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Home My WebLink About02-04-13 Council PacketUpdated 2 -4 -13 WORK SESSION AGENDA CITY OF LINO LAKES Monday , February 4, 2013 CITY COUNCIL WORK SESSION Community Room (not televised) 5:30 P.M. 1. Water and Sewer Utility Rate Study, Springsted Incorporated 2. Emerald Ash Borer Project – Country Lakes Park 3. Of f-Sale Liquor Licensing 4. Blue Heron Days 5. Five Year Financial Forecast 6. Adam Johnson Docks 7. Charter Commission Expenditures 8. Citywide Survey 9. Review Regular Agenda Adjourn WS – Item #1 W ORK SESSION STAFF REPORT Work Session Item No. 1 D ate: February 4, 2013 T o: City Council Fr om: Rick DeGardner and Al Rolek R e: Water and Wastewater Utility Rate Study Background Attached is the Final Report of the Water and Sewer Utility Rate Study prepared by Springsted, Inc. +Nick Dragisich and Patty Kettles from Springsted, Inc. will review the report at the February 4 th City Council Work Session. Requested Council Direction None Required Attachments Final Report dated January 28, 2013 Water and Sewer Utility Rate Study Update. Final Repor t Cit y of Lino Lakes, Minnesota Water and Sewer Utilit y Rate Stud y Update Januar y 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 u tility 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 experien ce as well as anticipated capital improvement costs of each Fund. We appreciate the opportunity to conduct the Water a nd 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 ot her revenue needed to adequately fund operations through 2022. The process incl uded a historical review of the two utility funds, the evaluation of the appropriate rate structures needed to fund these operations over the pla nning 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 determini ng the water rates is compliance with Minnesota State Statutes, Section 103G.291. In the 2012 the Minnesota Legislature redefined the water con servation 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 effec tive water conservation/demand reduction program. Rate structures work best when coupled with a comprehensive program. A water demand reduction progr am 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 a nd used this information to recommend alternative rate structures that would promote water conservation. All recommendations are based on info rmation provided to us and on the assumptions given for the financial projec tions. 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 determin ed as a result of this study and the financial projections prepared: 1. The Water and Sewer Fund’s histor y shows revenues and expenditures, have remained fairly stable over tim e. 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 in clude 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 r esidential, 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 revenu es, 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 volumetri c 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 volumetri c 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 irrigati on. 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 fund ed 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 concurre nt with the development of the following year’s budget. These recommendations are based on inform ation provided to us by City of Lino Lakes. The City will need to m onitor 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 approp riate rate structure and other revenue sources needed for its operation and fi nancing of capital assets. The rate structure and other revenue in each fund must provide sufficient revenue to cover anticipated operating and mainte nance expenses, debt service including principal and interest, capital improve ments, 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 cost s during the period for which rates are being established. This report includes a review of th e 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, prov ides approximately 4,175 residential, commercial, industrial, and institutio nal customers with water and sewer services. The City encompasses approxima tely 33 square miles and had a 2010 Census population of 20,216 and an est imated 2011 population slightly higher at 20,505. Currently, the City obtains its water s upply from four raw water wells. Water storage for consistent pressure and for fi re 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 sin ce 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 sche dule 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 2009201020112012 Operating RevenuesActualActualActualBudget Charges for Services1,334,055 1,059,994 1,054,977 1,250,000 Hook-up Charges8,750 8,000 9,260 9,000 Water Meter Sales10,874 8,698 10,561 10,000 Other Revenue12,138 10,321 15,306 36,000 Total Operating Revenue1,365,817 1,087,013 1,090,104 1,305,000 Operating Expenses Personal Services187,201 