
cover the cost for roughly 2 years. After that, the annual fee would require General Fund
budget dollars.
Requested Council Direction
Consideration of moving forward with Easy CIP to facilitate the CIP process.
Attachments
Easy CIP Overview
Easy CIP Overview
Dreading Capital Improvement Program preparation this
time of the year? We can help!
About Easy CIP
We started the Easy CIP journey because we were there and understood the tedious and manual
process of planning for Capital Improvement Programs (CIPs).We’ve always believed that there
has to be an easier way than emailing Excel spreadsheets and Word files back and forth.Easy
CIP is our mission realized,a cloud-based application that is mobile compatible to centralize,
facilitate, plan, track, and report to simplify your CIP process.
Features
We have a standard base setup that we use from our understanding and experience,however,
we understand that different jurisdictions have different needs.Here are some features that set
us apart:
●Highly configurable, we’ll work with you to customize configurations for your needs
●Cloud-based hosted by secure Amazon Web Services (AWS)
●Highly mobile compatible so you have access to your data anywhere
●Easy and intuitive interface designed to keep it simple for all of your people
●Affordable and does not require implementation cost, just your time
●Easy cross-departmental collaboration
●Print all project sheets with a single click of a button
●Pre-built Excel report templates connected to the application. No more manual report
preparation
●Customized high-level dashboards with drill-down capability
●Free webpage that can list all projects for your residents/citizens to give instant visibility
to live project information. Can also be embedded into your website!
Support
We believe in Easy CIP and our mission so we fully support and maintain your configuration of
Easy CIP.You can expect mostly same day responses and quick turn-around time on requested
features and add-ons. Bottom line is we want you to be successful.
www.easycip.com Chris Mills
Easy CIP Co-Founder
(w) 650-649-7135
(m) 559 765 7014
Schedule a Demo to Discuss! www.easycip.com/contact-us
Detailed Overview of Easy CIP
Home Page - Shows Projects you have submitted and allows you to add a new project.
Project Details - View information about the project and view all of the project details.
Project Financial Information - The system can store various financial data including but not limited to Funding Sources and
Expenditure.
Project Dashboard - Quick view of all of the important CIP data you have on hand. Automatically updates live as projects get edited.
Project Reports - Council Example - Specific Views tailored to your data with various report styles.
Project Map - Display your project by locations on an interactive map.
Project Print View - We have created an easy way to print a page to pdf or to a printer. You can use one of our easy layouts for print
view.
Project Easy View - Embed example -You can embed a page into a website and/or just use a url to display all projects to guests and
visitors.
Project Excel Export - We work with you to create an excel document that connects to the database. It is as easy as clicking a
button and then refreshing data to get the latest information down to an excel format that you are used to using.
Word Export - We work with you to make a word template so all of the projects can be exported to Microsoft Word with the click of a
button.
WS – Item 4 WORK SESSION STAFF REPORT Work Session Item No. 4
Date: March 1st, 2021
To: City Council
From: Andy Nelson, Environmental Coordinator Jessica Eller, Community Development Intern
Re: Smart Irrigation Controller Program
Background
This program was discussed at the February 1st, 2021 Work Session. At that time, Council requested that more information be presented.
Fresh water is a finite resource. In our area, over 60% of water usage for a typical home
is used for outdoor irrigation during the growing season. Of that water use, roughly 50%
is wasted on overwatering, evaporation, and non-target watering. Wasted fresh water
could easily reach 150 gallons per house per day. One of the most powerful and easy to
implement options to improve our water conservation efforts in the City involves
increasing the efficiency of outdoor irrigation. Improving irrigation efficiency will
reduce water consumption in the City without negatively impacting quality of life.
Smart irrigation controllers have been found to reduce water use by up to 50%.
Installation of 100 controllers could save up to 2.2 million gallons a year, representing
nearly 2 days of water use for the entire city. If smart irrigation controllers were installed
at all addresses currently connected to municipal water, it could lead to a 20% savings on
yearly water pumped in the entire City. This could lead to significant cost savings on
infrastructure.
Currently, high manganese content in the municipal water supply makes water
conservation even more important. If the City’s water needs can be met through
operating fewer wells, wells that have higher manganese levels can be utilized less or left
offline, which will lead to higher quality water being supplied to residents.
As part of the City’s water conservation efforts, staff is proposing to implement a smart
irrigation controller purchase program. $20,000 was budgeted for this program in the
2021 Water Utility budget.
Rachio 3 Smart Irrigation Controller Details:
•Smart irrigation controllers can reduce water use by up to 50%.
•Irrigation system is controlled through a smart phone app and home wi-fi. App
allows users to easily make adjustments to watering zones, schedules, and
controller settings. App updates for Apple and Android are ongoing.
•Installation takes less than 30 minutes and matches the existing wiring on
homeowner’s current irrigation controller.
•Rachio app monitors local weather and adjusts irrigation run times accordingly.
•Watering is customized to account for plant types, soil types, slope, and
evaporation to ensure that plants are only getting as much water as they need.
•Controllers have a 2 year warranty.
•Controllers typically have a 10-15 year lifespan.
Program Details:
1. The City will purchase 100 controllers at $189.99 each, using money from the
Water Utility Fund.
2.These controllers will be available to residents on a first-come first-served basis at
the discounted rate of $38 each (20% of the cost).
3.We can compare water usage for properties that participate in the program to
measure the program’s impact.
4.Program will be available for water utility customers that have an existing
irrigation system and will be limited to one controller per address.
The Environmental Board recommended implementation of the Smart Irrigation
Controller program at their January 27, 2021 meeting.
Requested Council Direction
Staff is requesting City Council direction to implement the Smart Irrigation Controller
program.
Attachments
Item 4A, Draft Application for Smart Irrigation Controller
Smart Irrigation Controller
Application
Lino Lakes City Hall • 600 Town Center Parkway, Lino Lakes, MN 55014 • (651) 982-2400
Hours: Monday – Friday, 8:00 am – 4:30 pm
Applicant: _______________________________________________
Property Address: _________________________________________
City: ________________ State: _____________ Zip: _____________
Phone: __________________________________________________
Cell: ____________________________________________________
Email: ___________________________________________________
Are you connected to City Water? Yes: No:
FOR OFFICAL OFFICE USE ONLY
Staff Approval: _____________________
Date: _____________
Irrigation Number: __________________
Cash: OR Check:
Check Number: _____________________
Receipt Number: ____________________
My signature indicates that the information provided is true, I have read and understood the program guidelines,
and that I comply with the City of Lino Lakes program requirements. I will allow a representative of the City of Lino
Lakes to verify the installation if requested.
Signature: ________________________________________________________ Date:_______________________
ELIGIBILITY GUIDELINES
• Must be a resident of the City of Lino
Lakes.
• Must be connected to the City water.
• Must currently have a functional
irrigation controller.
• Must have a smartphone (necessary to
program and to operate the controller).
• Must have in-home Wi-Fi strength at your
existing controller by making sure that
your smartphone picks up at least two
bars. Failure to have sufficient Wi-Fi at
the controller location may result in
compatibility or functionality issues with
your controller.
• Installation and programming of your new controller is the
responsibility of the property owner.
• Participants must provide the City with photos within 30 days of
purchase of old and newly installed controllers to verify successful
installation. If photos are not provided, full cost of controller will be
assessed to homeowner’s utility bill.
• Smart controllers will be distributed on a first come, first served
basis and at the discretion of the City of Lino Lakes. The City reserves
the right to refuse any application for any reason it sees fit.
• Limit one controller per property address.
• If your controller is located outside, you will need to purchase an
outdoor enclosure. The City is not responsible for providing an
outdoor enclosure.
• The City is not responsible for sensor performance or water savings.
• The City has the right to discontinue or amend the program at any
time.
• All applications must be completed and turned in at Lino Lakes City
Hall.
WS – Item 7
WORK SESSION STAFF REPORT
Work Session Item No. 7
Date: March 1, 2021
To: City Council
From: Hannah Lynch, Finance Director
Re: Utility Rate Overview
Background
On February 22, 2021, the City Council approved Baker Tilly to complete a Utility Rate
Study. Many policies, procedures, statutes, and history are involved in utility rates and
utility billing. This staff report is intended to give an overview for informational purposes
throughout the Utility Rate Study process.
Utility Billing
Residential and commercial customers receive quarterly utility bills. The City is split into
three cycles. Each month one cycle’s meter reads are obtained and bills are generated.
With 5,175 current accounts, roughly 1,500 to 2,000 accounts are included in each cycle.
Meter reads are obtained by a utility employee driving by and electronically obtaining the
reads from the smart meters. In order to read more frequently, the City would need to
invest in another employee to get the drive-by reads, or infrastructure that could sit on top
of a water tower and electronically obtain the reads from the properties in its radius.
Customers can elect e-statements by accessing their account online and selecting that
option. If an e-statement has not been elected, bills are printed and mailed by the Utility
Billing Clerk.
Current Utility Fees and Charges
Attached are the current utility rates and fees. Ordinance No. 11-13 shows the City’s
current rates and rate structure. Connection fees are outlined in the City’s Fee Schedule.
The rates and fees are deposited into the following funds:
Water Fund (#601) accounts for the operations of supplying municipal water and
for the ongoing maintenance and replacement of existing infrastructure.
o Funding is provided by water usage rates
Sewer Fund (#602) accounts for the operations of sewage disposal and for the
ongoing maintenance and replacement of existing infrastructure. The major
expenditure for this fund is the charge paid to Metropolitan Council
Environmental Services for sewage treatment.
o Funding is provided by sewer base and usage rates
Area and Unit Charge Fund (#406) accounts for new water and sewer
infrastructure.
o Funding is provided by water base rates and utility connection fees
The City Council has established that the cost of deprecation be include in its rates to
provide for the maintenance and eventual replacement of system infrastructure. The cash
balance of each fund reflects the accumulation of resources for this purpose.
Water Rate Structure
The City’s water rate structure is a conservation rate structure. To conserve groundwater,
municipal water utilities serving more than 1,000 people must include a “conservation
rate structure” or a uniform rate structure combined with other ways to reduce demand
for water before requesting approval from the commissioner of Health to construct a
public water supply well or requesting an increase in the authorized volume of water
appropriation.
