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ARDEN HILLS CITY COUNCIL WORK SESSION—FEBRUARY 27, 2012 3 Councilmember Holden questioned what the percentages were for meter rate versus water charges. Director of Finance and Administrative Services Iverson indicated this would require further analysis and a rate study. She explained that after speaking with the Council and residents, another option would be to keep the meter rate the same and charge residents beginning at gallon one. She stated there were a number of ways that the Council could proceed. She recommended the Council proceed with the middle of the road rate change. Councilmember Holden commented she would be motivated to use less water if her bill went down for using less than 10,000 gallons. Director of Finance and Administrative Services Iverson stated she could continue to run additional rate scenarios for the Council to review. She discussed the rates she ran in November of 2011 and how these compared to the current examples. Mayor Grant suggested the information be presented in two columns comparing the present rates with the two new rates structures. He indicated this would provide the Council with greater perspective on where the rates were going. Councilmember Tamble commented the new rate structure could be construed to be unfair but with the new structure, all water usage would be billed accordingly with no subsidies. Councilmember Holden stated the current structure could be viewed to be unfair because 3,000 gallon users were paying the same rate as 10,000 gallon users. Councilmember Tamble questioned if the City would run the risk of a deficit moving forward with the per gallon usage utility rate. Director of Finance and Administrative Services Iverson stated conservation could lead to a deficit and the City's inability to cover fixed costs. This was the reason a meter charge was selected to cover fixed costs with a rate structure to cover the variable expenses. Discussion ensued regarding the proposed rates structures. Councilmember Tamble questioned how much more the bills would increase for those residents using 5,000 gallons or less. Director of Finance and Administrative Services Iverson estimated the first option would keep their rate the same. For those using between 5,000-10,000 gallons they would have a $4.19 increase. All users over 10,000 gallons would see an$8.00 increase in their bill. Councilmember Holden asked if the water per gallon rate could be increased to 80 cents. Director of Finance and Administrative Services Iverson stated the rates could be rerun with this rate.