172,095 175,906 181,337 Materials and Supplies269,925 208,872 154,450 237,500 Contractual Services60,814 76,755 92,345 110,000 Utilities78,532 97,060 80,906 92,000 Other21,262 28,640 19,903 31,450 Depreciation423,218 426,861 421,616 435,000 Total Operating Expenses1,040,952 1,010,283 945,126 1,087,287 Operating Income (Loss)324,865 76,730 144,978 217,713 Non Operating Revenues (Expenses) Investment Earnings74,818 37,249 43,983 25,000 Special Assessments8,107 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 Transfers359,173 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 Income323,612 50,516 135,114 199,136 Depreciation423,218 426,861 421,616 435,000 Amortization5,319 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 Accruals75,838 14,295 (78,038) - Ending Cash Balance3,432,696 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 $6,9 39,631; 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 2009201020112012 Operating RevenuesActualActualActualBudget Charges for Services1,477,007 1,491,728 1,486,616 1,480,000 Hook-up Charges7,490 6,490 7,220 8,000 Other Revenue17,667 352 500 Total Operating Revenue1,502,164 1,498,218 1,494,188 1,488,500 Operating Expenses Personal Services172,744 173,937 177,758 184,942 Materials and Supplies43,147 43,252 73,029 42,500 Contractual Services91,973 70,464 163,233 105,000 MCES Sewer Charges625,353 681,591 720,986 704,933 Utilities37,121 34,047 42,251 44,000 Other14,981 17,600 14,229 13,400 Depreciation446,788 445,956 446,577 450,000 Total Operating Expenses1,432,107 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 Earnings153,929 67,521 82,232 50,000 Special Assessments662 2,493 731 Total Non Operating Revenues (Expenses)154,591 70,014 82,963 50,000 Net Income (Loss) Before Transfers224,648 101,385 (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 Income214,087 67,324 (93,973) (40,786) Depreciation446,788 445,956 446,577 450,000 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 Balance5,750,402 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 mini mum 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 ope rating 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 expe nse. Personnel, supplies, and repairs and maintenance are typical examples of costs that are treated as operating expenses. These costs are shown on the inco me statement each year in the total amount of the expenditure for each category. The cost incurred in the acquisition or construction of assets su ch 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 depr eciated. 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 depreci ation 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, conn ection 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 th e planning period of this analysis. Should growth be expedited, we recommend the City revisit these fees to include the capital and associated bo rrowing costs of this large capital expenditure. It is important for the City to understa nd that while availability charges provide a valuable source of revenue for the util ities, 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 ha ve 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 pur poses, revised to take into account the slower growth pattern the City h as recently experienced. The projected number of added connectio ns 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 conser vation of our natural resources. The City is required to complete a wate r 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, A ugust, 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 margin al 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 hi gher rate than water consumed in the off-peak season. The City currently tracks consumption pa tterns for the following eight types of users: residential, commercial, industr ial, 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 residen tial, 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 residentia l, non-residential and non-residential irrigation is: 2011 – Q12011 – Q2 2011 – Q32011 – Q4 Residential 16,32818,404 32,62433,077 Non-Residential 104,63994,178 125,257143,080 Non-Residential Irrigation 66,70098,083 243,061343,500 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 40,0 00 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 40,00 0 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 mo re 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 fi ve-tiered system the same but adjust the volume charge if necessary, 2) provide on e rate for each user class (residential, non-residential, and non-residential irri gation) 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 incl ude 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 Obliga tion 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. Wa t e r U t i l i t y 18 Ci t y o f L i n o L a k e s , M i n n e s o t a – Water and Sewer Rate Study Update Wa t e r U t i l i t y F i n a n c i a l P r oj e c t i o n s – C u r r e n t B l o c k R a t e S t r u c t u r e a n d C u r r e n t V o l u m e t r i c R a t e s Water Utility 19 City of Lino Lakes, Minnesota – Water and Sewer Rate Study Update Water Utility A rea and Unit Charge Fund A rea and Unit Charge Bonds Special Assessments - Area and UnitTotals 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 incl ude new watermains, wells, and a new ground storage unit. The water capital outla y 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 cap ital 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 pa ges. 