HomeMy WebLinkAbout02-12-07 Item 3D, Resolution 07-29 2007 Utility Rates
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Request for Council Action
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Agenda Item:
3D
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Daled 2'6-07
No.: 07-29
No.:
Sue Iverson/Sandy Byl
Revising Water Standby Utility Rates Effective January 1. 2007
Recommendation:
Recommendation:
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$18,508.50 in lost water utility revenue for 2007 if rates are not revised.
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MEMORANDUM
DATE:
February 6, 2007
AGENDA ITEM 3D
TO: Honorable Mayor and City Council
Michelle Wolfe, City Administrator
FROM: Sue Iverson, Finance Directo~Y
Sandy Byl, Utility Billing Clerk
SUBJECT: Resolution 07-29: Water Standby Utility Rates
BACKGROUND
In 2004, the Council hired Abdo, Eick, and Meyers (consultant) to perform a Utility Rate Study
for the City. Based upon the findings of the utility rate study, the City Council adopted a four
year (2005-2009) implementation plan to increase the City's utility rates for residential and
commercial customers.
DISCUSSION
Council previously approved the Utility Rates for 2007 on December II, 2006. Staff has found
through the course of updating utility rates that the Standby rates were not included. After some
research, it has been found that the standby rates have not been increased since 2004. The
residential rate is an increase of $1.34 per quarter to reflect the 2007 rate schedule. Commercial
accounts vary by meter size and charges, the average standby charge per account will be $49.17
for 2007 vs. $45.00 for 2004.
It seems that these rates have never been included on the letter sent to residents, which in turn is
the format also used for council approval in the resolution. Due to stafftumover, the previous
formats were used and these rates were inadvertently forgotten. To correct this problem, these
rates will be included in the resident letters in the future,
FINANCIAL IMPLICATIONS
Approximately $133,721.89 in standby charges were collected in 2006, which were billed at the
2004 rate. This equates to $9,831.20 in lost revenue for 2005 and $14,375.37 in lost revenue for
2006. This represents a cumulative loss of $24,206,57 over the two years. (These amounts were
calculated using the increases outlined in the rate study referenced above.) If we do not increase
Memo
City Council
Committees & Appointments
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the rate in 2007, the impact would be $18,508.50 in lost revenue for 2007 compared to using the
2004 rate. (Cumulative loss would be $42,715.07 over the three years if we do not implement
the change.)
CITY STAFF RECOMMENDATION
Motion to Approve Resolution 07-29: A resolution revising water standby utility rates effective
January 1, 2007.
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~~HILLS
CITY OF ARDEN HILLS
COUNTY OF RAMSEY
STATE OF MINNESOTA
RESOLUTION NO. 07-29
RESOLUTION REVISING WATER STANDBY UTILITY RATES
EFFECTIVE JANUARY 1, 2007
WHEREAS, the City Council established a policy to review its water, sewer, and surface water
rates on as needed basis; and
WHEREAS, City had hired a consultant to conduct a Utility Rate Study and had revised the
City's utility rate structure based on their recommendation; and
WHEREAS, this study has determined that the rate increase is necessary to enable the utility to
remain self-supporting while having adequate funds to maintain and upgrade the City's
infrastructure that supports the water, sewer, and surface water utilities.
NOW THEREFORE, BE IT RESOLVED by the City Council of the City of Arden Hills,
Minnesota that effective first quarter of2007, water utility standby rates be revised as follows:
Service Description Current
Water - Residential per Quarter:
Standby per account $ 5.00
2007
$6.34
Water - Commercial per Quarter:
Standby per account (avg.) $ 45.00
$49.17
PASSED AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF ARDEN HILLS
THIS 12th DAY OF FEBRUARY, 2007.
ATTEST:
Stanley D. Harpstead, Mayor
Michelle A. Wolfe, City Administrator