The City looked at uniform rate structures in the 2013 Utility Rate Study (attached), but
elected to stay with the conservation rate structure. Cities must include an explanation of
their conservation rate structure in their water supply plan. Public water suppliers serving
more than 1,000 people must update their water supply plan and, upon notification,
submit it to the Department of Natural Resources commissioner for approval every 10
years.
Sewer Rate Structure
The City’s metered sewer rate includes a base fee plus a usage fee based on winter
averaging. Winter averaging is a billing method developed to give you the best possible
break on sewer billing costs. This method takes the water consumption used in the winter
quarter as the basis for billing sewer charges throughout the year. Customers will not be
paying additional sewer charges for warm weather purposes such as watering lawns,
washing cars, landscaping, gardening, or filling pools.
Utility Rate Study Consultant
The City received eight proposals from firms to complete the Utility Rate Study. Staff
evaluated the firms on a variety of criteria including cost, project schedule, credentials,
experience, references, and experience with Minnesota cities. A list of each firm and the
cost proposed is included below:
Firm Cost
Stantec $32,050
AE2S Nexus $31,750
UFS $28,795
Ehlers $27,560
GovRates $22,100
AEM $19,500
Baker Tilly $17,730
David Drown $12,500
Staff recommended Baker Tilly due to the positive history with the city, experience with
many other cities within the metro area, project approach/work plan presented, key
personnel assigned to the project, Series 50 qualification, and low cost.
Baker Tilly Scope of Services
Baker Tilly’s overall objective is to recommend rates and fees that will equitably recover
the cost of providing water and sewer services to customers through fiscal year 2030.
Their recommended rates and fees will ensure adequate funding for operating and
maintenance costs, and capital needs, while minimizing the impact on rates to the greatest
extent possible.
Within their scope two water rate structure scenarios will be evaluated both with and
without the assumption of constructing and operating a Water Treatment Plant.
1. Current tier structure – shown on Utility Rates & Fees attachment
2. Revised tier structure – Baker Tilly will look at historical consumption and
determine if there is a different tier structure that makes more sense (i.e. first tier
being 0-10,000 or 0-30,000 instead of 0-20,000 gallons)
If the City Council would like to explore a uniform rate structure scenario, Baker Tilly
can provide that service for an additional $2,200. Please note, the 2013 Utility Rate Study
shows that a uniform rate for all users resulted in the highest rate when compared to
conservation rate structures.
Requested Council Direction
This staff report was provided mainly for informational purposes, but the Council should
consider if the study of a uniform rate structure is desired.
Attachments
1. Utility Rates & Fees
2. 2013 Utility Rate Study Final Report (Baker Tilly was previously Springstead)
City of Lino Lakes Utility Rates & Fees
Ordinance No. 11-13
Effective January 1, 2015:
Water Utility Rates Residential $10.00 Per Quarter / REU*, plus $1.87 Per Thousand Gallons (0 – 20,000 Gal.) $2.08 Per Thousand Gallons (20,001 – 40,000 Gal.) $2.60 Per Thousand Gallons (40,001 – 80,000 Gal.) $3.12 Per Thousand Gallons (80,001 – 120,000 Gal.) $3.64 Per Thousand Gallons (over 120,000 Gal.)
Non-Residential Domestic $10.00 Per Quarter / REU*, plus $1.87 Per Thousand Gallons (0 – 20,000 Gal.) $2.08 Per Thousand Gallons (20,001 – 40,000 Gal.) $2.35 Per Thousand Gallons (over 40,000 Gal.)
Non-Residential Irrigation $2.60 Per Thousand Gallons (0 – 40,000 Gal.) $3.12 Per Thousand Gallons (40,001 – 80,000 Gal.) $3.64 Per Thousand Gallons (over 80,000 Gal.)
Sewer Utility Rates Metered Sewer Rate $55.70/Quarter/REU*, plus $1.07 Per 1,000 Gallons Over 10,000 Gallons (based on winter average) Flat Sewer Only $65.70/Quarter/REU*
*REU = a residential equivalent connection:
1.Residential – a single housing unit2.Non-Residential REU = per Met Council Service Availability Charge Procedures Manual
Non-Residential users with irrigation systems that do not have a separate irrigation meter will be charged at residential rates until such time that a separate irrigation meter is installed and inspected.
2021 Fee Schedule
UTILITY FEES
Sewer Utility Rates To be considered by separate Ordinance, No. 11-13
Water Utility Rates To be considered by separate Ordinance,
No. 11-13
City Trunk Utility Connection Fees - The Trunk Utility Connection Fee consists of two components: a Trunk Charge and an Availability Charge.
Trunk Charge
The trunk charge shall be paid at the time of subdivision approval or at the time of hook-up, whichever is first. Residential trunk charges are based on one unit per dwelling unit. Commercial/Industrial/Institutional (CII) trunk charges are based on a factor of 2.92 units per acre.
Sanitary Sewer $ 1,630.00 /Unit
Water $ 2,341.00 /Unit
Availability Charge
For residential properties, the availability charge shall be paid at the time of subdivision approval or at the time of hook-up, whichever is first. Commercial/Industrial/Institutional availability charges shall be paid at the time of building permit. Fees are based on the number of sanitary access charge (SAC) units assigned by Metropolitan Council Environmental Services (MCES). Residential uses shall be assigned one unit per dwelling unit unless otherwise noted by MCES.
City Sewer (CSAC) $ 1,525.00 /SAC Unit
City Water (CWAC) $ 1,473.00 /SAC Unit
Final Report
City of Lino Lakes, Minnesota
Water and Sewer Utility Rate Study Update
January 28, 2013
1 EXECUTIVE SUMMARY ....................................................................... 1
2 INTRODUCTION.................................................................................. 5
3 BACKGROUND................................................................................... 6
Water Fund Historical Information ...................................................... 6 Current Water Rate Schedule ............................................................ 7 Sewer Fund Historical Information ...................................................... 9 Current Sewer Rate Schedule ........................................................... 9 Cash Reserves ............................................................................ 11 Depreciation ................................................................................ 11 Assumptions ............................................................................... 12
4 WATER UTILITY ............................................................................... 13
Water Rates ................................................................................ 13 Water Customer Growth Projections ................................................. 13 Conservation Rate Structure ........................................................... 14 Water Utility Revenue Requirements ................................................. 17 Capital Outlay .............................................................................. 19 Financial Projections ..................................................................... 22 Impact on Water Charges ............................................................... 30
5 SEWER UTILITY ............................................................................... 37
Sewer Rates ............................................................................... 37 Sewer Customer Growth Projections ................................................. 37 Sewer Utility Revenue Requirements ................................................ 38 Capital Outlay .............................................................................. 40 Financial Projections ..................................................................... 41 Impact on Sewer Charges .............................................................. 43
6 CONCLUSIONS AND RECOMMENDATIONS.......................................... 47
Table of Contents
LETTER OF TRANSMITTAL
January 28, 2013
Mr. Al Rolek, Finance Director
Mr. Rick DeGardner, Public Services Director
City of Lino Lakes
600 Town Center Parkway
Lino Lakes, Minnesota 55014-1182
Re: Summary of Water and Sewer Utility Rate Study Update
Dear Mr. Rolek and Mr. DeGardner:
Springsted Incorporated was hired to update the utility rate study for the Water Fund and Sewer Fund of
the City of Lino Lakes. Each Fund was looked at individually. This Study includes a review of the past
performance of each fund, determines the adequacy of revenues in each of the Funds, and provides rate
recommendations which reflects recent cost experience as well as anticipated capital improvement costs
of each Fund.
We appreciate the opportunity to conduct the Water and Wastewater Utility Rate Study for the City of
Lino Lakes.
Respectfully submitted,
Nick Dragisich Patty Kettles
Nick Dragisich, Executive Vice President Patty Kettles, Vice President
Director, Management Consulting Services
sml
Springsted Incorporated
380 Jackson Street, Suite 300
Saint Paul, MN 55101-2887
Tel: 651-223-3000
Fax: 651-223-3002
www.springsted.com
Executive Summary 1
City of Lino Lakes, Minnesota – Water and Sewer Rate Study Update
1. Executive Summary
This report was prepared to review the financial performance of the City of Lino
Lakes’ current Water and Sewer Funds and determine the appropriate rate
structure, availability charges, and other revenue needed to adequately fund
operations through 2022. The process included a historical review of the two
utility funds, the evaluation of the appropriate rate structures needed to fund
these operations over the planning period, alternative water rate structures to
encourage water demand reduction, connection fees, and a comparison of rates
with other similar utilities.
One major consideration in determining the water rates is compliance with
Minnesota State Statutes, Section 103G.291. In the 2012 the Minnesota
Legislature redefined the water conservation requirements now calling them
demand reduction measures. The law now states that “public water suppliers
serving more than 1,000 people must encourage water conservation by
employing water use demand reduction measures” as opposed to the initial law
requiring “a conservation rate structure”. The law goes on further to state,
“Demand reduction measures must include a conservation rate structure, or a
uniform rate structure with a conservation program that achieves demand
reduction.” It is important to point out that conservation rate structures by
themselves do not constitute an effective water conservation/demand reduction
program. Rate structures work best when coupled with a comprehensive
program. A water demand reduction program should include, at a minimum, a
public education program and public assistance program to achieve the
reduction in per capita water use envisioned by the City.
In determining the water rates and rate structure options, Springsted reviewed
historical water consumption patterns and used this information to recommend
alternative rate structures that would promote water conservation.
All recommendations are based on information provided to us and on the
assumptions given for the financial projections. The City will need to monitor
the performance of each fund and make any necessary adjustments based upon
its actual performance and on the actual construction costs of the anticipated
capital improvements.
The following conclusions were determined as a result of this study and the
financial projections prepared:
1. The Water and Sewer Fund’s history shows revenues and expenditures,
have remained fairly stable over time. 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.
Executive Summary 2
City of Lino Lakes, Minnesota – Water and Sewer Rate Study Update
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 include 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
Future projections indicate rates may need to be increased by 2.00%
annually 2014 - 2017.