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. Wa t e r U t i l i t y 20 Ci t y o f L i n o L a k e s , M i n n e s o t a – W a t e r a n d S e w e r R a t e S t u d y U p d a t e Ye a r P r o j e c t W a t e r U t i l i t y Ar e a a n d U n i t Ch a r g e F u n d A r e a a n d U n i t Ch a r g e B o n d s Special A ssessments - Area and UnitTotals 20 1 3 N E A r e a T r u n k W a t e r M a i n P H 1 ( 4 0 0 ' ) 2 1 , 0 0 0 4 9 , 0 0 0 7 0 , 0 0 0 20 1 4 S t r e n g t h e n T r u n k W a t e r m a i n ( P h a s e 1 ) 9 6 1 , 3 4 5 9 6 1 , 3 4 5 20 1 4 W e l l N o . 6 & W a t e r m a i n 1 , 0 6 8 , 6 4 0 1 , 0 6 8 , 6 4 0 20 1 4 W o o d r i d g e E s t a t e T r u n k W a t e r m a i n e x t e n s i o n 2 3 6 0 0 0 2 3 6 , 0 0 0 20 1 6 L a k e D r . T r u n k W a t e r m a i n ( P h a s e 2 ) 3 9 8 , 3 4 3 3 9 8 , 3 4 3 20 1 7 L a k e D r . T r u n k W a t e r m a i n s t r e n g h t e n i n g ( P h a s e 3 ) 9 0 2 , 8 1 8 9 0 2 , 8 1 8 20 1 8 G r o u n d S t o r a g e R e s e r v o i r 2 . 5 M G & b o o s t e r S t a . & W e l l N o . 7 4 , 7 5 1 , 6 5 3 4 , 7 5 1 , 6 5 3 20 1 9 R a w W a t e r m a i n s f r o m W e l l s 1 , 3 , 5 , 6 t o r e s e r v o i r 2 , 0 4 0 , 1 3 8 2 , 0 4 0 , 1 3 8 20 2 0 R e d u n d a n t 1 6 i n c h w a t e r m a i n t o r e p l a c e n o r t h l o o p 2 , 6 8 3 , 6 5 6 2,683,656 - 2 , 6 8 5 , 3 2 8 1 0 , 3 7 8 , 2 6 5 4 9 , 0 0 0 1 3 , 1 1 2 , 5 9 3 Ca p i t a l O u t l a y Wa t e r U t i l i t y 21 Ci t y o f L i n o L a k e s , M i n n e s o t a – W a t e r a n d S e w e r R a t e S t u d y U p d a t e AR E A & U N I T C H A R G E F U N D Re v e n u e s 2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5 2 0 1 6 2 0 1 7 2 0 1 8 2 0 1 9 2 0 2 0 2 0 2 1 2 0 2 2 Qu a r t e r l y F e e s 24 2 , 4 0 0 2 4 5 , 5 6 0 2 4 9 , 7 2 0 2 5 3 , 8 8 0 2 5 8 , 0 4 0 2 6 3 , 2 0 0 2 6 8 , 3 6 0 2 7 4 , 5 2 0 2 8 0 , 6 8 0 287,840 295,000 Sp e c i a l A s s e s s m e n t s - E x i s t i n g Sp e c i a l A s s e s s m e n t s - N e w - - 4 2 , 0 9 6 8 7 , 9 0 9 2 6 2 , 5 7 5 2 6 2 , 5 7 5 2 6 2 , 5 7 5 2 6 2 , 5 7 5 2 6 2 , 5 7 5 395,768 501,864 W a t e r T r u n k C h a r g e s 2 2 2 , 0 8 5 2 2 2 , 0 8 5 3 1 6 , 0 8 5 3 1 6 , 0 8 5 3 1 6 , 0 8 5 4 1 0 , 0 8 5 4 1 0 , 0 8 5 5 0 4 , 0 8 5 5 0 4 , 0 8 5 598,085 598,085 S e w e r T r u n k C h a r g e s 16 7 , 7 4 5 1 6 7 , 7 4 5 2 3 8 , 7 4 5 2 3 8 , 7 4 5 2 3 8 , 7 4 5 3 0 9 , 7 4 5 3 0 9 , 7 4 5 3 8 0 , 7 4 5 3 8 0 , 7 4 5 451,745 451,745 To t a l R e v e n u e 6 3 2 , 2 3 0 6 3 5 , 3 9 0 8 4 6 , 6 4 6 8 9 6 , 6 1 9 1 , 0 7 5 , 4 4 5 1 , 2 4 5 , 6 0 5 1 , 2 5 0 , 7 6 5 1 , 4 2 1 , 9 2 5 1 , 4 2 8 , 0 8 5 1,733,438 1,846,694 Op e r a t i n g E x p e n s e s Ca p i t a l O u t l a y - 6 0 6 , 6 1 4 2 , 9 4 0 , 3 5 5 2 , 5 7 1 , 1 1 0 3 9 8 , 3 4 3 9 0 2 , 8 1 8 4 , 7 5 1 , 6 5 3 2 , 0 4 0 , 1 3 8 5 , 5 6 3 , 4 8 8 1,490,356 4,940,354 Ot h e r To t a l O p e r a t i n g E x p e n s e s - 6 0 6 , 6 1 4 2 , 9 4 0 , 3 5 5 2 , 5 7 1 , 1 1 0 3 9 8 , 3 4 3 9 0 2 , 8 1 8 4 , 7 5 1 , 6 5 3 2 , 0 4 0 , 1 3 8 5 , 5 6 3 , 4 8 8 1,490,356 4,940,354 R e v e n u e O v e r ( U n d e r ) E x p e n d i t u r e s 6 3 2 , 2 3 0 2 8 , 7 7 6 ( 2 , 0 9 3 , 7 0 9 ) ( 1 , 6 7 4 , 4 9 1 ) 6 7 7 , 1 0 2 3 4 2 , 7 8 7 ( 3 , 5 0 0 , 8 8 9 ) ( 6 1 8 , 2 1 3 ) ( 4 , 1 3 5 , 4 0 3 ) 243,082 (3,093,659) Ot h e r F i n a n c i n g S o u r c e s ( U s e s ) Tr a n s f e r i n 3 4 , 5 1 1 3 5 , 8 6 1 3 4 , 6 4 6 3 3 , 4 1 6 3 4 , 6 2 7 3 5 , 7 2 6 - - - - - Bo n d P r o c e e d s - 3 1 7 , 3 0 7 3 3 7 , 1 8 5 1 , 2 8 5 , 5 5 5 - 9 0 2 , 8 1 8 4 , 7 5 1 , 6 5 3 2 , 0 4 0 , 1 3 8 4 , 9 5 1 , 0 5 5 1,490,356 4,940,354 De b t S e r v i c e - e x i s t i n g ( 4 0 5 , 9 1 1 ) ( 3 8 3 , 4 7 0 ) ( 3 6 1 , 5 4 2 ) ( 3 1 3 , 0 1 3 ) ( 2 6 , 7 6 4 ) ( 3 0 , 6 2 3 ) - - - - - De b t S e r v i c e - n e w - - ( 3 7 , 1 9 8 ) ( 7 7 , 7 4 2 ) ( 2 3 6 , 2 3 9 ) ( 2 3 6 , 2 3 9 ) ( 3 4 7 , 5 4 8 ) ( 9 3 3 , 3 8 4 ) ( 1 , 1 8 4 , 9 1 5 ) (1,795,335) (1,979,082) Ot h e r To t a l N o n O p e r a t i n g R e v e n u e s ( E x p e n s e s ) ( 3 7 1 , 4 0 0 ) ( 3 0 , 3 0 1 ) ( 2 6 , 9 0 9 ) 9 2 8 , 2 1 7 ( 2 2 8 , 3 7 6 ) 6 7 1 , 6 8 2 4 , 4 0 4 , 1 0 5 1 , 1 0 6 , 7 5 4 3 , 7 6 6 , 1 4 0 (304,979) 2,961,272 N e t I n c r e a s e ( D e c r e a s e ) i n f u n d b a l a n c e 2 6 0 , 8 3 1 ( 1 , 5 2 5 ) ( 2 , 1 2 