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35 <br />MEMORANDUM <br />DATE: October 16, 2009 <br />TO; City Council <br />FROM, Mike Ivlornson, City Manager <br />Roger Larson, Finance Director <br />ITEM: SEWER RATE INCREASE & DISCUSSION <br />Based on 2008 financial data, the City Auditor reported the need for a sewer rate <br />increase. Operating revenues totaled $797,360 compared to expenditures of $810,920. <br />The deficit of ($13,560) was funded from the existing fund balance, <br />The last sewer rate increase was in 2003 when the rate was changed from $2.77 per 1,000 <br />gallons to $3.30 per 1,000 gallons. Since 2003, there has been no need for an increase <br />due to the City's aggressive I & I program that significantly reduced or eliminated ground <br />water entering the sanitary waste disposal system. This resulted in less gallons.being <br />processed by Metropolitan Waste mid stabilized the rising per unit cost for disposal, <br />Projected expenditures for 2009 total $843,350. The increase in operating costs includes <br />1) Cost of living increase for City employces. <br />2) Rising cost of health insurance. <br />3) The per unit cost for sanitary waste disposal has increased since 2003. <br />The anticipated shortfall for 2009 totals ($45,990). Funding for both shortfalls (2008 & <br />2009 is funded by the 2007 sewer fund balance which increased $105,314. <br />Charges for sanitary waste disposal: <br />The Met Council is moving ahead with restructuring how it pays for sewer capacity <br />already built as part of their system in anticipation of future growth and development. <br />Previously, these charges were paid for by hookup fees called SAC Credits, The current <br />fee of $2,000 per credit is charged for new homes, new development and redevelopment. <br />Because of a significant decline in growth of new development, resulting in loss of <br />income fiom SAC Credits, the flet Council is shifting the costs to existing homes and <br />businesses. The result for 2010 is that the Met Council has approved a sanitary waste <br />disposal increase of 3.$%, <br />The gpod news far St. Anthony is the I & I prograrn has been effective tool in reducing <br />disposal costs. <br />