Scenario 2 – One Rate for Each Customer Class
In Scenario 2, the rate for each residential, non-residential, and non-
residential irrigation customer is assumed to be the rate which provides for
residential customers generating 77% of total revenues, non-residential
accounts generating 10% of annual revenues, and non-residential irrigation
accounts generating 13% of total revenues, as is currently the case.
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
Non-Residential Irrigation Rates
2012 Rate per 1,000 Gallons
2013 Rate per 1,000 Gallons
0 - 40,000 gallons $2.50 $2.55
40,001 – 80,000 gallons $3.00 $3.06
Over 80,000 gallons $3.50 $3.57
Executive Summary 3
City of Lino Lakes, Minnesota – Water and Sewer Rate Study Update
The proposed rates are:
As in the first scenario, these volumetric rates would need to be increased
by 2.0% annually 2014-2017.
Scenario 3 –Uniform Rate for All Use/All Users
Scenario 3 assumes one rate for all use of all users. The 2013 rate for all
users; residential, non-residential, and non-residential irrigation customers is
recommended to be $2.16 per 1,000 gallons to meet revenue requirements.
A uniform rate structure is estimated to alter the total revenues generated
from each customer class as follows:
As
in the first two scenarios, these volumetric rates would need to be increased
by 2.0% annually 2014-2017.
Scenario 4 –Revised Block Rate Structure
The final option reviewed is to keep a block rate structure, whereby the
price of water increases with volume consumed, but reduce the number of
blocks from five to three for residential and from three to two for non-
residential and non-residential irrigation. The following block rate structure
is proposed in order to meet revenue requirements:
Proposed 2013 Residential Rates
Proposed 2013 Non-Residential Rates
Residential Non-Residential Non-Residential Irrigation
2013 $2.02 $2.21 $3.40
Residential Non-
Residential
Non-
Residential
Irrigation
Current Rates 77% 10% 13%
Proposed Rate 82% 10% 8%
Residential
0 – 30,000 gallons $1.89
30,001 – 50,000 $2.09
> 50,000 $2.91
Non-Residential
0 – 50,000 gallons $2.04
> 50,000 $2.30
Executive Summary 4
City of Lino Lakes, Minnesota – Water and Sewer Rate Study Update
Proposed 2013 Non-Residential Irrigation Rates
Our proposed rates along with 2.0% increases in these rates 2014-2017
projects depreciation could be funded while maintaining recommended
reserve levels.
5. The current Sewer Availability Charge of $2,911 is adequate to fund
projected capital costs.
6. Sewer user rates should be increased by 7.0% in 2013 and 2.0% annually
2014 through 2019.
7. The City should establish the user rates for each utility fund for a three-
year period and review them on an annual basis. The rates should be
reviewed on an annual basis concurrent with the development of the
following year’s budget.
These recommendations are based on information provided to us by City of
Lino Lakes. The City will need to monitor the performance of the Water and
Sewer Funds and make any necessary adjustments based upon its actual
performance and on the actual construction costs of the anticipated capital
improvements.
Non-Residential
Irrigation
0 – 50,000 gallons $2.55
> 50,000 $3.57
Introduction 5
City of Lino Lakes, Minnesota – Water and Sewer Rate Study Update
2. Introduction
The purpose of this report is to review and analyze City of Lino Lakes’ Water
and Sewer Funds to determine the appropriate rate structure and other revenue
sources needed for its operation and financing of capital assets. The rate
structure and other revenue in each fund must provide sufficient revenue to
cover anticipated operating and maintenance expenses, debt service including
principal and interest, capital improvements, replacements, and to provide
adequate cash reserves. At the same time, the rate structure should promote
water conservation. Since our initial study in 2007/08, the Minnesota
Legislature has revised the definition of water conservation rates.
Total revenue collected should reflect not only recent cost experience, but
should recognize anticipated future costs during the period for which rates are
being established.
This report includes a review of the City’s Water Fund and Sewer Fund
revenues and expenditures, historical budgets, a projection of revenues and
expenditures through 2022 (incorporating the City’s plans for capital
improvements), and a determination of the rates and charges necessary to
provide sufficient revenues that will cover capital and operational costs.
Background 6
City of Lino Lakes, Minnesota – Water and Sewer Rate Study Update
3. Background
The City of Lino Lakes, which is located approximately 20 miles north of St.
Paul in southeastern Anoka County, provides approximately 4,175 residential,
commercial, industrial, and institutional customers with water and sewer
services. The City encompasses approximately 33 square miles and had a 2010
Census population of 20,216 and an estimated 2011 population slightly higher
at 20,505.
Currently, the City obtains its water supply from four raw water wells. Water
storage for consistent pressure and for fire protection occurs in two elevated
storage towers.
Wastewater treatment is provided by the Metropolitan Waste Control
Commission. Collection is accomplished through a series of trunk lines that
empty into one of nine lift stations operated by the City.
Water Fund A review of the City’s most recent financial reports shows the Water Fund
Historical Information ending cash balance has increased since 2009. The 2012 budget was projected
to result in an ending cash balance of $3,861,609, up from $3,432,696 in 2009.
Historically the fund has recorded positive operating income, funding
depreciation each year.
Revenues and expenditures for the past three years and the 2012 budget, as well
as the City’s current water rate schedule are shown on the following pages.
Background 7
City of Lino Lakes, Minnesota – Water and Sewer Rate Study Update
Current Water Rate Schedule
Water Volume Charges (Quarterly)
Residential Rates
Effective January 2009
Rate per 1,000
Gallons
Flat Fee of $10 per Residential Equivalent Unit (REU)
0 - 20,000 gallons $1.80
20,001 – 40,000 gallons $2.00
40,001 – 80,000 gallons $2.50
80,001 – 120,000 gallons $3.00
Over 120,000 gallons $3.50
Water Connection Fee
Meter Size
(Inches) Amount
All $250
Water Availability Charge
Non-Residential Rates
Effective January 2009
Rate per 1,000
Gallons
Flat Fee of $10 per Residential Equivalent Unit (REU)
0 - 20,000 gallons $1.80
20,001 – 40,000 gallons $2.00
Over 40,000 gallons $2.25
Non-Residential Irrigation Rates Effective January 2009 Rate per 1,000 Gallons
0 - 40,000 gallons $2.50
40,001 – 80,000 gallons $3.00
Over 80,000 gallons $3.50
Per SAC unit Amount
2012 $3,854
Background 8
City of Lino Lakes, Minnesota – Water and Sewer Rate Study Update
2009 2010 2011 2012
Operating Revenues Actual Actual Actual Budget
Charges for Services 1,334,055 1,059,994 1,054,977 1,250,000
Hook-up Charges 8,750 8,000 9,260 9,000
Water Meter Sales 10,874 8,698 10,561 10,000
Other Revenue 12,138 10,321 15,306 36,000
Total Operating Revenue 1,365,817 1,087,013 1,090,104 1,305,000
Operating Expenses
Personal Services 187,201 172,095 175,906 181,337
Materials and Supplies 269,925 208,872 154,450 237,500
Contractual Services 60,814 76,755 92,345 110,000
Utilities 78,532 97,060 80,906 92,000
Other 21,262 28,640 19,903 31,450
Depreciation 423,218 426,861 421,616 435,000
Total Operating Expenses 1,040,952 1,010,283 945,126 1,087,287
Operating Income (Loss) 324,865 76,730 144,978 217,713
Non Operating Revenues (Expenses)
Investment Earnings 74,818 37,249 43,983 25,000
Special Assessments 8,107 6,216 731 10,000
Bond Interest (43,298) (29,858) (15,864) (13,566)
Paying Agent Fees (5,319) (5,760) (5,653) (5,500)
Total Non Operating Revenues (Expenses) 34,308 7,847 23,197 15,934
Net Income (Loss) Before Transfers 359,173 84,577 168,175 233,647
Operating Transfers
Transfers In
Transfers (Out) (35,561) (34,061) (33,061) (34,511)
Total Operating Transfers (35,561) (34,061) (33,061) (34,511)
Net Income (Loss) 323,612 50,516 135,114 199,136
Beginning Cash & Investments 2,964,709 3,432,696 3,555,128 3,649,473
Net Income 323,612 50,516 135,114 199,136
Depreciation 423,218 426,861 421,616 435,000
Amortization 5,319 5,760 5,653 5,500
Acquisition and Construction of Assets -
Proceeds from New Long-Term Debt -
Payments on Long-Term Debt (360,000) (375,000) (390,000) (427,500)
Adjustment to Accruals 75,838 14,295 (78,038) -
Ending Cash Balance 3,432,696 3,555,128 3,649,473 3,861,609
Water Fund Information
Background 9
City of Lino Lakes, Minnesota – Water and Sewer Rate Study Update
Sewer Fund A review of the City’s most recent financial reports shows the cash balance in
Historical Information the Sewer Fund has also been increasing. The 2012 budget was projected to
result in an ending cash balance of $6,939,631; up from $5,750,402 in 2009.
Historically, the fund recorded positive operating income in 2009 and 2010.
Operating income was ($143,875) in 2011 and is projected to be ($56,275) in
2012, indicating the City is not fully funding depreciation as previously has
been a goal.
Revenue and expenditures for the past four years in the Sewer Fund, as well as
the City’s current sewer rate schedule are shown below.
Current Sewer Rate Schedule
Sewer Volume Charges
(Quarterly)
*Sewer based on winter quarter usage.