0 , 6 1 7 ) ( 7 4 6 , 2 7 4 ) 4 4 8 , 7 2 6 1 , 0 1 4 , 4 7 0 9 0 3 , 2 1 7 4 8 8 , 5 4 1 ( 3 6 9 , 2 6 3 ) (61,897) (132,388) Be g i n n i n g C a s h & I n v e s t m e n t s 3 , 2 1 7 , 9 8 4 3, 4 7 8 , 8 1 5 3 , 4 7 7 , 2 8 9 1 , 3 5 6 , 6 7 2 6 1 0 , 3 9 7 1 , 0 5 9 , 1 2 3 2 , 0 7 3 , 5 9 3 2 , 9 7 6 , 8 1 0 3 , 4 6 5 , 3 5 0 3,096,088 3,034,191 Ne t I n c o m e 2 6 0 , 8 3 1 ( 1 , 5 2 5 ) ( 2 , 1 2 0 , 6 1 7 ) ( 7 4 6 , 2 7 4 ) 4 4 8 , 7 2 6 1 , 0 1 4 , 4 7 0 9 0 3 , 2 1 7 4 8 8 , 5 4 1 ( 3 6 9 , 2 6 3 ) (61,897) (132,388) En d i n g C a s h B a l a n c e 3 , 4 7 8 , 8 1 5 3 , 4 7 7 , 2 8 9 1 , 3 5 6 , 6 7 2 6 1 0 , 3 9 7 1 , 0 5 9 , 1 2 3 2 , 0 7 3 , 5 9 3 2 , 9 7 6 , 8 1 0 3 , 4 6 5 , 3 5 0 3 , 0 9 6 , 0 8 8 3,034,191 2,901,803 Wa t e r U t i l i t y F i n a n c i a l 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 th ree 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 ensu re 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 w ith the Water Fund expenditures; subsequently, revenues were adjusted to provide the recommended income, cash flow, and level of ending cash balan ces. Our expenditure projections are generally based on an analysis of p ast trends, anticipated changes in operations, and our significant experien ce 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% increa se in user rates in each of the five blocks is needed annually 2013-2017. The projected rate increases are primar ily needed to fund depreciation while maintaining recommended reserve levels. The financial projections are shown on the following page. Wa t e r U t i l i t y 23 Ci t y o f L i n o L a k e s , M i n n e s o t a – Water and Sewer Rate Study Update Sc e n a r i o 1 - W a t e r U t i l i t y F i na n c i a l P r o j e c t i o n s - C u r r e n t Bl o c k R a t e S t r u c t u r e w i t h Vo l u m e t r i c R a t e I n c r e a s e s 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-r esidential irrigation customer is assumed to be the rate that provides for reside ntial customers generating 77% of total revenues, non-residential accounts gene rating 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 Wa t e r U t i l i t y 25 Ci t y o f L i n o L a k e s , M i n n e s o t a – Water and Sewer Rate Study Update Sc e n a r i o 2 - W a t e r U t i l i t y Fi n a n c i a l P r o j e c t i o n s – O n e R a te f o r E a c h C u s t o m e r C l a s s 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 revenu e requirements will need to be met as in Scenarios 1 and 2. However, Scenar io 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 recomme nded 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 volum etric 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% Wa t e r U t i l i t y 27 Ci t y o f L i n o L a k e s , M i n n e s o t a – Water and Sewer Rate Study Update Sc e n a r i o 3 - W a t e r U t i l i t y Fi n a n c i a l P r o j e c t i o n s – U n i f o r m R a t e f o r A l l U s e / U s e r s 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 resi dential 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 main taining 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 Wa t e r U t i l i t y 29 Ci t y o f L i n o L a k e s , M i n n e s o t a – Water and Sewer Rate Study Update Sc e n a r i o 4 - W a t e r U t i l i t y F i n a n c i a l P r o j e c t i o n s – R ev i s e d B l o c k - R a t e S t r u c t u r e 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 av erage residential water user of 17,500 gallons per quarter, 24,000 gallons per qu arter, 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 qua rterly bill for the City of Lino Lakes to the average quarterly bill of other co mmunities selected by the City is shown below. The average water bill of the seven co mmunities 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 JurisdictionBlock Usage Water Rates per 1,000 Gallons Volume ChargeBase Charge Total Avg Quarterly Charge Lino Lakes0 - 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 Lakes0 - 30,000$1.89 SCENARIO 4 - 2013 30,001 - 50,000$2.09 >50,000$2.91 Blaine0 - 24,000$1.06 24,001 - 150,000$1.43 >150,000$2.10 Hugo - 20120 - 15,000$1.50 (2013 rates determined in March)15,001 - 30,000$1.65 > 30,000$2.50 Circle Pines0 - 8,000$1.70 8,001 - 16,000$1.90 16,000 - 35,000$2.35 >35,000$3.25 Centerville0 - 90,000$2.00 2013 rates 90,001 - 150,000$2.20 >150,001$2.50 Lexington0 - 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 Hills0- 10,000$0.00 10,001 - 35,000$3.28 >35,000$5.75 Shoreview0 - 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 co mmunities for a resident using 24,000 gallons per quarter surveyed is $60.56, ag ain 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 JurisdictionBlock Usage Water Rates per 1,000 Gallons Volume ChargeBase Charge Total Avg Quarterly Charge Lino Lakes0 - 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 Lakes0 - 30,000$1.89 