12-17-07 Item 1C Utility Rates - Laserfiche WebLink

Home Browse Search

~ ~~HILLS MEMORANDUM DATE: December 11,2007 Agenda Item: 1.c. TO: Honorable Mayor and City Council FROM: Sue Iverson, Finance Director ~ SUBJECT: 2008 Utility Rate Study Policy Considerations BackgroundlDiscussion: As previously discussed, the enterprise funds have excess expenditures over revenues in the 2008 budget. I met with our financial consultants from Ehlers in November to review the Financial Management Plan and to discuss conducting a Utility Rate Study. (This was to be part of last year's Financial Management Plan, but was postponed in order to get accurate numbers and accurately assess what our major problem areas were.) I have attached a memo that you previously received for the November 19, 2007 work session, but due to time constraints, was not discussed. This memo lists policy issues that need to be discussed. Council feedback/direction is needed regarding these policy issues. A good rate study takes approximately three to four months to complete, so Ehlers recommended that we implement the current proposed rates and then do a "mid-year" rate adjustment once the study is completed. Council adopted those rates on December 10,2007. Much of the information that will be used in the rate study will also be used for the Resource Plan for TCAAP, sO the Financial Model and the Rate Study will be based on the current budget adopted on December 10, 2007, and worked into the Resource Plan. I am confident that these are accurate numbers from which to complete these models/studies and have discussions with the Council. We will also use the five-year CIP plan once it is adopted by the Council for 2008 - 2012. For purposes of discussion on Monday night, staff proposes a review of the Policy considerations that are listed in the attached memo. I will bring supporting documentation and analysis with to the meeting to answer questions on the senior discount and what other cities are doing with connections fees. Mark Ruff from Ehlers will be in attendance to answer any questions about the rate study or rate structures that other cities use. Once we have direction from the Council on these issues; staff can proceed with the preparation of the Model and the Study. DIRECTION REQUESTED: Council feedback/direction on policy considerations for the City's water and sewer enterprise funds.