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,a MEMORANDUM DATE: October 16, 2009 TO: Mayor and Councilmembers FROM: Mike Morrison, City Manager Roger Larson, Finance Director ITEM: TIERED WATER RATES Overview: Minnesota Statutes, section 103G.291 was amended to include a requirement for public water suppliers serving more than 1,000 people to adopt a water rate structure that encourages conservation. To comply with the law, effective 01/01/2010, Cities must implement a tiered system of water rates that charges a higher rate per unit as water usage increases. The conservation rates are for all user groups including residential, multi -family and commercial users of water. Currently, St. Anthony has a uniform rate structure where the cost per unit ($2.60 per 1,000 gallons) is the same regardless of the volume used. An example of residential tiered water rates would be as follows: 0 — 7,500* Gallons 7,500 — 15,000 Gallons 15,000 — 22,500 Gallons 22,500 — 30,000 Gallons Over 30,000 Gallons *Minimum bill = $7,500 Gallons Meetings to Date: $2.60 per 1,000 Gallons $2.73 per 1,000 — 5% increase $3.00 per 1,000 — 10% increase $3.45 per 1,000 — 15% increase $4.32 per 1,000 — 25% increase The City Council and Staff reviewed tiered water rates at their June 1" and August 3`d work sessions. In addition, a presentation and discussion occurred at the August 25°i and October 13°' regular Council Meetings. The City Council has expressed the need to impact all user groups equally. To accomplish this goal, City Staff developed the following criteria: 1) Same base rate of $2.60 per 1,000 for all User Groups. 2) Same percentage increase structure for all User Groups. 3) Each User Group will have its own tier structure. At the October 13°i meeting, the City Council directed staff to include a 5% tier and change the last tier from a 20% to 25%.