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The decrease is attributable to the change in the City’s Utility (senior) Discount Program’s eligibility 24 criteria. Previously, homeowners were eligible if they were simply receiving social security or 25 retirement income. Earlier this year, the Council changed the criteria to ensure that the Program was 26 financially need-based instead. Homeowners must now be at or below 165% of federal poverty 27 threshold guidelines. 28 29 In making this change, the number of homeowners receiving the discount is expected to decline from 30 2,300 homes (24%) to approximately 50 (0.5%). As a result, the subsidies provided by homeowners 31 that are not getting the discount to those that are; will drop by approximately $250,000 annually. This 32 in turn allows us to lower the base fee for both water and sewer. 33 34 The impact on homes that no longer receive the utility (senior) discount is dramatically different 35 however. These homes effectively lose out on a $10 monthly subsidy. In other words, their quarterly 36 bill will increase by approximately $30. 37 38 Water Operations 39 The City’s water operation provides City customers with safe potable water, as well as on-demand 40 water pressure sufficient to meet the City’s fire protection needs. The following table provides a 41 summary of the 2014 and 2015 (Proposed) Budget: 42 43 44 $ Incr. % Incr. 2014 2015 (Decrease) (Decrease) Personnel $ 583,000 $ 603,000 Supplies & Materials 78.350 79,900 Other Services & Charges 586,850 589,750 Water Purchases 5,100,000 5,250,000 Depreciation / Capital 2,860,000 2,354,000 Total $ 9,208,200 $ 8,876,650 ($331,550) (3.6%) 45 46 The single largest operating cost for the water operation is the purchase of wholesale water from the 47 City of St. Paul. For 2015, the budgeted amount has been increased to account for an expected 7.5% 48 increase in the rates charged by St. Paul. St. Paul Water Officials have informed us that their overall 49 customer consumption continues to decline which results in a drop in revenue at a time when operating 50 costs as well as capital costs are increasing. The rate increase is necessary to offset these impacts. 51 52 The amount of capital replacements is also expected to decline by approximately $500,000 compared to 53 the previous year. The City expects to have inflationary-type increases in supply costs, while personnel 54 costs are increasing by 3.4%. 55 56 57 Page 2 of 11