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ARDEN HILLS CITY COUNCIL – MAY 14, 2018 12 Ms. Vogt commented on the findings from the study noting the Storm Water and Water Fund have sufficient cash balances but needs some work. It was noted the Sewer Fund has an insufficient balance and requires a rate increase. She recommended the City eliminate the undeveloped surface water management fee along with the standby fee. She reviewed the City’s fixed costs and commented on the City’s tiered billing system, describing how the system had to align with water usage. The City’s existing water rates were discussed further with the Council. She reported the existing tiers were found to be appropriate. She noted cash balances were not sufficient to pay for capital projects and recommended the City issue debt for the 2018 projects. She explained the current usage rates meet the conservation standards per State Statute, but noted a rate increase will be required to allow for payment of future debt service. Ms. Vogt recommended the City consider a 6.5% utility rate increase for 2018 through 2022 and 2% from 2023 through 2028. She reviewed how the proposed rate change would impact the water rates. She discussed the proposed capital projects that would impact the water and sewer funds. She provided further comment on the proposed rate increases for the sewer and sanitary sewer rates noting the pros and the cons. She discussed how the proposed rate increases would impact the average resident. She recommended the Council adopt the recommended rate increases for all utility funds for 2018. Mayor Grant commented the last rate study was completed 10 years ago. He noted the Council contacted with Ehlers to complete this rate study to ensure the City was covering all of its costs. He discussed the capital projects that would be completed from the Water Fund in 2018. He stated it would be nice to level off these expenses, however each of these projects had to be completed this year. Councilmember Holmes questioned when the proposed rate increases would take effect. City Administrator Perrault reported the rate increases would go into effect the second quarter of 2018. MOTION: Councilmember Holden moved and Councilmember Holmes seconded a motion to adopt Ordinance 2018-001, Amending the 2018 Fee Schedule Updating the Utility Rates and Authorizing Publication of the Summary Ordinance. The motion carried (5-0). 11. UNFINISHED BUSINESS None. 12. COUNCIL COMMENTS Councilmember Holmes stated she and several members of the Council attended the NYFS Leadership Luncheon on Wednesday, May 2. She reported this was a great fundraising event and encouraged members of the public to attend next year. Councilmember Holmes commented on several donations the Arden Hills Foundation had recently received.