Sewer Connection Fee
Water Meter
Size (Inches) Amount
All $200
Sewer Availability Charges
Per SAC Unit Amount
2012 $2,911
Rate
Rate per 1,000
Gallons
Up to 10,000 gallons $52.00
Over 10,000 gallons $1.00
Sewer Customer Only $62.00
Background 10
City of Lino Lakes, Minnesota – Water and Sewer Rate Study Update
2009 2010 2011 2012
Operating Revenues Actual Actual Actual Budget
Charges for Services 1,477,007 1,491,728 1,486,616 1,480,000
Hook-up Charges 7,490 6,490 7,220 8,000
Other Revenue 17,667 352 500
Total Operating Revenue 1,502,164 1,498,218 1,494,188 1,488,500
Operating Expenses
Personal Services 172,744 173,937 177,758 184,942
Materials and Supplies 43,147 43,252 73,029 42,500
Contractual Services 91,973 70,464 163,233 105,000
MCES Sewer Charges 625,353 681,591 720,986 704,933
Utilities 37,121 34,047 42,251 44,000
Other 14,981 17,600 14,229 13,400
Depreciation 446,788 445,956 446,577 450,000
Total Operating Expenses 1,432,107 1,466,847 1,638,063 1,544,775
Operating Income (Loss) 70,057 31,371 (143,875) (56,275)
Non Operating Revenues (Expenses)
Investment Earnings 153,929 67,521 82,232 50,000
Special Assessments 662 2,493 731
Total Non Operating Revenues (Expenses) 154,591 70,014 82,963 50,000
Net Income (Loss) Before Transfers 224,648 101,385 (60,912) (6,275)
Operating Transfers
Transfers In
Transfers (Out) (10,561) (34,061) (33,061) (34,511)
Total Operating Transfers (10,561) (34,061) (33,061) (34,511)
Net Income (Loss) 214,087 67,324 (93,973) (40,786)
Beginning Cash & Investments 5,609,938 5,750,402 6,237,600 6,575,417
Net Income 214,087 67,324 (93,973) (40,786)
Depreciation 446,788 445,956 446,577 450,000
Amortization - - - -
Acquisition and Construction of Assets (27,748) (17,524) (45,000)
Proceeds from New Long-Term Debt -
Payments on Long-Term Debt
Adjustment to Accruals (492,663) (26,082) 2,737 -
Ending Cash Balance 5,750,402 6,237,600 6,575,417 6,939,631
Sewer Fund Information
Background 11
City of Lino Lakes, Minnesota – Water and Sewer Rate Study Update
Cash Reserves Springsted’s clients often ask about the amount of cash that should be available
in their Utility funds. Utility funds need sufficient cash to pay current expenses,
together with principal and interest on outstanding bonds. This would typically
require each Utility fund to have a minimum of three months of anticipated
operating expenses and one year’s total debt service in cash at the end of each
year. However, this does not provide any level of cash reserves for unforeseen
expenses, emergencies, or to cover any shortfalls in the budget. The amount of
cash reserves that the Water and Sewer Funds should have is dependent on a
number of factors, including:
Reserves that are legally required
Variability of the annual revenue stream
Variability in annual expenditures
Variability in rainfall
Age and condition of fixed assets
Anticipated future capital needs
○ Capital improvement plan
○ Regulatory compliance
Tolerance for risk
Number of relatively large customers
Unfortunately, there are no prescribed formulas, and the amount of reserves
varies considerably between utilities. We encourage the City to maintain a
minimum cash balance in the Water and Sewer Fund of at least three
months/ninety days of anticipated operating expenses and one year’s debt
service at the end of the year.
Depreciation Costs incurred in the operation of each Utility are either recorded as operating
expenses or capitalized as assets. Whether the cost is expensed immediately or
capitalized, the City actually pays for the asset at the time it is acquired.
Generally, anything that is used up in the period in which the cost of acquiring it
is incurred is treated as an operating expense. Personnel, supplies, and repairs
and maintenance are typical examples of costs that are treated as operating
expenses. These costs are shown on the income statement each year in the total
amount of the expenditure for each category. The cost incurred in the
acquisition or construction of assets such as buildings and major pieces of
equipment are capitalized. That means their cost does not show up as an
expense on the income statement in the year in which the expenditure occurs,
rather the cost of these assets are depreciated. Depreciation is the process of
allocating the cost of an asset over its useful life in a systematic and rational
manner.
Background 12
City of Lino Lakes, Minnesota – Water and Sewer Rate Study Update
The City currently includes depreciation in its annual budget and until
recently, user rates in each utility fully funded annual depreciation. However,
since 2011, sewer rates are not fully funding annual depreciation. Our
recommendations will show the necessary rate increases in order to once
again fully fund deprecation in the Sewer Fund.
Assumptions The City provided Springsted with a variety of material including:
2009-2011 Financial Reports
2012 and 2013 Operating Budgets for each Fund
2013-2025 Capital Improvement Plan – listing cost and year of
expenditure in 2012 dollars
Capital costs were inflated to year of construction cost, using the 10-
year average of the Municipal Cost Index, or a 3.59% inflation factor
Projected new connections to the water and sewer system over the
planning period
Detailed number of water connections by quarter by user class for
2010 and 2011
Detailed water consumption data by quarter by user class for 2010
and 2011
Previous utility rates
We have used the information provided by the City as the basis of our
projections, as well as discussions with City personnel.
Water Utility 13
City of Lino Lakes, Minnesota – Water and Sewer Rate Study Update
4. Water Utility
Water Rates The Water Availability Charge is a fee incurred to recover the capital costs
associated with providing the necessary infrastructure to make water 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 of growth. Springsted and City staff have
determined the water meter charge, connection fee, and the availability charge
to be sufficient at this time.
Due to limited growth recently experienced by the City, the new water treatment
plant is now projected to occur in 2025 (it was projected to be in 2017 in the
previous rate study), which is beyond the planning period of this analysis.
Should growth be expedited, we recommend the City revisit these fees to
include the capital and associated borrowing costs of this large capital
expenditure.
It is important for the City to understand that while availability charges provide
a valuable source of revenue for the utilities, they can be much more volatile
than user fee revenue related to actual sales. Water availability charges are
dependent on local economic conditions and will rise and fall accordingly.
However, the fixed costs associated with debt issued to finance the necessary
capital improvements will need to be paid regardless of how much revenue is
collected. To minimize this risk, we have recommended the City maintain an
adequate level of cash reserves that include one year of debt service.
Water Customer The projection of new residential water connections is based on those provided
Growth Projections by the City’s engineering consultant WSB (which used the Metropolitan
Council projections) for capital planning purposes, revised to take into account
the slower growth pattern the City has recently experienced. The projected
number of added connections is shown below.
Residential
(3/4” meter)
Commercial
(1” meter)
2013 50 3
2014 75 3
2015 75 3
2016 75 3
2017 100 3
2018 100 3
2019 125 3
2020 125 3
2021 150 3
2022 150 3
Water Utility 14
City of Lino Lakes, Minnesota – Water and Sewer Rate Study Update
Conservation Rate Water utilities have traditionally relied on increased capacity to meet their
Structure growing needs for additional water resulting from population growth and
economic development. However, utilities are increasingly looking to
conservation as an alternative strategy. This change in philosophy is the result
of several factors including:
Growing competition for limited water supplies;
Increasing cost and difficulties in developing new water supplies;
Increasing cost of capacity expansion;
Increasing cost of water treatment and testing;
Statutory requirements for increased water supply permits; and
Growing public support for the conservation of our natural resources.
The City is required to complete a water emergency and conservation plan every
10 years. Included in this plan, the City must explain current water use trends
and how they will address conservation in the future. The average use per
resident in the City in 2007 was 86 gallons per day (gpd). The average use per
resident in 2011 was 90 gallons per day. And the average use per resident in
2012 was 107 gallons per day. The average use in 2012 is reflective of the
relatively dry watering months (July, August, and September). Precipitation in
the summer watering months of 2012 were 50% lower than the 29 year average
of those same months, most likely prompting residents to water more.
The DNR goal is to achieve an average consumption per user of 75 gpd. A
conservation rate structure was developed to help the City achieve this goal. A
conservation rate structure provides a financial incentive for users to reduce
demands based upon the general economic theory that demand for a commodity
decreases as its price increases. Water conservation rates generally involve one
of the types listed below:
Increasing block rates where the marginal cost of water to the user
increases in blocks of usually two or more steps as water use
increases;
Flat rate where the cost of water is the same regardless of
consumption; and
Seasonal pricing where the cost of water consumed during the season
of peak demand is charged at a higher rate than water consumed in
the off-peak season.
The City currently tracks consumption patterns for the following eight types of
users: residential, commercial, industrial, institutional, prison, church, school,
and non-residential irrigation.
Water Utility 15
City of Lino Lakes, Minnesota – Water and Sewer Rate Study Update
Tier 1
74.5%
Tier 2
24.0%
Tier 3
1.3%
Tier 4
0.2%
Tier 5
0.1%
Residential Accounts by Tier
winter average (2010‐2011)
The total annual consumption by residential, non-residential and non-residential
irrigation for 2010 and 2011 is shown in the chart below.
2010 2011
Residential 396,630,500 402,204,500
Non-Residential 48,644,000 48,995,500
Non-Residential
Irrigation 38,534,000 40,999,000
Totals 483,808,500 492,199,000
The average use per quarter by residential, non-residential and non-residential
irrigation is:
2011 – Q1 2011 – Q2 2011 – Q3 2011 – Q4
Residential 16,328 18,404 32,624 33,077
Non-Residential 104,639 94,178 125,257 143,080
Non-Residential Irrigation 66,700 98,083 243,061 343,500
Below are some additional highlights on past water use in the City:
Winter water use (Quarter 1, 2010 & 2011 data)
98.5% of residential users used 40,000 gallons or less, falling into the
first two tiers of use.
Only 61 customers (1.5% of users), used more than 40,000 gallons,
falling into the top three tiers.
Therefore, our assumption was that water consumption over 40,000 gallons in
the summer quarters is due primarily to non-residential irrigation.
Water Utility 16
City of Lino Lakes, Minnesota – Water and Sewer Rate Study Update
Tier 1
38.2%
Tier 2
30.0%
Tier 3
25.1%
Tier 4
5.5%
Tier 5
1.2%
Residential Accounts by Tier
summer average (2010‐2011)
Summer consumption statistics include:
Summer water use (Quarter 3, 2010 & 2011 data)
68.2% of residential users use 40,000 gallons or less, falling into the
first two tiers of use.
1,290 or 31.8% of residential customers use 40,000 gallons or more
in the summer months, which is over 21 times what customers use in
winter.
47 or 1.2% of residential customers use 120,000 gallons or more in
the summer months.
