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S nit r Sewer Operations. The City maintains a sanitary sewer collection syste to enure the general -, m m ns 34 public's health and general welfare. The single largest operating cost to the sanitary sewer operation is the 35 treatment costs paid to the Metropolitan Council Environmental Services Division (MCES). The MCES 36 has notified us that our treatment costs are expected to increase by approximately 4�% in 200 9. In addition, 37 the City's internal operating costs are expected to increase by approximately 5% reflecting higher motor fuel, insurance,, and other operating costs. 39 4, :-) Like the water operation; to facilitate a change to a conservation-based rate structure, significant changes in 4 1 the sanitary sewer rates need to occur. The portion of the rates designed to offset the City's fixed sanitary 42 sewer costs need to increase substantially, whereas the variable rate portion can be lowered. 43 44 The Sanitary Sewer Fund is in good financial condition which has allowed for lower-than-inflation rate 45 increases over the last 5 years. However, planned capital replacements over the net 10 years will 46 necessitate a rate increase in 2009. 47 48 Storm Water Drainage Operations.- The City provides for the management of storm water drainage to 49 prevent flooding and pollution controt, as well as street sweeping and the leaf pickup program. The storm sewer costs are expected to be higher than in previous years, due to an increase in the planned capital ,i replacement of stormwater systems, as well as higher costs for motor fuel, depreciation, and other operating 2 Costs. 53 54 Like the Sanitary Sewer Fund, the Storm Water Drainage Fund is in good financial condition which has allowed for lower-than-inflation rate increases over the last 5 years. However, planned capital 6 replacements over the next 10 years will necessitate rate increases in 2009. 58 Recycling Operations: The recycling operation provides for the contracted curbside recycling pickup 59 throughout the City. The primary operating cost is the amounts paid to a contractor to pickup recycling 6('-) materials. Thanks to strong revenue sharing dollars being recouped, no rate increase will be needed for 6� 2009. 62 63 Water Conservation Measures 64 Based on an analysis of the City's water customers,, it appears that the Roseville residents are already 65 consuming less water than residents in many other communities. This is likely due to the fact that 66 relatively few residential properties in Roseville have irrigation systems, which is in contrast to some 2 nd 67 and P ring suburbs. It may also be the result of having a relatively lower population per household. 68 However,, there are additional measures that can be taken to encourage water conservation even further. 69 "7 ('_) To provide an even greater incentive to conserve water, Staff is recommending two changes to the City's 7 1 water rate structure; a tiered water rate structure and a summer usage rate 72 "73 Currently, all water users pay the same rate regardless of the amount they use. It is recommended that a "74 tiered rate be implemented that would charge residential users that consume in excess of 30,000 gallons per "7 quarter, a 10% rate premium. Based on current customer behavior, this would impact 10 -15% of the City's "7 6 residential customers. A tiered rate for commercial customers is not recommended given the large disparity "7 "7 in usage among those customers. A tiered water rate would encourage households to take year-round "7 measures such as installing water-saving devices and taking shorter showers. "7 9 Page 2 of 7