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23 The decrease is attributable to the change in the City's Utility (senior) Discount Program's eligibility <br />24 criteria. Previously, homeowners were eligible if they were simply receiving social security or <br />25 retirement income. Earlier this year, the Council changed the criteria to ensure that the Program was <br />26 financially need -based instead. Homeowners must now be at or below 165% of federal poverty <br />27 threshold guidelines. <br />28 <br />29 In making this change, the number of homeowners receiving the discount is expected to decline from <br />3o 2,300 homes (24%) to approximately 50 (0.5%). As a result, the subsidies provided by homeowners <br />31 that are not getting the discount to those that are; will drop by approximately $250,000 annually. This <br />32 in turn allows us to lower the base fee for both water and sewer. <br />33 <br />34 The impact on homes that no longer receive the utility (senior) discount is dramatically different <br />35 however. These homes effectively lose out on a $10 monthly subsidy. In other words, their quarterly <br />36 bill will increase by approximately $30. <br />37 <br />38 Water Operations <br />39 The City's water operation provides City customers with safe potable water, as well as on -demand <br />40 water pressure sufficient to meet the City's fire protection needs. The following table provides a <br />41 summary of the 2014 and 2015 (Proposed) Budget: <br />42 <br />43 <br />44 <br />45 <br />46 The single largest operating cost for the water operation is the purchase of wholesale water from the <br />47 City of St. Paul. For 2015, the budgeted amount has been increased to account for an expected 7.5% <br />48 increase in the rates charged by St. Paul. St. Paul Water Officials have informed us that their overall <br />49 customer consumption continues to decline which results in a drop in revenue at a time when operating <br />50 costs as well as capital costs are increasing. The rate increase is necessary to offset these impacts. <br />51 <br />52 The amount of capital replacements is also expected to decline by approximately $500,000 compared to <br />53 the previous year. The City expects to have inflationary -type increases in supply costs, while personnel <br />54 costs are increasing by 3.4%. <br />55 <br />56 <br />Page 2 of 8 <br />2 <br />S Incr. % Incr. <br />2015 (Decrease)(Decrease) <br />Personnel <br />$ 583,000 <br />$ 603,000 <br />Supplies & Materials <br />78.350 <br />79,900 <br />Other Services & Charges <br />586,850 <br />589,750 <br />Water Purchases <br />5,100,000 <br />5,250,000 <br />Depreciation / Caital <br />2,860,000 <br />2,354,000 <br />Total 1 <br />$ 9,208,200 1 <br />$ 8,876,650 $331,550 <br />44 <br />45 <br />46 The single largest operating cost for the water operation is the purchase of wholesale water from the <br />47 City of St. Paul. For 2015, the budgeted amount has been increased to account for an expected 7.5% <br />48 increase in the rates charged by St. Paul. St. Paul Water Officials have informed us that their overall <br />49 customer consumption continues to decline which results in a drop in revenue at a time when operating <br />50 costs as well as capital costs are increasing. The rate increase is necessary to offset these impacts. <br />51 <br />52 The amount of capital replacements is also expected to decline by approximately $500,000 compared to <br />53 the previous year. The City expects to have inflationary -type increases in supply costs, while personnel <br />54 costs are increasing by 3.4%. <br />55 <br />56 <br />Page 2 of 8 <br />