In the 2012 the Minnesota Legislature redefined the water conservation
requirements now calling them demand reduction measures. The law now states
that “public water suppliers serving more than 1,000 people must encourage
water conservation by employing water use demand reduction measures” as
opposed to the initial law requiring “a conservation rate structure”. The law
goes on further to state, “Demand reduction measures must include a
conservation rate structure, or a uniform rate structure with a conservation
program that achieves demand reduction.” Therefore, the City can alter its
current five-tiered system so long as it reduces water demand, water losses, peak
water demands, and nonessential water uses. We have provided four options for
future water rates; 1) leave the current five-tiered system the same but adjust the
volume charge if necessary, 2) provide one rate for each user class (residential,
non-residential, and non-residential irrigation) that will generate revenues from
each user class that the current block rates do, 3) go to one rate for all water use,
or 4) reduce the five-tiered system to something less.
Water Utility 17
City of Lino Lakes, Minnesota – Water and Sewer Rate Study Update
Water Utility Revenue Revenue requirements indicate the amount of revenue needed for the City to
Requirements continue efficient operations, as well as maintain an adequate cash balance in
the utility. Revenue requirements include operating and maintenance expenses,
debt service payments, capital outlay, and any operating or working capital
reserves. The debt service payments to be made from the Water Utility are for a
portion of the 2010A General Obligation Improvement and Utility Revenue
Refunding Bonds.
In 2010 and 2011, revenues from volume charges were approximately
$1,055,000. In 2012, due to an extremely dry year, year-to-date figures estimate
revenues to come in closer to $1,250,000. In order to not overstate revenues in
2013 and beyond, we have assumed 2011 revenues to be a more “normal”
revenue base assuming average rainfall. Therefore we assume 2013 revenues
would increase somewhat to account for minimal new growth in 2012 and 2013
to approximately $1,115,000.
2010 and 2011 consumption data also indicated 77% of volume-based revenues
were derived from residential users, 10% from non-residential users, and 13%
from non-residential irrigation accounts. We assume this pattern will continue
when generating possible rate structures.
The following pages show the projected operating statement and annual cash
balance in the Water Utility, assuming the current rate structure and volume
charges are kept in place over the planning period with increases only
attributable to new customers as discussed on page 13, not from increased rates.
The 2013 proposed budget was used for operating expenditures.
The fund is projected to maintain positive operating income until 2015. At that
time, the City will no longer be fully funding depreciation. However, projected
ending cash balance is sufficient to fund the recommended reserve levels in all
years of the planning period.
Water Utility 18 City of Lino Lakes, Minnesota – Water and Sewer Rate Study Update Water Utility Financial Projections – Current Block Rate Structure and Current Volumetric Rates
Water Utility 19
City of Lino Lakes, Minnesota – Water and Sewer Rate Study Update
Water Utility
Area and Unit
Charge Fund
Area and Unit
Charge Bonds
Special
Assessments -
Area and Unit Totals
2012 - - - - 45,000
2013 - 289,307 - 317,307 656,614
2014 - 2,603,170 - 337,185 2,992,150
2015 - 1,285,555 - 1,285,555 2,624,764
2016 - 398,343 - - 535,425
2017 - - 902,818 - 960,394
2018 - - 4,751,653 - 4,811,296
2019 - - 2,040,138 - 2,101,922
2020 - 612,433 3,970,743 980,312 5,728,200
2021 - - 745,178 745,178 1,556,656
2022 - - 4,940,354 - 5,009,034
Total - 5,188,808 17,350,884 3,665,537 27,021,455
Capital Outlay To determine the appropriate fees and rates needed for the operation of the
Water Utility over the planning period, we have incorporated the anticipated
future capital outlay needs provided by the Finance Director and City Engineer.
These capital costs and their projected source of funding are shown in the table
below. The capital items are projected to be paid the Area and Unit Charge
Fund. All water and sewer trunk charges are deposited into the Area and Unit
Charge Fund, in addition to the $10 quarterly fee imposed on all water users.
The only capital improvements planned for the Water Utility are related
primarily to projected growth and include new watermains, wells, and a new
ground storage unit. The water capital outlay is projected to be funded with a
mixture of special assessments and G.O. Water Revenue Bonds, which are
projected to be repaid from trunk charge revenue.
A detailed listing of the anticipated capital improvements to be paid from the
Water Utility Fund through 2022 as well as the Area and Unit Charge Fund
projections is shown on the following pages. Capital Outlay shown in the
Area and Unit Charge Fund also includes Sewer Utility projects. Discussion
of the Sewer Utility appears later in the report.
Water Utility 20 City of Lino Lakes, Minnesota – Water and Sewer Rate Study Update Year Project Water UtilityArea and Unit Charge FundArea and Unit Charge BondsSpecial Assessments - Area and Unit Totals2013 NE Area Trunk Water Main PH 1 (400') 21,000 49,000 70,0002014 Strengthen Trunk Watermain (Phase 1) 961,345 961,3452014 Well No. 6 & Watermain 1,068,640 1,068,6402014 Woodridge Estate Trunk Watermain extension 236000 236,0002016 Lake Dr. Trunk Watermain (Phase 2) 398,343 398,3432017 Lake Dr. Trunk Watermain strenghtening (Phase 3) 902,818 902,8182018 Ground Storage Reservoir 2.5 MG & booster Sta. & Well No. 7 4,751,653 4,751,6532019 Raw Watermains from Wells 1,3,5,6 to reservoir 2,040,138 2,040,1382020 Redundant 16 inch watermain to replace north loop 2,683,6562,683,656 - 2,685,328 10,378,265 49,000 13,112,593Capital Outlay
Water Utility 21 City of Lino Lakes, Minnesota – Water and Sewer Rate Study Update AREA & UNIT CHARGE FUNDRevenues 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022Quarterly Fees242,400 245,560 249,720 253,880 258,040 263,200 268,360 274,520 280,680 287,840 295,000 Special Assessments - ExistingSpecial Assessments - New - - 42,096 87,909 262,575 262,575 262,575 262,575 262,575 395,768 501,864 Water Trunk Charges 222,085 222,085 316,085 316,085 316,085 410,085 410,085 504,085 504,085 598,085 598,085 Sewer Trunk Charges167,745 167,745 238,745 238,745 238,745 309,745 309,745 380,745 380,745 451,745 451,745 Total Revenue 632,230 635,390 846,646 896,619 1,075,445 1,245,605 1,250,765 1,421,925 1,428,085 1,733,438 1,846,694 Operating ExpensesCapital Outlay - 606,614 2,940,355 2,571,110 398,343 902,818 4,751,653 2,040,138 5,563,488 1,490,356 4,940,354 OtherTotal Operating Expenses - 606,614 2,940,355 2,571,110 398,343 902,818 4,751,653 2,040,138 5,563,488 1,490,356 4,940,354 Revenue Over (Under) Expenditures 632,230 28,776 (2,093,709) (1,674,491) 677,102 342,787 (3,500,889) (618,213) (4,135,403) 243,082 (3,093,659) Other Financing Sources (Uses)Transfer in 34,511 35,861 34,646 33,416 34,627 35,726 - - - - - Bond Proceeds - 317,307 337,185 1,285,555 - 902,818 4,751,653 2,040,138 4,951,055 1,490,356 4,940,354 Debt Service - existing (405,911) (383,470) (361,542) (313,013) (26,764) (30,623) - - - - - Debt Service - new - - (37,198) (77,742) (236,239) (236,239) (347,548) (933,384) (1,184,915) (1,795,335) (1,979,082) OtherTotal Non Operating Revenues (Expenses) (371,400) (30,301) (26,909) 928,217 (228,376) 671,682 4,404,105 1,106,754 3,766,140 (304,979) 2,961,272 Net Increase (Decrease) in fund balance 260,831 (1,525) (2,120,617) (746,274) 448,726 1,014,470 903,217 488,541 (369,263) (61,897) (132,388) Beginning Cash & Investments 3,217,984 3,478,815 3,477,289 1,356,672 610,397 1,059,123 2,073,593 2,976,810 3,465,350 3,096,088 3,034,191 Net Income 260,831 (1,525) (2,120,617) (746,274) 448,726 1,014,470 903,217 488,541 (369,263) (61,897) (132,388) Ending Cash Balance 3,478,815 3,477,289 1,356,672 610,397 1,059,123 2,073,593 2,976,810 3,465,350 3,096,088 3,034,191 2,901,803 Water Utility Financial
Water Utility 22
City of Lino Lakes, Minnesota – Water and Sewer Rate Study Update
Financial Projections The financial projections assumed the City would maintain a minimum cash
balance in the Water Fund equal to three months of anticipated operating
expenses and one-year’s debt service within the planning period. In addition,
the City would fully fund depreciation and maintain positive operating income.
These assumptions were made to ensure that the Water Fund would have
sufficient cash to fund operations going forward as well as meet debt service
requirements.
To determine the appropriate user rates needed for the repayment of debt
service and operation of the Water Fund, we have projected future revenue
and expenditures and have incorporated the anticipated future capital outlay
needs for the time period covered by this study.
The financial projections began with the Water Fund expenditures;
subsequently, revenues were adjusted to provide the recommended income,
cash flow, and level of ending cash balances. Our expenditure projections are
generally based on an analysis of past trends, anticipated changes in
operations, and our significant experience in preparing Water rate studies.
Scenario 1 – Keep Current Block Rate Structure
Our projections show that the existing block rate structure combined with
projected growth in the customer-base, will provide sufficient revenues for the
operation of the Water Utility through 2014. In order to obtain the goals stated
above, we determined that a 2.0% increase in user rates in each of the five
blocks is needed annually 2013-2017.
The projected rate increases are primarily needed to fund depreciation while
maintaining recommended reserve levels.
The financial projections are shown on the following page.
Water Utility 23 City of Lino Lakes, Minnesota – Water and Sewer Rate Study Update Scenario 1 - Water Utility Financial Projections - Current Block Rate Structure with Volumetric Rate Increases
Water Utility 24
City of Lino Lakes, Minnesota – Water and Sewer Rate Study Update
Scenario 2 – One Rate for Each Customer Class
In Scenario 2, we assume the City will generally need to generate the same
amount of revenues each year as shown in Scenario 1. The rate for each
residential, non-residential, and non-residential irrigation customer is assumed
to be the rate that provides for residential customers generating 77% of total
revenues, non-residential accounts generating 10% of annual revenues, and non-
residential irrigation accounts generating 13% of total revenues, as is currently
the case with 2012 rates.
Based on these assumptions the uniform rates for each customer class would
need to be:
As in the first scenario, these volumetric rates would need to be increased by
2.0% annually 2014-2017.
The financial projections are shown on the following page.
Residential Non-
Residential
Non-
Residential
Irrigation
2013 $2.02 $2.21 $3.40
Water Utility 25 City of Lino Lakes, Minnesota – Water and Sewer Rate Study Update Scenario 2 - Water Utility Financial Projections – One Rate for Each Customer Class
Water Utility 26
City of Lino Lakes, Minnesota – Water and Sewer Rate Study Update
Scenario 3 –Uniform Rate for All Use/Users
Scenario 3 also assumes the same revenue requirements will need to be met as
in Scenarios 1 and 2. However, Scenario 3 assumes one rate for all use of all
users. The 2013 rate for all users; residential, non-residential, and non-
residential irrigation customers is recommended to be $2.16 per 1,000 gallons.
A uniform rate structure is estimated to alter the total revenues generated from
each customer class as follows:
As in the first two scenarios, these volumetric rates would need to be increased
by 2.0% annually 2014-2017.
The financial projections are shown on the following page.
Residential Non-
Residential
Non-
Residential
Irrigation
Current
Rates
77% 10% 13%
Proposed
Rate
82% 10% 8%
Water Utility 27 City of Lino Lakes, Minnesota – Water and Sewer Rate Study Update Scenario 3 - Water Utility Financial Projections – Uniform Rate for All Use/Users
Water Utility 28
City of Lino Lakes, Minnesota – Water and Sewer Rate Study Update
Tier 1
95.0%
Tier 2
4.3%
Tier 3
0.8%
Residential Accounts by Tier
winter average (2010‐2011)
Scenario 4 – Revised Block Rate Structure
One final option we reviewed is to keep a block rate structure, whereby the
price of water increases with volume consumed, but reduce the number of
blocks from five to three for residential and from three to two for non-
residential and non-residential irrigation. The following block rate structure is
proposed in order to meet revenue requirements:
Proposed 2013 Residential Rates
Based on this rate structure, 95% of residential accounts would fall into the first
tier and 99.3% in the first two tiers (based on 2010 and 2011 winter average
consumption records).
Proposed 2013 Non-Residential Rates
Proposed 2013 Non-Residential Irrigation Rates
Our proposed rates along with 2.0% increases in these rates 2014-2017 project
depreciation could be funded while maintaining recommended reserve levels.
The financial projections are shown on the following page.
Residential
0 – 30,000 gallons $1.89
30,001 – 50,000 $2.09
> 50,000 $2.91
Non-Residential
0 – 50,000 gallons $2.04
> 50,000 $2.30
Non-Residential Irrigation
0 – 50,000 gallons $2.55
> 50,000 $3.57
Water Utility 29 City of Lino Lakes, Minnesota – Water and Sewer Rate Study Update Scenario 4 - Water Utility Financial Projections – Revised Block-Rate Structure
Water Utility 30
City of Lino Lakes, Minnesota – Water and Sewer Rate Study Update
Impact on Water Charges The proposed quarterly water bill for an average residential water user of 17,500
gallons per quarter, 24,000 gallons per quarter, and 30,000 gallons per quarter in
2013 compared to current rates for each rate scenario are shown in the tables
below:
Average Residential User of 17,500
gallons per quarter (64.6% of users)
Fixed
Fee/REU
Volume
Charges
Total
Quarterly
Bill 2013
Total
Quarterly
Bill 2012
Increase
2014-2017
Scenario 1
(Current Blocks)
$10.00 $32.20 $42.20 $41.50 2.0%
Scenario 2
(One Rate for Each Customer Class)
$10.00 $35.35 $45.35 $41.50 2.0%
Scenario 3
(One Rate for All Users/All Use)
$10.00 $37.80 $47.80 $41.50 2.0%
Scenario 4
(Revised Block Rate Structure)
$10.00 $33.08 $43.08 $41.50 2.0%
Average Residential User of 24,000
gallons per quarter (86.4% of users)
Fixed
Fee/REU
Volume
Charges
Total
Quarterly
Bill
Total
Quarterly
Bill 2012
Increase
2014-2017
Scenario 1
(Current Blocks)
$10.00 $44.96 $54.96 $54.00 2.0%
Scenario 2
(One Rate for Each Customer Class)
$10.00 $48.48 $58.48 $54.00 2.0%
Scenario 3
(One Rate for All Users/All Use)
$10.00 $51.84 $61.84 $54.00 2.0%
Scenario 4
(Revised Block Rate Structure)
$10.00 $45.36 $55.36 $54.00 2.0%
Average Residential User of 30,000
gallons per quarter (95.0% of users)
Fixed
Fee/REU
Volume
Charges
Total
Quarterly
Bill
Total
Quarterly
Bill 2012
Increase
2014-2017
Scenario 1
(Current Blocks)
$10.00 $57.20 $67.20 $66.00 2.0%
Scenario 2
(One Rate for Each Customer Class)
$10.00 $60.60 $70.60 $66.00 2.0%
Scenario 3
(One Rate for All Users/All Use)
$10.00 $64.80 $74.80 $66.00 2.0%
Scenario 4
(Revised Block Rate Structure)
$10.00 $56.70 $66.70 $66.00 2.0%
The bill for an average residential user in scenarios 2 and 3 is higher due to the
need to generate lost revenues that higher end water users currently pay for
using more water at higher rates.
Water Utility 31
City of Lino Lakes, Minnesota – Water and Sewer Rate Study Update
We recommend the City establish Water rates on a three-year basis. The rates
should be reviewed on an annual basis concurrent with the development of
following year’s budget.
A comparison of an average residential quarterly bill for the City of Lino Lakes
to the average quarterly bill of other communities selected by the City is shown
below.
The average water bill of the seven communities for a resident using 17,500
gallons per quarter surveyed is $45.75, putting three of the four the proposed
2013 options slightly below average. Some comparable communities have
already adopted 2013 rates. It is noted where that is the case.
Water Utility 32
City of Lino Lakes, Minnesota – Water and Sewer Rate Study Update
WATER RATES - RESIDENTIAL USER - AVERAGE USE 17,500 GALLONS/QUARTER
Jurisdiction Block Usage
Water Rates per
1,000 Gallons Volume Charge Base Charge
Total Avg
Quarterly Charge
Lino Lakes 0 - 20,000 $1.84
SCENARIO 1 - 2013 20,001 - 40,000 $2.04
40,001 - 79,000 $2.55
79,001 - 120,000 $3.06
> 120,000 $3.57
Lino Lakes
SCENARIO 2 - 2013 All Use $2.02 $35.35 $10.00 $45.35
Lino Lakes
SCENARIO 3 - 2013 All Use $2.16 $37.80 $10.00 $47.80
Lino Lakes 0 - 30,000 $1.89
SCENARIO 4 - 2013 30,001 - 50,000 $2.09
>50,000 $2.91
Blaine 0 - 24,000 $1.06
24,001 - 150,000 $1.43
>150,000 $2.10
Hugo - 2012 0 - 15,000 $1.50
(2013 rates determined in March)15,001 - 30,000 $1.65
> 30,000 $2.50
Circle Pines 0 - 8,000 $1.70
8,001 - 16,000 $1.90
16,000 - 35,000 $2.35
>35,000 $3.25
Centerville 0 - 90,000 $2.00
2013 rates 90,001 - 150,000 $2.20
>150,001 $2.50
Lexington 0 - 10,000 $1.40
10,001 - 20,000 $1.68
20,001 - 30,000 $2.10
30,001 - 40,000 $2.73
>40,000 $3.69
Arden Hills 0- 10,000 $0.00
10,001 - 35,000 $3.28
>35,000 $5.75
Shoreview 0 - 5,000 $1.08
2013 rates 5,001 - 10,000 $1.74
10,001 - 30,000 $2.41
30,001 or > $3.96
Forest Lake (a) 0 - 5,000 $0.00
2013 rates 5,001 - 15,000 $2.87
>15,001 $3.54
(a) City has fall/winter rates that vary from spring/summer. Our calculation is an average of the two.
$33.08 $10.00 $43.08
$7.50 $39.83
$17.00
$18.55 $5.50 $24.05
$63.07
$43.63
$37.55 $19.70
$36.60$10.00
$13.40$32.18
$32.20 $10.00 $42.20
$35.00 $21.00 $56.00
$24.60
$26.63
$26.60
$32.33
$57.25
$45.58
$38.47
Water Utility 33
City of Lino Lakes, Minnesota – Water and Sewer Rate Study Update
$0.00
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$70.00
$80.00
$90.00
Quarterly Residential Water Bill
(24,000 gallons)
The average water bill of the seven communities for a resident using 24,000
gallons per quarter surveyed is $60.56, again putting three of the four proposed
2013 options below average.
Water Utility 34
City of Lino Lakes, Minnesota – Water and Sewer Rate Study Update
WATER RATES - RESIDENTIAL USER - AVERAGE USE 24,000 GALLONS/QUARTER
Jurisdiction Block Usage
Water Rates per
1,000 Gallons Volume Charge Base Charge
Total Avg
Quarterly Charge
Lino Lakes 0 - 20,000 $1.84
SCENARIO 1 - 2013 20,001 - 40,000 $2.04
40,001 - 79,000 $2.55
79,001 - 120,000 $3.06
> 120,000 $3.57
Lino Lakes
SCENARIO 2 - 2013 All Use $2.02 $48.48 $10.00 $58.48
Lino Lakes
SCENARIO 3 - 2013 All Use $2.16 $51.84 $10.00 $61.84
Lino Lakes 0 - 30,000 $1.89
SCENARIO 4 - 2013 30,001 - 50,000 $2.09
>50,000 $2.91
Blaine 0 - 24,000 $1.06
24,001 - 150,000 $1.43
>150,000 $2.10
Hugo - 2012 0 - 15,000 $1.50
(2013 rates determined in March)15,001 - 30,000 $1.65
> 30,000 $2.50
Circle Pines 0 - 8,000 $1.70
8,001 - 16,000 $1.90
16,000 - 35,000 $2.35
>35,000 $3.25
Centerville 0 - 90,000 $2.00
2013 rates 90,001 - 150,000 $2.20
>150,001 $2.50
Lexington 0 - 10,000 $1.40
10,001 - 20,000 $1.68
20,001 - 30,000 $2.10
30,001 - 40,000 $2.73
>40,000 $3.69
Arden Hills 0- 10,000 $0.00
10,001 - 35,000 $3.28
>35,000 $5.75
Shoreview 0 - 5,000 $1.08
2013 rates 5,001 - 10,000 $1.74
10,001 - 30,000 $2.41
30,001 or > $3.96
Forest Lake (a) 0 - 5,000 $0.00
2013 rates 5,001 - 15,000 $2.87
>15,001 $3.54
(a) City has fall/winter rates that vary from spring/summer. Our calculation is an average of the two.
