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approach to maintaining service levels while planning responsibly for future costs and is essential to <br />avoiding larger increases in the future. The Stormwater rates will likely change as staff and engineering <br />start further review of the ordinance, components and projects. <br /> <br />See Appendix F for Stormwater Fund reports and charts. Proposed Fees and Quarterly Bills <br />Appendix A shows the Proposed Rates for 2026 under this model. Tables in the attachments show an <br />illustration of a low, middle, and high quarterly bill in both Residential and Commercial. A low-volume <br />user will see a change in their quarterly bill of around $24, or $8 per month. <br /> <br />Comparisons of Other Cities <br />Appendix B shows the comparisons of fees to other cities. These were the same cities selected in the <br />Northland comparison in 2023 and in our utility study in 2025. All but three of those comparable cities <br />have or are planning water treatment plant(s). <br /> <br />The charts show 2026 fees, with Lake Elmo 2026 (with an overall increase of ~15%) ranking is 8th <br />highest in the group, up from the Lake Elmo 2025 ranking of 10th. We do have 2026 fee data for all the <br />cities as of the writing of this report. <br /> <br />Development / Connection Charges <br />The Water and Sewer Availability and Connection Charges (WAC, WCC, SAC, SCC) have not been <br />adjusted since 2013, remaining at $3,000 for availability and $1,000 for connection charges for each fund. <br />Staff did not increase these charges for this model; however, they plan to review these fees in the future. <br />This approach is reasonable given the rising construction costs observed in recent years. <br /> <br />These connection fees vary widely from city to city, both in their rates and in how they are applied, and it <br />would require a significant amount of staff time to provide a thorough analysis of these differences. <br /> <br />Multi-Family Rates <br />A multi-family rate was adopted for all of the funds last year. <br /> Water – A per unit base rate was added, which aligns with many other cities’ practices, and acknowledges <br />the large draw of these facilities on the water system. And a single tier usage rate was adopted in <br />conjunction the base unit, which acknowledges that the higher-gallon usage on those meters is due to the <br />multiple units and is generally basic residential utilization like cooking, bathing, and laundry. <br /> <br />Sewer – A per unit base fee and a single tier usage fee were adopted that align with regular residential and <br />commercial rates. <br /> <br />Stormwater –Multi-Family Stormwater fees are treated like Commercial, as the stormwater run-off will <br />be similar to commercial with a lower number of permeable surfaces on each property. <br /> <br />Future Model Improvements / Challenges <br />• Improved Depreciation Modeling – current model is a flat 40-year depreciation for future assets, and <br />a more accurate depiction would consider individual assets at estimated useful life. A review of all of <br />the current fixed assets and their depreciation schedules is taking place now that we have software <br />that can track our fixed assets more appropriately. <br />• Engineering will be completing a review of Stormwater so those fees may change in the future as we <br />use their updates in this model. <br />• Break Capital and Operations into separate funds for reporting to better visualize the impacts of these <br />revenue and expense types. <br /> <br />Summary <br />Attached are tables and charts in Appendices C through F that show the more detailed financial <br />projections for each of the funds.