SCENARIO 4 - 2013 30,001 - 50,000$2.09 >50,000$2.91 Blaine0 - 24,000$1.06 24,001 - 150,000$1.43 >150,000$2.10 Hugo - 20120 - 15,000$1.50 (2013 rates determined in March)15,001 - 30,000$1.65 > 30,000$2.50 Circle Pines0 - 8,000$1.70 8,001 - 16,000$1.90 16,000 - 35,000$2.35 >35,000$3.25 Centerville0 - 90,000$2.00 2013 rates 90,001 - 150,000$2.20 >150,001$2.50 Lexington0 - 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 H ills0- 10,000$0.00 10,001 - 35,000$3.28 >35,000$5.75 Shoreview0 - 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 co mmunities 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 JurisdictionBlock Usage Water Rates per 1,000 Gallons Volume ChargeBase Charge Total Avg Quarterly Charge Lino Lakes0 - 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 Lakes0 - 30,000$1.89 SCENARIO 4 - 2013 30,001 - 50,000$2.09 >50,000$2.91 Blaine0 - 24,000$1.06 24,001 - 150,000$1.43 >150,000$2.10 Hugo - 20120 - 15,000$1.50 (2013 rates determined in March)15,001 - 30,000$1.65 > 30,000$2.50 Circle Pines0 - 8,000$1.70 8,001 - 16,000$1.90 16,000 - 35,000$2.35 >35,000$3.25 Centerville0 - 90,000$2.00 2013 rates 90,001 - 150,000$2.20 >150,001$2.50 Lexington0 - 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 Hills0- 10,000$0.00 10,001 - 35,000$3.28 >35,000$5.75 Shoreview0 - 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 sta ff 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 beco me 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 proj ections through 2022 without any rate increases are shown on the following page. Se w e r U t i l i t y 39 Ci t y o f L i n o L a k e s , M i n n e s o t a – Water and Sewer Rate Study Update Se w e r U t i l i t y F i n a n c i a l P r o j ec t i o n s – N O R A T E I N C R E A S E S Sewer Utility 40 City of Lino Lakes, Minnesota – Water and Sewer Rate Study Update Sanitary Sewer Utility A rea and Unit Charge Fund A rea and Unit Charge Bonds Special Assessments - Area and UnitTotals 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 Total816,226 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 ite ms 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 mainte nance of existing infrastructure. New items, such as new lift stations a nd trunk lines will be repaid from trunk charges collected from new users a nd 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 YearProject Sanitary Sewer Utility A rea and Unit Charge Fund A rea and Unit Charge Bonds Special Assessments - Area and UnitTotals 2012Capital Outlay from 2012 Sewer Budget45,000 45,000 2013Gravity Sewer Extension, 21st Avenue Phase 1 (1,320')50,000 50,000 100,000 2013Gravity Sewer, Cedar Street/Centerville Rd218,307 218,307 436,614 2013Sanitary Sewer Rehab50,000 50,000 2014Gravity Sewers, North of Century Farms, Stage 1337,185 337,185 674,370 2014Sanitary Sewer Rehab51,795 51,795 2015Gravity Sewer Extension, 21st Avenue Phase 2 (3,960')275,000 275,000 550,000 2015Gravity Sewer, Lift Station & Forcemain Area 1G603,050 603,050 1,206,100 2015NE Area Trunk Sewer, Stage 1407,505 407,505 815,010 2015Sanitary Sewer Rehab53,654 53,654 2016Sanitary Sewer Rehab55,581 55,581 2016Upgrade Lift Station No. 881,501 81,501 2017Sanitary Sewer Rehab57,576 57,576 2018Sanitary Sewer Rehab59,643 59,643 2019Sanitary Sewer Rehab61,784 61,784 2020Gravity Sewer, 77th Street/Country Lane84,427 337,708 422,135 2020Gravity Sewer, Lake Drive North of Main Street1,287,087 321,772 1,608,859 2020Lift Station & Forcemain, Area 3D276,232 69,058 345,290 2020NE Area Trunk Sewer, Stage 2251,774 251,774 503,548 2020Sanitary Sewer Rehab64,002 64,002 2020Upgrade Lift Station No. 10100,710 100,710 2021Gravity Sewers, North of Century Farms, Stage 2745,178 745,178 1,490,356 2021Sanitary Sewer Rehab66,300 66,300 2022Sanitary Sewer Rehab68,680 68,680 2022West Side Relief Sewer 4,940,354 4,940,354 TOTALS816,2262,503,4806,972,6193,616,53713,908,862 Financial Projections The financial projections assumed the City would maintain a minimum cash balance in the Sewer Fund equal to th ree 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 oper ations 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 w ith the Sewer Fund expenditures; subsequently, revenues were adjusted to provide the recommended income, cash flow, and level of ending cash balan ces. Our expenditure projections are generally based on an analysis of p ast trends, anticipated changes in operations, and our significant experien ce in preparing sewer rate studies. Our projections show that the existing rate structure combined with projected growth in the customer-base, will pr ovided 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 need ed 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. Se w e r U t i l i t y 42 Ci t y o f L i n o L a k e s , M i n n e s o t a – Water and Sewer Rate Study Update Se w e r U t i l i t y F i n a n c i a l P r o j e c t i o n s Sewer Utility 