$47.84 $13.40 $61.24
$60.56 $19.70 $80.26
$39.20 $10.00 $49.20
$45.92 $38.47 $84.39
$47.60 $7.50 $55.10
$48.00 $21.00 $69.00
$25.44 $5.50 $30.94
$37.35 $17.00 $54.35
$44.96 $10.00 $54.96
$45.36 $10.00 $55.36
Water Utility 35
City of Lino Lakes, Minnesota – Water and Sewer Rate Study Update
$0.00
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
Quarterly Residential Water Bill
(30,000 gallons)
The average water bill of the seven communities for a resident using 30,000
gallons per quarter surveyed is $74.63, putting three of the four proposed
2013 options below average.
Water Utility 36
City of Lino Lakes, Minnesota – Water and Sewer Rate Study Update
WATER RATES - RESIDENTIAL USER - AVERAGE USE 30,000 GALLONS/QUARTER
Jurisdiction Block Usage
Water Rates per
1,000 Gallons Volume Charge Base Charge
Total Avg
Quarterly Charge
Lino Lakes 0 - 20,000 $1.84
SCENARIO 1 - 2013 20,001 - 40,000 $2.04
40,001 - 79,000 $2.55
79,001 - 120,000 $3.06
> 120,000 $3.57
Lino Lakes
SCENARIO 2 - 2013 All Use $2.02 $60.60 $10.00 $70.60
Lino Lakes
SCENARIO 3 - 2013 All Use $2.16 $64.80 $10.00 $74.80
Lino Lakes 0 - 30,000 $1.89
SCENARIO 4 - 2013 30,001 - 50,000 $2.09
>50,000 $2.91
Blaine 0 - 24,000 $1.06
24,001 - 150,000 $1.43
>150,000 $2.10
Hugo - 2012 0 - 15,000 $1.50
(2013 rates determined in March)15,001 - 30,000 $1.65
> 30,000 $2.50
Circle Pines 0 - 8,000 $1.70
8,001 - 16,000 $1.90
16,000 - 35,000 $2.35
>35,000 $3.25
Centerville 0 - 90,000 $2.00
2013 rates 90,001 - 150,000 $2.20
>150,001 $2.50
Lexington 0 - 10,000 $1.40
10,001 - 20,000 $1.68
20,001 - 30,000 $2.10
30,001 - 40,000 $2.73
>40,000 $3.69
Arden Hills 0- 10,000 $0.00
10,001 - 35,000 $3.28
>35,000 $5.75
Shoreview 0 - 5,000 $1.08
2013 rates 5,001 - 10,000 $1.74
10,001 - 30,000 $2.41
30,001 or > $3.96
Forest Lake (a) 0 - 5,000 $0.00
2013 rates 5,001 - 15,000 $2.87
>15,001 $3.54
(a) City has fall/winter rates that vary from spring/summer. Our calculation is an average of the two.
$62.30 $13.40 $75.70
$81.80 $19.70 $101.50
$51.80 $10.00 $61.80
$65.60 $38.47 $104.07
$61.70 $7.50 $69.20
$60.00 $21.00 $81.00
$34.02 $5.50 $39.52
$47.25 $17.00 $64.25
$57.20 $10.00 $67.20
$56.70 $10.00 $66.70
Sewer Utility 37
City of Lino Lakes, Minnesota – Water and Sewer Rate Study Update
5. Sewer Utility
Sewer Rates In addition to quarterly billing charges, the City currently has a Sewer
Trunk/Availability Charge and a Sewer Connection Fee. These fees are as
follows:
Quarterly Charges
Availability Charge
Connection Fee
The Sewer Availability Charge is a fee incurred to recover the capital costs
associated with extending and over-sizing of trunk lines to new developments
within the City. This cost should be established to recover the capital cost
associated with providing the necessary infrastructure to make these services
available to the customer. City staff has determined the connection fee and
availability charge to be sufficient at this time.
Sewer Customer The projection of residential sewer connections is the same as projected
Growth Projections new water connections. The projected number of added sewer connections over
the planning period is as follows:
Volume Charges Amount
0 – 10,000 gal $52.00
>10,000 (per 1,000 gallons) $1.00
Per SAC Unit Amount
$2,911
Meter Size
(Inches) Amount
All $200
Residential
(3/4” meter)
Commercial
(1” meter)
2013 50 3
2014 75 3
2015 75 3
2016 75 3
2017 100 3
2018 100 3
2019 125 3
2020 125 3
2021 150 3
2022 150 3
Sewer Utility 38
City of Lino Lakes, Minnesota – Water and Sewer Rate Study Update
Sewer Utility Revenue Revenue requirements indicate the amount of revenue needed for the City to
Requirements continue efficient operations as well as maintain an adequate cash balance in
the utility. The following page shows the projected operating statement and
annual cash balance in the Sewer Utility, assuming no rate increases, over the
planning period 2013-2022.
Operating income is projected to become negative at the end of 2012 and
remain negative through the end of the planning period, indicating that
depreciation is not being fully funded. The projected ending cash balance in
2022 is $8,759,808. Sewer utility projections through 2022 without any rate
increases are shown on the following page.
Sewer Utility 39 City of Lino Lakes, Minnesota – Water and Sewer Rate Study Update Sewer Utility Financial Projections – NO RATE INCREASES
Sewer Utility 40
City of Lino Lakes, Minnesota – Water and Sewer Rate Study Update
Sanitary Sewer
Utility
Area and Unit
Charge Fund
Area and Unit
Charge Bonds
Special
Assessments -
Area and Unit Totals
2012 45,000 - - - 45,000
2013 50,000 268,307 - 268,307 586,614
2014 51,795 337,185 - 337,185 726,165
2015 53,654 1,285,555 - 1,285,555 2,624,764
2016 137,082 - - - 137,082
2017 57,576 - - - 57,576
2018 59,643 - - - 59,643
2019 61,784 - - - 61,784
2020 164,712 612,433 1,287,087 980,312 3,044,544
2021 66,300 - 745,178 745,178 1,556,656
2022 68,680 - 4,940,354 - 5,009,034
Total 816,226 2,503,480 6,972,619 3,616,537 13,908,862
Capital Outlay To determine the appropriate fees and rates needed for the operation of the
Sewer Fund over the planning period, we have projected future revenue and
expenditures and we have incorporated the anticipated future capital outlay
needs provided by the City. The capital items are projected to be paid from both
the Sewer Utility Fund and the Area and Unit Charge Fund. The capital costs
and their projected source of funding are shown in the table below.
These capital projects to be paid for from the Sanitary Sewer Utility are
primarily related to repair and maintenance of existing infrastructure. New
items, such as new lift stations and trunk lines will be repaid from trunk
charges collected from new users and deposited into the Area and Unit
Charge Fund.
A detailed listing of the anticipated capital improvements shows estimated
sewer capital expenditures through 2022 of approximately $13,909,000. The
anticipated capital improvements are shown on the following page.
Sewer Utility 41
City of Lino Lakes, Minnesota – Water and Sewer Rate Study Update
Year Project
Sanitary Sewer
Utility
Area and Unit
Charge Fund
Area and Unit
Charge Bonds
Special
Assessments -
Area and Unit Totals
2012 Capital Outlay from 2012 Sewer Budget 45,000 45,000
2013 Gravity Sewer Extension, 21st Avenue Phase 1 (1,320') 50,000 50,000 100,000
2013 Gravity Sewer, Cedar Street/Centerville Rd 218,307 218,307 436,614
2013 Sanitary Sewer Rehab 50,000 50,000
2014 Gravity Sewers, North of Century Farms, Stage 1 337,185 337,185 674,370
2014 Sanitary Sewer Rehab 51,795 51,795
2015 Gravity Sewer Extension, 21st Avenue Phase 2 (3,960') 275,000 275,000 550,000
2015 Gravity Sewer, Lift Station & Forcemain Area 1G 603,050 603,050 1,206,100
2015 NE Area Trunk Sewer, Stage 1 407,505 407,505 815,010
2015 Sanitary Sewer Rehab 53,654 53,654
2016 Sanitary Sewer Rehab 55,581 55,581
2016 Upgrade Lift Station No. 8 81,501 81,501
2017 Sanitary Sewer Rehab 57,576 57,576
2018 Sanitary Sewer Rehab 59,643 59,643
2019 Sanitary Sewer Rehab 61,784 61,784
2020 Gravity Sewer, 77th Street/Country Lane 84,427 337,708 422,135
2020 Gravity Sewer, Lake Drive North of Main Street 1,287,087 321,772 1,608,859
2020 Lift Station & Forcemain, Area 3D 276,232 69,058 345,290
2020 NE Area Trunk Sewer, Stage 2 251,774 251,774 503,548
2020 Sanitary Sewer Rehab 64,002 64,002
2020 Upgrade Lift Station No. 10 100,710 100,710
2021 Gravity Sewers, North of Century Farms, Stage 2 745,178 745,178 1,490,356
2021 Sanitary Sewer Rehab 66,300 66,300
2022 Sanitary Sewer Rehab 68,680 68,680
2022 West Side Relief Sewer 4,940,354 4,940,354
TOTALS 816,226 2,503,480 6,972,619 3,616,537 13,908,862
Financial Projections The financial projections assumed the City would maintain a minimum cash
balance in the Sewer Fund equal to three months of anticipated operating
expenses and one-year’s debt service within the planning period as well as fully
fund deprecation. This assumption was made to ensure that the Sewer Fund
would have sufficient cash to fund operations going forward and meet future
debt service requirements.
