2023.03.20 Packet - Laserfiche WebLink

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14669 Fitzgerald Avenue North, Hugo, MN 55038 • (651) 762‐6300 • www.ci.hugo.mn.us TO: Honorable Mayor Tom Weidt and Members of the City Council FROM: Anna Wobse, Finance Director SUBJECT: 2023 Water and Sanitary Sewer Service Rates DATE: For the City Council Meeting of March 20, 2023 DESIRED COUNCIL ACTION Adoption of Resolution Approving a Pro Forma Financial Guide for Water and Sanitary Sewer Operations for the 2023 Fiscal Year and Establishing Service Rates. BRIEF HISTORY Over the last five years, the Finance Department has prepared the water and sewer rate schedules rather than outsourcing the task to a consulting firm. The Finance Department spent a considerable amount of hours collecting, organizing and analyzing water usage information and staff is ready to recommend water and sanitary sewer rates for the 2023 fiscal year. PRO FORMA FINANCIAL GUIDE In order to develop service rates staff developed a pro forma financial guide (basically a budget) for the Water and Sewer Departments. Staff feels that the spending items identified in the guide reflect the true and actual expenses for the services being provided. Funds for large repair items (such as pump repairs, water main breaks and lift station rebuilds) have been identified separately. The Public Works Director had presented Council with a potential restructuring plan for the Public Works Department. The restructuring divided Public Works into three divisions ‐ Streets, Parks and Utilities, with each division having a lead worker position and the creation of a new Superintendent position to oversee the three divisions. Council approved this reorganization at their February 6, 2023 Council Meeting. The 2023 water and sewer budget contains funding to cover salary and benefit expenses for a new Public Works Superintendent position and also contains funds to allow for utilities lead worker pay. In 2022, the Public Works Department moved into a new larger facility and a new larger facility brings increased costs for insurance, utilities and other services. Both the water and sewer budgets reflect their portion of those increases, along with overall increases for inflation. From fuel to utilities to everyday supplies, all the goods and services that are required to make the Water & Sewer Departments run are costing more. In addition to salary and benefit increases for the new positons and increases for inflation, the sewer fund budget is also continuing to see substantial increases from Metropolitan Council Environment Services for sewage treatment. Water and sewer rates were last adjusted in 2020. The residential water base rate increased from $31.00 per quarter to $34.00 per quarter and the residential sewer base rate per SAC unit increased from $60.00 per quarter to $61.00 per quarter.