43 City of Lino Lakes, Minnesota – Water and Sewer Rate Study Update 20122013201420152016201720182019 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 b ill of other communities selected by the City is also shown below. The av erage sewer bill of the seven communities for a resident using 17,500 gallons pe r 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 JurisdictionBlock Usage Sewer Rates per 1,000 Gallons Volume ChargeBase Charge Total Avg Quarterly Charge Lino Lakes - 20130 -10,000$0.00 10,001 >$1.07 BlaineFlat rate$44.70$44.70 $44.70 Hugo0 - 9,000$0.00 (2013 rates determined in March)9,000 and up $1.85 Circle Pines0 - 8,000$3.55 8,000 - 16,000$3.84 >16,000$4.23 CentervilleAll Use$1.90$33.25$37.00 $70.25 2013 rates LexingtonAll Use$2.50$43.75$9.00 $52.75 Arden Hills0 - 15,000$0.00 >15,000$4.83 Shoreview0 - 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 Lake10,000$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 JurisdictionBlock Usage Sewer Rates per 1,000 Gallons Volume ChargeBase Charge Total Avg Quarterly Charge Lino Lakes - 20130 -10,000$0.00 10,001 >$1.07 BlaineFlat rate$44.70$44.70 $44.70 Hugo0 - 9,000$0.00 (2013 rates determined in March)9,000 and up $1.85 Circle Pines0 - 8,000$3.55 8,000 - 16,000$3.84 >16,000$4.23 CentervilleAll Use$1.90$45.60$37.00 $82.60 2013 rates LexingtonAll Use$2.50$60.00$9.00 $69.00 Arden Hills0 - 15,000$0.00 >15,000$4.83 Shoreview0 - 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 Lake10,000$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 co mmunities 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 JurisdictionBlock Usage Sewer Rates per 1,000 Gallons Volume ChargeBase Charge Total Avg Quarterly Charge Lino Lakes - 20130 -10,000$0.00 10,001 >$1.07 BlaineFlat rate$44.70$44.70 $44.70 Hugo0 - 9,000$0.00 (2013 rates determined in March)9,000 and up $1.85 Circle Pines0 - 8,000$3.55 8,000 - 16,000$3.84 >16,000$4.23 CentervilleAll Use$1.90 $57.00$37.00 $94.00 2013 rates LexingtonAll Use$2.50$75.00$9.00 $84.00 Arden Hills0 - 15,000$0.00 >15,000$4.83 Shoreview0 - 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 Lake10,000$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 co mmunities 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 a nd 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 determin ed as a result of this study and the financial projections prepared for the years 2012 through 2022. 1. The Water and Sewer Fund’s histor y shows revenues and expenditures, have remained fairly stable over tim e. 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 in clude 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 r esidential, 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 revenu es, 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 volumetri c 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 irrigati on. 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 f unded 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 concurre nt with the development of the following year’s budget. These recommendations are based on inform ation provided to us by City of Lino Lakes. The City will need to m onitor 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 1 WS – Item 2 WORK SESSION STAFF REPORT Work Session Item 2 Date: February 4, 2013 To: City Council From: Marty Asleson Re: Emerald Ash Borer Update Emerald Ash Borer was recently discovered in Minneapolis in the Prospect Park neighborhood. S ince then, an EAB infestation was discovered in the Minneapolis tree processing area at Fort Snelling. An infestation was also discovered in Showview. This infestation is approximately 5 miles from Lino Lakes. The City has taken precautions to not plan t any more than 10 to 15 % of any one species in any neighborhood. When we first heard about the introduction of Emerald Ash borer In Detroit in 2003, we stopped planting Ash trees altogether. Because of the precautions that have been taken we should hav e a minimum impact to City resources compared to many other Cities where only ash trees were planted. Private residential and wilding trees however, may be in the tens of thousands To date, staff has inventoried 777 Ash trees on public properties in Lino Lakes. Public properties include parks, street boulevards and other open space areas. The average size Ash tree on City property is 8 inches. Our largest concentration of Ash trees on City owned properties is in Country Lakes Park. There are 292 Ash tree s in Country Lakes Park. These Ash trees are mixed in with several other species of trees including Oak, Hackberry, Poplar and Boxelder . Our next largest concentration of Ash trees in the City owned open space areas in the South Resha nau Lake Estates are a. There are 57 Ash Trees in this area. Once EAB is discovered in an area, there is approximately 5 years before all Ash trees in that area are killed by EAB, unless the trees are