To determine the appropriate user rates needed for the repayment of debt
service and operation of the Sewer Fund, we have projected future revenue
and expenditures and have incorporated the anticipated future capital outlay
needs for the time period covered by this study.
The financial projections began with the Sewer Fund expenditures;
subsequently, revenues were adjusted to provide the recommended income,
cash flow, and level of ending cash balances. Our expenditure projections are
generally based on an analysis of past trends, anticipated changes in
operations, and our significant experience in preparing sewer rate studies.
Our projections show that the existing rate structure combined with projected
growth in the customer-base, will provided sufficient revenues to meet the
minimum cash reserves recommended, but an increase of 7.0% in 2013 and
2.0% annual increases 2014-2019 will be needed to fully fund depreciation.
Our projections fund depreciation as well as the recommended reserve levels
in the Sewer Fund throughout the planning period.
The financial projections are shown on the following pages.
Sewer Utility 42 City of Lino Lakes, Minnesota – Water and Sewer Rate Study Update Sewer Utility Financial Projections
Sewer Utility 43
City of Lino Lakes, Minnesota – Water and Sewer Rate Study Update
2012 2013 2014 2015 2016 2017 2018 2019
0 - 10,000 gallons 52.00$ 55.64$ 56.75$ 57.89$ 59.05$ 60.23$ 61.43$ 62.66$
> 10,000 gals (per 1,000 gal)1.00$ 1.07$ 1.09$ 1.11$ 1.14$ 1.16$ 1.18$ 1.20$
$0.00
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
Quarterly Residential Sewer Bill
(17,500 gallons)
Impact on Sewer Charges The proposed sewer rates are shown below. The proposed user rates were
determined by increasing existing rates by 7.0% in 2013, and 2.0% annually
2014-2019.
We recommend the City establish Sewer rates on a three year basis. The rates
should be reviewed on an annual basis concurrent with the development of
following year’s budget.
A comparison of an average residential 2013 quarterly bill for the City of
Lino Lakes to the average quarterly bill of other communities selected by the
City is also shown below. The average sewer bill of the seven communities
for a resident using 17,500 gallons per quarter surveyed is $71.38, putting the
proposed sewer rates at 89.2% of the average.
Sewer Utility 44
City of Lino Lakes, Minnesota – Water and Sewer Rate Study Update
SEWER RATES - RESIDENTIAL USER - AVERAGE USE 17,500 GALLONS/QUARTER
Jurisdiction Block Usage
Sewer Rates per
1,000 Gallons Volume Charge Base Charge
Total Avg
Quarterly Charge
Lino Lakes - 2013 0 -10,000 $0.00
10,001 > $1.07
Blaine Flat rate $44.70 $44.70 $44.70
Hugo 0 - 9,000 $0.00
(2013 rates determined in March)9,000 and up $1.85
Circle Pines 0 - 8,000 $3.55
8,000 - 16,000 $3.84
>16,000 $4.23
Centerville All Use $1.90 $33.25 $37.00 $70.25
2013 rates
Lexington All Use $2.50 $43.75 $9.00 $52.75
Arden Hills 0 - 15,000 $0.00
>15,000 $4.83
Shoreview 0 - 5,000 $16.02
2013 rates 5,001 - 10,000 $27.58
10,000 - 20,000 $42.29
20,001 - 30,000 $57.52
>30,000 $74.73
Forest Lake 10,000 $0.00
2013 rates 10,001 or > $5.20
$39.00 $47.00 $86.00
$15.73 $50.00 $65.73
$12.08 $83.87 $95.95
$37.91 $80.20
$8.03 $55.64 $63.67
$65.47 $10.00 $75.47
Sewer Utility 45
City of Lino Lakes, Minnesota – Water and Sewer Rate Study Update
SEWER RATES - RESIDENTIAL USER - AVERAGE USE 24,000 GALLONS/QUARTER
Jurisdiction Block Usage
Sewer Rates per
1,000 Gallons Volume Charge Base Charge
Total Avg
Quarterly Charge
Lino Lakes - 2013 0 -10,000 $0.00
10,001 > $1.07
Blaine Flat rate $44.70 $44.70 $44.70
Hugo 0 - 9,000 $0.00
(2013 rates determined in March)9,000 and up $1.85
Circle Pines 0 - 8,000 $3.55
8,000 - 16,000 $3.84
>16,000 $4.23
Centerville All Use $1.90 $45.60 $37.00 $82.60
2013 rates
Lexington All Use $2.50 $60.00 $9.00 $69.00
Arden Hills 0 - 15,000 $0.00
>15,000 $4.83
Shoreview 0 - 5,000 $16.02
2013 rates 5,001 - 10,000 $27.58
10,000 - 20,000 $42.29
20,001 - 30,000 $57.52
>30,000 $74.73
Forest Lake 10,000 $0.00
2013 rates 10,001 or > $5.20
$37.91 $95.43
$72.80 $47.00 $119.80
$92.96 $10.00 $102.96
$43.47 $83.87 $127.34
$14.98 $55.64 $70.62
$27.75 $50.00 $77.75
The average sewer bill of the seven communities for a resident using 24,000
gallons per quarter surveyed is $89.95, putting the proposed sewer rates at
78.5% of the average.
$0.00
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
$140.00
Quarterly Residential Sewer Bill
(24,000 gallons)
Sewer Utility 46
City of Lino Lakes, Minnesota – Water and Sewer Rate Study Update
$0.00
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
$140.00
$160.00
$180.00
Quarterly Residential Sewer Bill
(30,000 gallons)
SEWER RATES - RESIDENTIAL USER - AVERAGE USE 30,000 GALLONS/QUARTER
Jurisdiction Block Usage
Sewer Rates per
1,000 Gallons Volume Charge Base Charge
Total Avg
Quarterly Charge
Lino Lakes - 2013 0 -10,000 $0.00
10,001 > $1.07
Blaine Flat rate $44.70 $44.70 $44.70
Hugo 0 - 9,000 $0.00
(2013 rates determined in March)9,000 and up $1.85
Circle Pines 0 - 8,000 $3.55
8,000 - 16,000 $3.84
>16,000 $4.23
Centerville All Use $1.90 $57.00 $37.00 $94.00
2013 rates
Lexington All Use $2.50 $75.00 $9.00 $84.00
Arden Hills 0 - 15,000 $0.00
>15,000 $4.83
Shoreview 0 - 5,000 $16.02
2013 rates 5,001 - 10,000 $27.58
10,000 - 20,000 $42.29
20,001 - 30,000 $57.52
>30,000 $74.73
Forest Lake 10,000 $0.00
2013 rates 10,001 or > $5.20
$37.91 $95.43
$104.00 $47.00 $151.00
$118.34 $10.00 $128.34
$72.45 $83.87 $156.32
$21.40 $55.64 $77.04
$38.85 $50.00 $88.85
The average sewer bill of the seven communities for a resident using 30,000
gallons per quarter surveyed is $105.33, putting the proposed sewer rates at
73.1% of the average.
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 and 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 determined as a result of this study and the
financial projections prepared for the years 2012 through 2022.
1. The Water and Sewer Fund’s history shows revenues and expenditures,
have remained fairly stable over time. 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 include 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
Conclusions and Recommendations 48
City of Lino Lakes, Minnesota – Water and Sewer Rate Study Update
Future projections indicate rates may need to be increased by 2.00%
annually 2014 - 2017.
Scenario 2 – One Rate for Each Customer Class
In Scenario 2, the rate for each residential, non-residential, and non-
residential irrigation customer is assumed to be the rate which provides for
residential customers generating 77% of total revenues, non-residential
accounts generating 10% of annual revenues, and non-residential irrigation
accounts generating 13% of total revenues, as is currently the case. The
proposed rates are:
As in the first scenario, these volumetric rates would need to be increased
by 2.0% annually 2014-2017.
Scenario 3 –Uniform Rate for All Use/All Users
Scenario 3 assumes one rate for all use of all users. The 2013 rate for all
users; residential, non-residential, and non-residential irrigation customers is
recommended to be $2.16 per 1,000 gallons to meet revenue requirements.
A uniform rate structure is estimated to alter the total revenues generated
from each customer class as follows:
As in the first two scenarios, these volumetric rates would need to be
increased by 2.0% annually 2014-2017.
Scenario 4 –Revised Block Rate Structure
The final option reviewed is to keep a block rate structure, whereby the
price of water increases with volume consumed, but reduce the number of
blocks from five to three for residential and from three to two for non-
residential and non-residential irrigation. The following block rate structure
is proposed in order to meet revenue requirements:
Non-Residential Irrigation Rates
2012 Rate per 1,000 Gallons
2013 Rate per 1,000 Gallons
0 - 40,000 gallons $2.50 $2.55
40,001 – 80,000 gallons $3.00 $3.06
Over 80,000 gallons $3.50 $3.57
Residential Non-Residential Non-Residential
Irrigation
2013 $2.02 $2.21 $3.40
Residential Non-
Residential
Non-
Residential
Irrigation
Current Rates 77% 10% 13%
Proposed Rate 82% 10% 8%
Conclusions and Recommendations 49
City of Lino Lakes, Minnesota – Water and Sewer Rate Study Update
Proposed 2013 Residential Rates
Proposed 2013 Non-Residential Rates
Proposed 2013 Non-Residential Irrigation Rates
Our proposed rates along with 2.0% increases in these rates 2014-2017
project depreciation could be funded while maintaining recommended
reserve levels.
5. The current Sewer Availability Charge of $2,911 is adequate to fund
projected capital costs.
6. Sewer user rates should be increased by 7.0% in 2013 and 2.0% annually
2014 through 2019.
7. The City should establish the user rates for each utility fund for a three-
year period and review them on an annual basis. The rates should be
reviewed on an annual basis concurrent with the development of the
following year’s budget.
These recommendations are based on information provided to us by City of
Lino Lakes. The City will need to monitor the performance of the Water and
Sewer Funds and make any necessary adjustments based upon its actual
performance and on the actual construction costs of the anticipated capital
improvements.
Residential
0 – 30,000 gallons $1.89
30,001 – 50,000 $2.09
> 50,000 $2.91
Non-Residential
0 – 50,000 gallons $2.04
> 50,000 $2.30
Non-Residential
Irrigation
0 – 50,000 gallons $2.55
> 50,000 $3.57