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0 <br />City Council Regular Meeting Minutes <br />October 13, 2009 <br />Page 2 <br />IV. PUBLIC HEARING. <br />None. <br />V. REPORTS FROM COMMISSION AND STAFF. <br />None. <br />9 VI. GENERAL BUSINESS OF COUNCIL. <br />10 <br />11 A. Update on Tiered Water Rates. <br />12 <br />13 City Manager Mornson reported that Minnesota Statutes, Section 103G.291 was amended to <br />14 include a requirement for public water suppliers serving more than 1,000 people to adopt a water <br />15 rate structure that encourages conservation. To comply with the law, effective January 1, 2010, <br />16 cities must implement a tiered system of water rates that charges a higher rate per unit as water <br />17 usage increases. The conservation rates are for all user groups including residential, multi - family <br />18 and commercial users of water. This is the fourth City Council meeting on this subject. Staff was <br />19 directed to contact the DNR to request a one -year extension. The DNR has denied the request <br />20 indicating the law does not give the DNR the authority to grant extensions. City Manager <br />21 Mornson indicated Council will be asked to provide direction on the following: <br />22 ■ Base Rate (staff recommendation to leave the base rate at $2.60 per 1,000 gallons). <br />23 ■ Percentage split between tiers <br />24 ■ Amend Ordinance 33.036 to include Tiered Water Rates (three readings required). <br />25 <br />26 Finance Director Larson and City Manager Morrison provided a PowerPoint presentation on the <br />27 proposed City of St. Anthony Tiered Water Rates. They provided the following information in <br />28 response to questions of the City Council. <br />29 <br />30 Based on staff's discussions with the DNR, the DNR will accept the rate structure being <br />31 considered by St. Anthony. The DNR would like a high differential between the tiers, but there is <br />32 no penalty if the City does not implement the DNR recommendation. There would be a penalty if <br />33 the City does not implement a tiered rate system. An example of this would be denial of DNR <br />34 permits. <br />35 In regards to the high percentage of commercial users included in Tier I, a large number of those <br />36 users are on a minimum bill because they do not have much activity. The City Engineer and <br />37 financial advisors have reviewed all of the tiers and determined that the proposed rate structure <br />38 appears to be equitable. <br />39 Rate structures being adopted by other cities varies. There is an approximate 50/50 split in the <br />40 cities that are increasing the base rate. Of the cities that have implemented a tiered rate structure, <br />41 all have indicated that a sensitivity analysis will be done to make sure that one group is not being <br />42 treated unfairly or receiving an extra benefit as a result of the new rate structure. <br />43 The intent of the DNR law is to change behavior by impacting the rates so that people will take <br />44 note and move to a conservation mode when they can apply it. The result of the rate structure <br />