7A-1, Motion to Adopt Utility Rates

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.. __us MEMORANDUM DATE: December 3, 2008 TO: Honorable Mayor and City Council Ron Moorse, City Administrator FROM: Sue Iverson, Finance Director SUBJECT: 2008 Utility Rate Study and 2009 Utility Rates Background/Discussion: In January, the Council authorized a rate study to be performed by Ehlers & Associates, Inc. Ehlers presented the Water and Sewer portion to the Council at its May work session. At that time, Council asked for some further analysis. Ehlers presented the additional analysis at the Council's November work session along with the Surface Water Management part of the study. Council directed Ehlers to prepare the rates based on the Water-Option II and Sewer-Option II A. They also requested that the senior discount be phased out over three years. Attached is the final version of the utility tates for Council approval. As stated previously, the senior discount at last count in 2007 was estimated to cost the City over $50,000 a year - we have had many new senior applications since we last did the calculations. We still need to pay the Metropolitan COlancil for treatment of this discharge as well as maintain our sewer lines. In 2007 the number of senior sew€r users was 508 - if we take that number times the difference between the senior user and low volume user ($87.27 - 45.20 = 42.07) x 508 we get a total of$21,371.56 a quarter or $85,486.24 a year. (Please note that I am using 16,000 gallons for this e.xample - senior users may use more or less than that amount.) Page two lists the Surface Water or Storm Sewer Rates by class and how they are computed. As previously stated, the i~crease is not significant here - we have been increasing these rates at about 3% a year. If the Council does not adopt these rates, staff will ask to adopt a rate increase from the old rate study effective January 1, 2009. (The current budget has th€ old rate study iNcreases at this time which are 4% for water, 3% for sewer, and 3% for surface water.) STAFF RECOMMENDATION: A motion to adopt utility rates as presented in the rate study. (A detailed listing of the utility rates by category is listed in the Fee Schedule which will be adopted by Ordinance in another item.)