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LAKE ELMO CITY COUNCIL MINUTES <br /> DECEMBER 11, 2012 <br /> <br />Page 2 of 4 <br /> <br />It was explained that the only reason that the water system is operating “in the black” is due to depreciation. Finance Director Bendel provided a detailed overview of the balance sheet. The depreciation expense was explained and how that impacted the bottom line. It is barely at the cash flow level. This is just above what the bond companies require, but does need to be addressed for the future. Mr. Zuleger provided and overview of residential water user profiles. 26.21% of the users went over 70,000 gallons in the third quarter. Council Member Smith inquired about the average bill and if private wells factored into the calculations. A discussion was had explaining that the average figure incorporated everyone under 70,000 gallons and the average use was about 30,000 gallons. There were many users with very little usage that offset the higher bills. There was also a discussion regarding how it was evident that the users over 170,000 were not practicing any conservation methods. It was noted that lot size can play a huge role in increasing usage. Council Member Emmons noted that there may be a difference in the different preference towards irrigation based on location. Council Member Pearson asked what the average usage is for a family of four situated on a one-acre lot. A discussion was had regarding average usage standards. A discussion was had regarding the chlorination options and amount. It was explained that it was not a simple on/off implementation. Conclusions were that in the past, “fixed costs” were ignored due to the 3M contamination. After 3M ceased paying for a portion of costs, along with economic and conservation issues the tiered rate system was implemented. Increased usage resulting in higher treatment costs, along with drought conditions, led directly to high water rates for the heaviest users. Based on those conclusions, staff recommends: moving the billing cycle to break up the summer water costs (April-June & July-September); provide for bulk rate watering credit for new lawns at $3.77/1,000 gallons; pursue grants/funds to offset the fixed costs of providing potable water to 3M contamination areas, create bulk conservation rate of $6.03/1,000 gal. for verified use of saturation sensors/programmed conservation; consider the allowance of metered irrigation wells for watering at a lower rate (non-3M contaminated areas only); and NO RATE CHANGE AT THIS TIME. The City cannot afford a decrease at this time. Mr. Zuleger noted that additional users via growth, as well as grants and the reduction of depreciation rate, will drop the rates. Discussion was had regarding continued private well use for irrigation in non-3M contaminated areas. It was explained that it was allowed and would be up to the preference of the land owner.