treated. Some Cities, including Cities like L acrosse Wisconsin, have cho sen to chemically treat some of their Ash trees. They are treating some of their Ash trees in order to maintain aesthetic quality, and to render more time to remove and replace existing trees. Treating trees allows you to permanently keep high value tre es and stage the loss of 2 other Ash trees.. This allows the city to spread the cost and human resource time to better manage the tree losses. City Staff still intends to treat several Ash Tree areas on boulevards, and se lect trees in Country L akes Park, and possibly some Heron nesting trees on Peltier Island. Staff is recommending that we use the time we have now to remove some of our Ash trees , and in areas where the removals would be noticeable, replace them. Staff would like to remove at least 90 % of the Ash Trees in Country L akes Park, and all of the Ash trees in South Resha nau Lake Estat es open s pace areas. Both Country Lakes Park and South Reshan au woodland areas have a diversity of other species so removal of Ash trees should not be visually impa cting. Staff would also like to remove and replace the Ash trees in LaMotte Park. These trees are mostly on the boulevard. Attachment: Lino Lakes Ash Inventory Map C o u n t r y L a k e s P a r k 2 9 2 A s h T r e e s L a m o t t e P a r k 2 2 A s h T r e e s T o t a l A s h T r e e s 7 7 7 S o u t h R e s h a n a u L a k e E s t a t e s O p e n S p a c e A r e a 5 7 A s h T r e e s 3 7 1 A s h T r e e s L i n o L a k e s A s h I n v e n t o r y . WS – Item 3 WORK SESSION STAFF REPORT Work Session Item No. 3 Date: February 4, 2013 To: City Council From: Julie Bartell, City Clerk Re: Off -Sale Liquor Licenses Background At the council’s January work sessio n, staff presented information on off -sale liquor restrictions in the city and surrounding communities. The information was a sample of what some other cities in the area are doing to regulate the number of off -sale liquor licenses within their borders. A map was also presented showing t he location of off -sale licenses within the city. Based on council direction to provide additional information on off -sale regulations , a new map is attached to this report. The map has been modified to: - remove off -sale licenses held by bar/restaurants , 3.2 licenses and growler off -sales; - include off -sale establishments in neighboring cities that are close to Lino Lakes; - indicate a one -mile radius around each location. The council heard from staff that the most common regulations used by municipalities to restrict the number of lic enses are by proximity (how close one license may be to another) or by population. Staff was directed to look for more information on municipal regulations . In response, find attached a char t indicating regulations adopted b y other citie s in the metro area. The charter also lists cities with no restrictions and cities that operate a municipal off - sale store. In regard to restrictions by population, a chart is attached indicating the per capita average of the cities in this region; the average includes figures for both cities with restrictions by population and those without. This information is provided to indicate where Lino Lakes’ per capita falls in the mix. Requested Council Direction If the council is interested in modifying or adding to the city’s current liquor regulations, passage of an ordinance would be necessary. Attachments Map Off -Sale Restrictions, metro cities Off -Sale Restrictions, per capita in the vicinity R o n d e a u L a k e P e l t i e r L a k e M a r s h a n L a k e C e n t e r v i l l e L a k e G e o r g e W a t c h L a k e S h e r m a n L a k e W a r d s L a k e R e s h a n a u L a k e R i c e L a k e G o l d e n L a k e B a l d w i n L a k e B a l d E a g l e L a k e A m e l i a L a k e O t t e r L a k e C e d a r L a k e R i c e C r e e k M a r s h R I C E C R E E K C H A I N O F L A K E S R E G I O N A L T R A I L C o u n t y H w y 1 0 C o u n t y H w y 1 4 C o u n t y H w y 2 1 C o u n t y H w y 2 3 C o u n t y H w y 1 4 H o d g s o n R d C o u n t y H w y 2 3 F r e n c h m a n R d C o u n t y H w y 2 1 B l a i n e H a m L a k e B l a i n e L e x i n g t o n B l a i n e L i n o L a k e s S h o r e v i e w C i r c l e P i n e s L e x i n g t o n C i r c l e P i n e s L i n o L a k e s C i r c l e P i n e s S h o r e v i e w C o l u m b u s L i n o L a k e s F o r e s t L a k e H u g o G r a n t H u g o G r a n t W h i t e B e a r T w p . H u g o L i n o L a k e s H u g o W h i t e B e a r T w p . L i n o L a k e s N o r t h O a k s L i n o L a k e s S h o r e v i e w L i n o L a k e s W h i t e B e a r T w p . L i n o L a k e s C e n t e r v i l l e 1 8 1 0 1 3 1 2 2 3 4 5 7 1 1 9 6 1 4 O f f S a l e L i q u o r L i c e n s e s 7 /1 /2 0 1 2 - 6 /3 0 /2 0 1 3 1 i n c h = 3 ,5 0 0 f e e t 1 . L a k e s L i q u o r , I n c . d /b /a L a k e s L i q u o r o f L i n o L a k e s 7 8 6 0 L a k e D r i v e (5 5 0 1 4 ) 2 . L i n o L a k e s L i q u o r B a r r e l 7 9 9 7 L a k e D r i v e (5 5 0 1 4 ) 3 . E a g l e L i q u o r d /b /a E a g l e L i q u o r a n d T o b a c c o 7 3 0 A p o l l o D r i v e , #1 9 0 (5 5 0 1 4 ) 4 . S p i r i t H i l l s W i n e & L i q u o r , I n c . d /b /a S p i r i t H i l l s W i n e & L i q u o r 6 5 0 1 W a r e R o a d (5 5 0 1 4 ) 5 . G -W i l l L i q u o r s , I n c . 