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City Council Regular Meeting Minutes August 25, 2009 Page 3 B. Update on Tiered Water Rates. Mike Mornson, City Manager and Roger Larson, Finance Director, presenting_ 4 City Manager Morrison addressed Council and discussed that Minnesota Statutes, Section 5 103G.291 was amended to include a requirement for public water suppliers serving more than 6 1,000 people to adopt a water rate structure that encourages conservation. To comply with law, 7 effective January 1, 2010, cities must implement a tiered system of water rates that charges a 8 higher rate per unit as water usage increases. The conservation rates are for all user groups 9 including residential, multi -family and commercial users of water. The implementation of a 10 tiered system is being administered by the DNR. Their recommendation includes to encourage 11 the conservation of water, the cost should be significant between tiers. City Manager Morrison 12 and Finance Director Larson provided a PowerPoint presentation on the proposed City of St. 13 Anthony Conservation - Tiered Water Rates. The presentation included the following 14 information: 15 • State Law Mandate — Water Conservation 2010 16 • 2008 Revenues & Expenditures 17 ■ Example of Current Uniform Rate / Example of Tiered Water Rate Structure 18 ■ Current Residential Water Usage 19 • Comparison of Water Bill — Residential/Summer Watering 20 • Future City Council Discussion Points 21 o Finalize Rate Structure 22 o Analysis of Base Rate 23 o Tiered System for all User Groups 24 o Sewer Rate Increase (Sanitary Water Disposal) 25 26 There was discussion on the following options for finalizing the rate structure: 27 a. 10%, 12.5%,15% 28 b. 1.0%, 15%,20% 29 c. 25%, 25%, 50% (DNR recommendation) 30 31 Consensus of the City Council was to direct staff as to provide specific numbers on the above 32 rates for review at a future City Council meeting. 33 34 Councilmember Gray stressed the importance of informing the residents that the 25%, 25%, 50% 35 tiered structure that was discussed in the City newsletter is the DNR's recommendation, and it is 36 not what is being put into effect at this point. He pointed out those examples of the City's water 37 conservation efforts should also be noted to the residents. 38 39 Councilmember Stille suggested including the topic of water conservation on the upcoming joint 40 meeting with the School Board. 41 42 Councilmember Roth requested information on expenditures from the sewer fund. Finance 43 Director Larson provided information on expenditures associated with the sewer fund, noting 44 that the major expense is sanitary waste disposal. Due to stable sewer fund costs a rate increase 45 has not been necessary since 2003. 46 3