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<br />Sanitary Sewer Utility <br /> <br />Sewer Fees <br /> <br />The City of Arden Hills participates in the Metropolitan Council Environmental Services <br />(MCES) sanitary sewer system. The City is responsible for the sewer collection system <br />within the City limits and then pays MCES disposal fees for treatment. The MCES <br />disposal fees have increased 5 - 9% each of the last four years. The rate study anticipates <br />that future increases for these fees will be 5%, annually. The MCES disposal fees <br />comprise 54% of the sewer utility's operating expenses based on the 2008 budget. <br />Another 10% of expenditures represent depreciation, while only 36% of operating <br />expenditures are within the City's control. <br /> <br />From the graphs shown on page 6 and 7, it is readily apparent that Sewer Utility revenues <br />have not kept pace with operating expenses and capital costs. The rate options outlined <br />below are designed to reverse this trend and build cash balances. <br /> <br />Sewer Rate Structure <br /> <br />The current rate structure is $3.24 per 1,000 gallons of non winter sewer usage over water <br />usage of ] 5,000 gallons. Seniors pay a base quarterly charger of $45.20 and other <br />residents pay a base quarterly charge of $67.83. The minimum charge helps pay for the <br />fixed costs of the system as outlined in the water utility description. <br /> <br />Existing Residential Rate Structure-Rate Option I <br /> <br />The projected usage rate increase under the existing rate structure for sanitary sewer is <br />18% per year for the next three years. It appears that the reason for the increase is that the <br />pace of MCES rate increases has been higher than City user rate increases. It also appears <br />that rate increases adopted in the past have not kept up with the cost of capital <br />improvements. The proposed rates are shown in the chart below. <br /> <br />Base charge <br />Usage charge <br /> <br /> 6.00% 6.00% 6.00% 6.00% 6.00% 6.00% 6.00% <br /> 18.00% 18.00% 18.00% 6.00% 6.00% 6.00% 6.00% <br />2008 2009 2010 2011 2012 2013 2014 2015 <br />45.20 47.91 50.79 53.83 57.06 60.49 64.12 67.96 <br />67.83 71.90 76.21 80.79 85.63 90.77 96.22 101.99 <br /> <br />Senior <br />Non Senior <br />Usage-over <br />15.000 gallons <br />(per thousand <br />gallons) <br /> <br />3.24 <br /> <br />3.82 <br /> <br />4.51 <br /> <br />5.32 <br /> <br />5.64 <br /> <br />5.98 <br /> <br />6.34 <br /> <br />6.72 <br /> <br />As mentioned above, the MCES charges are increasing at 5% per year. We are concemed <br />about the long term cash balances of the sewer fund. <br /> <br />I <br /> <br />II <br />