2024.04.15 CC 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: 2024 Water and Sanitary Sewer Service Rates DATE: For the City Council Meeting of April 15, 2024 DESIRED COUNCIL ACTION Adoption of Resolution Establishing the 2024 Water and Sanitary Sewer Service Rates. BRIEF HISTORY Over the last six years, the Finance Department has prepared the water and sewer rate schedules rather than outsourcing the task to a consulting firm. For the 2024 fiscal year the Finance Department is recommending a water rate increase to only separately metered irrigation accounts and a sewer rate increase to the sanitary sewer base fee. WATER RATES Water service rates are established using a conservation rate schedule, which seeks to reward low‐end users with the lowest rate while encouraging everyone to use water efficiently. Using that philosophy, the Finance Department is recommending a 15% increase to all separately metered irrigation accounts. All other tiers will remain the same. All separately metered irrigation would be charged $6.45 per thousand gallons, up from $5.61 per thousand gallons. This revenue will offset a portion of operating expenses to help allow us to keep lower usage rates for low‐end water users. SANITARY SEWER RATES The largest expense item in the sewer department is for sewage treatment. These charges are imposed by and paid to Metropolitan Council Environmental Services (MCES). In 2022 the City sustained a 20% increase from MCES, in 2023 the City saw an 18% increase and for 2024 MCES fees are increasing 11%, with the total yearly fee amounting to $943,318. Staff anticipates continuing yearly fee increases from MCES for sewage treatment. With these large increases year after year the sewer fund has been taking some large hits and the Finance Department is recommending an increase in the base portion of the rate schedule in order to help cover the increased charges from MCES for sewage treatment. The utility fund currently has 5,590 residential SAC units. Commercial, Industrial and Institutional customers account for 667 SAC units. In order to help cover the continued increases from MCES, the Finance Department is recommending that the residential base amount per SAC unit be increased 7% to $74.00 per quarter, up from $69.00 per quarter. The Finance Department is also recommending that Commercial, Industrial and Institutional customers see a base amount increase per SAC unit of 7%, for a base charge of $23.00 per quarter, up from $21.50 per quarter.