8 6 5 M a i n S t r e e t (5 5 0 1 4 ) (O p e n i n g i n 2 0 1 3 ) 6 . M e t r o W i n e & S p i r i t s 6 0 1 3 H o d g s o n R o a d (5 5 0 1 4 ) 1 /2 4 /2 0 1 3 D o c u m e n t P a t h : K :\0 2 0 2 9 -2 3 0 \G I S \M a p s \L i q u o r L i c e n s e s .m x d D a t e S a v e d : 1 /2 4 /2 0 1 3 1 0 :3 8 :2 3 A M L i n o L a k e s C i r c l e P i n e s 7 . L i q u o r B a r r e l 3 9 C e n t e r S t r e e t (5 5 0 1 4 ) 8 . D o w n U n d e r L i q u o r S t o r e 2 B S o u t h P i n e S t r e e t (5 5 0 1 4 ) C e n t e r v i l l e 9 . M a i n S t r e e t L i q u o r B a r r e l 1 8 7 5 M a i n S t r e e t (5 5 0 3 8 ) 1 0 . P l a t i n u m L i q u o r s 7 0 9 3 2 0 t h A v e n u e (5 5 0 3 8 ) H u g o B l a i n e 1 1 . O n t h e R o c k s W i n e & S p i r i t s 1 4 7 7 5 V i c t o r H u g o B o u l e v a r d (5 5 0 3 8 ) 1 2 . R i c k 's L i q u o r 5 4 4 1 1 4 0 t h S t r e e t N (5 5 0 3 8 ) 1 3 . S a g e r 's L i q u o r 1 4 8 4 9 F o r e s t B o u l e v a r d (5 5 0 3 8 ) 1 4 . C e n t u r y L i q u o r s 4 3 5 5 P h e a s a n t R i d g e D r (5 5 4 4 9 ) Off -Sale Liquor Restrictions – metro area City Population Restrictions M unicipal restriction Blaine 57186 1 per 7000 residents; & one per mile New Brighton 21456 1 per 5000 residents; & one per mile Shoreview 25,043 1 per 5000 residents Andover 30598 1 per 6000 residents Brooklyn Park 75781 1 per 4000 residents (does not apply to combination licenses) Maplewood 38018 1 per 1000 foot radius (grandfathered until change in use) Burnsville 60306 1 per 0.75 mile radius Cottage Grov e 34589 1 per 1000 foot radius Orono 7437 1 per .50 mile radius; maximum of 2 licenses Inver Grove Heights 33880 Building and fixtures must be valued at minimum of $50,000 Minnetonka 49734 Licensee must be resident of the Twin Cities Shakopee 37076 Council authority to restrict as they deem proper St. Louis Park 45250 Council may restrict by resolution Dayton 4671 Licensee must reside in 9 county area Ham Lake 15296 Must reside in 8 county area East Bethel 11626 City resident requirement North St. Paul 11460 Limited to number in place when ordinance was passed Forest Lake 18375 Maximum of 10 licenses West St. Paul 19540 Maximum of 7 licenses Falcon Heights 5321 Maximum of 1 licenses Champlin 23089 Maximum of 4 licenses (3.2 not included) Roseville 33660 Maximum of 10 licenses (brewery not included) New Hope 20339 Maximum of 7 licenses Excelsior 2188 Maximum of 2 licenses Shorewood 7307 Maximum of 2 licenses (with ending date) Mendota Heights 11071 Maximum of 6 licenses Off -Sale Liquor Restrictions – metro area (cont’d) City Population Restrictions No exclusive City restrictions Lino Lakes 20216 Circle Pines 4918 Centerville 3792 Hugo 13332 Rosemount 21874 Eagan 64206 Eden Prairie 60797 Chanhassen 2 2952 Bloomington 82893 Hastings 22172 Chaska 23770 Waconia 10697 Minnetrista 6384 Plymouth 70576 Maple Grove 61597 Osseo 2430 Corcoran 5379 Otsego 13571 Arden Hills 9552 North Oaks 4469 Vadnais Heights 12302 Oakdale 27378 Lake Elmo 8069 Woodbury 61961 Municipal Store Farmington 21086 Apple Valley 49084 Lakeville 55954 Wayzata 3688 Mound 9052 Edina 47941 St. Anthony 8226 Brooklyn Center 30104 Off -Sale Liquor -- City of Lino Lakes & vicinity City Population Restrictions *# Off -Sale (per capita) No extraordinary Municipal restrictions Lino Lakes 20216 6 (3369) Circle Pines 4918 2 (2459) Centerville 3792 2 (1896) Hugo 13332 3 (6666) Restrictions Blaine 57186 1 per 7000; & one per mile 8 (7148) New Brighton 21456 1 per 5000; & one per mile 4 (5346) Shoreview 25,043 1 per 5000 5 (5008) Forest Lake 18,375 Maximum of 10 10 (1837) Average (4216 ) * Does not include bar/restaurants, 3.2 off -sale, off -sale growler or golf course WS – Item 4 WORK SESSION STAFF REPORT Work Session Item No. 4 Date: February 4, 2013 To: City Council From: Jeff Karlson Re: Blue Heron Days Background After 21 years of employment with the City of Lino Lakes, Mary Alice Divine has officiall y announced her retirement, effective April 26, 2013. As the City’s Economic Development Coordinator, Mary has been the driving force behind the annual Blue Heron Days event in order to keep it alive and successful. That being said, the Council will need to consider whether the City should continue providing staff resources for planning and coordinating Blue Heron Days. Mary Alice will be at the work session to provide the Council an overview of her past involvement with Blue Heron Days.