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ARDEN HILLS CITY COUNCIL WORK SESSION - MAY 19, 2008 3 Mr. North explained with Option II, the base fee scale would cover the first 10,000 gallons of usage with a quarterly meter fee of $32.00. He stated this would differ from Option I in that any usage over 10,000 gallons would be tiered. Mr. North stated any usage from 10,000-35,000 gallons would be charged at a rate of$2.73 per 1,000 gallons, with any usage over 35,000 gallons being charged at a rate of $4.78 per 1,000 gallons. He noted the tiering would promote conservation while also having the larger users assume a larger percentage of the costs for the system. Mr. North indicated with Option II, the residential sewer fees would continue to pay a meter charge of $70.50 per quarter as a base sewer charge for the first 15,000 gallons. of water. He noted after this amount, the resident would be charged $3.75 per 1,000 gallons. Mayor Harpstead questioned if the current utility billing system could handle this type of billing without incurring major administrative expenses. Finance Director Sue Iverson indicated she was not sure how much the programming charge would be, but the system could handle this type of billing. Mr. North reported that Option III was similar to Option II, without having the all or nothing fee for the first 10,000 gallons. He further explained that this rate structure would have a residential meter fee of $9.00 per quarter with the tiering rates starting at $1.50 per gallon for 0-15,000 gallons. Mr. North indicated Tier II would cover gallons 15,000-35,000 at a rate of $3.25 per 1,000 gallons, with Tier III charging $4.78 per gallon for anything over 35,000 gallons. He explained the residential sewer fees would pay a meter charge of $50 per quarter, or the senior rate of$25 per quarter along with $3.55 per 1,000 gallons. Mr. North further reviewed the Options with the Council explaining how the three options would affect senior water/sewer users. He noted the senior discount could be eliminated as these users would be on the low end for usage and would only be charged for actual use. Mr. North highlighted the goals of the rate increases to achieve some cash balances for cash flow contingency purposes. He noted for all the options, the sewer cash position was to increase to a range of$1.3 million by 2022 providing a cushion for any unforeseen expenditures. Mr. North noted the analysis proves the City should consider water and sewer increases for 2009 in order to meet its desired goals. He indicated Options II and III best met the objectives for charging users for actual usage, encouraging conservation along with better rate structures which both the DNR and other metropolitan cities see as positive. Discussion ensued regarding the future of water expenses in Arden Hills and how the purchasing of water from Roseville factors in. The Council also discussed why the City's sewer rates were higher than neighboring communities and that the past percentage increases were not covering the capital outlay expenses. Councilmember Holden questioned why the City does not charge area fees for development and if neighboring cities were.