CCP 10-18-2004 - Laserfiche WebLink

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CITY OF ARDEN HILLS, MINNESOTA RATE STUDY SEPTEMBER 9, 2004 III. WATER RATE STUDY - CONTINUED . Rate scenario 1 is not an option without issuing debt to finance a large portion ofthe planned capital projects. Rate scenario 2 projects results based on a 3 percent inflationary increase per year starting in 2005. The cash balance is adequate until the 2008 projects are completed. After 2007 the cash balance is not adequate for working capital. Rate scenario 3 uses the following increases to arrive at the cash flow described above: Percent Year Category Rate Increase 2004 Usage per 1,000 gallons $ 2.20 0% Base up to 10,000 21.95 0% 2005 Usage per 1,000 gallons 2.53 15% Base up to 10,000 25.24 15% 2006 Usage per 1,000 gallons 2.66 5% Base up to 10,000 26.50 5% 2007 Usage per 1,000 gallons 2.79 5% Base up to 10,000 27.83 5% 2008 Usage per 1,000 gallons 2.93 5% Base up to 10,000 29.22 5% 2009 Usage per 1,000 gallons 3.02 3% Base up to 10,000 30.10 3% . If rate scenario 3 is chosen, the City will have the second highest residential water rates as calculated in the comparison table. The average for all I I communities presented excluding Arden Hills is $46.43. Currently Arden Hills falls in the middle of the comparison cities. There are 5 cities with higher rates based on 24,000 gallons (average for Arden Hills' customers) and there are 6 with rates lower than Arden Hills. If Arden Hills' rate goes to $2.53 per 1,000 gallons the average residential bill for 24,000 gallons of usage will go from $52.33 to $60.24 or 30 percent higher than the average. The top 5 cities in the comparison average approximately $58 per quarter. A comparison to the top 5 indicates that the increase would be approximately 3 percent higher than the top 5 cities in the comparison list. The commercia] rates would also be the second highest in the comparison and would be 28 percent higher than the average. IV. SANITARY SEWER RATE STUDY Currently the City's sanitary sewer rate structure is as follows: Cat~ory Type Amount Senior per quarter charge $ 33.95 Non- Senior per quarter charge 50.95 Commercial per 1,000 gallons 2.63 The senior accounts total 17 percent of residential accounts. The rate stmcture results in a total discount of $28,000 ammally to the senior category when compared with regular residential billing. One of the other observations we made when compiling data for all accounts is the fairly large uumber of accounts that use over 15,000 gallons of water during the winter quarter. We noted that 955 of I 989 residential accounts or 48 percent use more than 15,000 gallons in the winter quarter. To obtain winter quarter statistics we used the February 2004 billing for Group I, March 2004 billing fO. Group 2 and April, 2004 billing for Group 3. The average usage for the 955 accounts was approximately 24,000 gallon in the winter quarter. We established a usage rate for sanitary sewer based on winter quarter data. -5-