10-07-2024 WS - Laserfiche WebLink

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Item No. 2 Meeting Date: October 7, 2024 Type of Business: Council Work Session City Administrator Review: ______ City of Mounds View Staff Report To: Honorable Mayor and City Council From: Gayle Bauman, Finance Director Item Title/Subject: Review Utility Rates for 2025 COUNCIL CONSIDERATION Staff is requesting City Council to review and provide feedback on the proposed utility rates for 2025. UTILITY RATES Sewer Fund Staff is proposing a 4% increase in rates. The impact on a household that uses an average of 16,000 gallons of water per quarter would be $4.23 per quarter or $16.92 per year. Because the plan is to complete $1,000,000 of sewer lining in 2025, the fund will realize a cash loss in 2025, but the 4% rate increase will assist in maintaining a sufficient cash balance for the long term. Street Lighting Fund Staff is proposing a 5% increase in rates. The impact on a household would be $0.25 per quarter or $1.00 per year. This fund had no rate increases from 2019 to 2023. Surface Water Management Fund Staff is proposing a 17.6% increase. The impact on a household would be $3.00 per quarter or $12.00 per year. This fund will require increases for the foreseeable future. The mandates related to storm water ponds is putting a strain on the fund. Council and Staff will need to prioritize projects and seek grant funding in order to proceed with work. Original proposal was $1.50 per quarter. Amount increased due to cost estimates related to Ardan and Silver View Park Storm Water Projects. Water Fund As council is aware, this fund is facing some challenges. There is a cash deficit projected in the Water Fund in excess of $750,000 at the end of 2024. Even with the rate increase being proposed for 2025, the budget shows the fund will still lose money. The goal is to try to spread rate increases out over a period of years to bring this fund back into the black. The City assesses two types of water rates – a fixed, flat fee and a rate applied to gallons used. The flat fee is meant to cover fixed costs in the fund. Fixed costs are those that do not change based on water use. These would include wages, debt service, insurance, memberships, training, and some supplies and professional services. These costs remain the same no matter how many gallons of water are used per year. Our fixed costs are currently in excess of $900,000 per year, partly due to the debt service payments due through 2036. Examples of fixed costs are: Personnel $591,740 Supplies $ 40,000 Insurance $ 12,300 Training/Dues $ 5,830 Debt Service $431,497