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23 TO: MAYOR, CITY COUNCIL & CITY MANAGER FROM: SHELLY RUECKERT, FINANCE DIRECTOR SUBJECT: 2013 UTILITY RATES DATE: MARCH 15, 2013 Storm Water Charges: In April of 2012 the City Council was presented with 10 year rate increase plan for storm water charges. This plan was considered warranted as the rates had remained flat since the inception of the charges. In order to provide funds for future capital needs staff recommended annual increases at approximately 2.5% per year. This level annual increase would achieve a target rate of $16.18 by 2020. The target rate represented the charge at inception adjusted for 1% percent inflation for the period of 1998-2020. The 10 year increase was suggested as an alternative to bringing the rates to their inflationary value in 2012, thus leveling out the required increase. I am reaffirming the validity and value of this approach and have proposed the. following adjustments to storm water charges: Classi ication-band Use 2012 Charge Pro posed 2013 Char e % Chan e I -Cemeteries, parks, golf courses, railroads, vacant land $55.40 per acre $56.75 per acre 2.38% 2- R-1, R-1 a, and R-2 residential $53.40 per unit $54.80 per unit 2.55% 3- R-3 residential $53.40 per limit $54.80 per unit 2.55% 4- Schools and institutional uses $127.55 per acre $130.50 per acre 2.26% 5- R-4 Residential , churches and manufactured home parks $162.70 per acre $166.40 per acre 2.22% 6- Commercial and industrial 1 $203.25 per acre $208.00 per acre 2.28% Sewer Rates: The April 2012 sewer rate discussion resulted in a goal to improve the Utility Fund operating income. Consistent with this as a goal the annual transfer from the sewer operations to the general fund was eliminated. Sewer rates were increased from $3.50 to $3.70 per 1,000 gallons. It was anticipated at that time that rate per 1,000 gallons would be increased by $0.05 for 2013. Additionally, the minimum usage charge was scheduled to increase by 1,250 gallons. The rate increase from $3.70 to $3.75 represents a 1.3% increase is expected to generate $10,995 in additional revenues (assuming usage is similar to first quarter water usage of 2012). An increase of the minimum use from a 7,500 base to an 8,750 base is also scheduled to occur. This base adjustment is estimated to produce $6,420 from single family residential properties under the existing minimum, and the program's impact on a 10,000 gallon per quarter user would be as follows: