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Foss Road Lift Station t July 12, 1988 Page 2 RATE ADJUSTMENT The sanitary sewer service rate in St. Anthony was raised from $1 . 12/100 c. f. to $1. 22/100 c. f. on January 1, 1988. The minimum charge is for 1000 c. f. /quarter or $12. 20/quarter at the present time. St. Anthony has budgeted $480, 000 as sanitary sewer revenue for 1988. At a rate of $1. 22/100 c. f, this would require 39,344,300 c. f. of sewage flow. This volume would produce additional revenue of $39,344 for each 10G/100c. f. of rate increase. A 10G/100 c. f. rate increase would pay a bond issue of $225,000 at 7 1/2$ interest for 7 1/2 years. The rate increase of 100/100 c. f. would cost a typical residence using 2500 c. f. /quarter an additional $10 per year or $75 over the 7 1/2 year period. Happy' s Potato Chip factory would pay an additional $2043 per year or $15,324 over the 7 1/2 year period based on the 510, 800 c. f. used during the first quarter of 1988. These costs are about 1/2 of the assessment costs because the rate increase is • being spread over the entire City. Replacement of the pumping station is a maintenance item and a rate increase to cover this cost is easier to justify and less complicated to implement than an assessment to the customers tributary to the pumping station. Using a rate increase results in the customer paying according to sewer use for several years after the project is put into operation whereas the assessment is made on the basis of historical sewer use and remains fixed regardless of the sewer use after the new pumping station is placed in operation. Finally a rate increase over the entire City results is a lower cost per customer than the assessment method. For these reasons we. recommend that the project financing be done using a rate increase over the entire City. After you have read . this report, please call me with any questions. Sincerely, • A Wilbur R. Liebenow WRL/cj c •