2016-10-25_PWETC_Minutes - Laserfiche WebLink

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At the request of Chair Cihacek, Finance Director Miller reviewed the use of reserves in each utility infrastructure fund, as isolated and segregated to ensure transparency and for management purposes. Mr. Miller advised that some outside restrictions applied to these cash reserves, thus their segregation not only for the water and sewer utilities, but in other areas of government accounting. Depending on infrastructure replacement cycles, Mr. Miller advised those cash reserves could spike or diminish from year to year depending on that schedule. Finance Director Miller reviewed each fund, responding to questions and comments of the PWETC. Water Operations (Attachment A, page 2) Chair Cihacek pointed out an apparent error in the 2nd table (water operations) between lines 34 — 38 (Revenues, Interest Earnings) showing "zero percent" increase or decrease in 2017, when an increase is actually projected based on anticipated increases in those interest earnings. Finance Director Miller thanked Chair Cihacek for pointing that error out. Sanitary Sewer Operations (Attachment A, page 3) Finance Director Miller reported that the Metropolitan Council is undertaking significant infrastructure replacement on their trunk line, running through Roseville, and would be passing on those capital improvement costs on to their customers. However, Mr. Miller noted this large percentage increase should be balanced by smaller increases in water and storm sewer utility costs for customers. At the request of Chair Cihacek, Mr. Miller advised that staff was usually able to balance rates to present steep spikes such as in this utility fund for 2017, but admitted this huge increase from the Metropolitan Council had caught staff by surprise even with the continued monitoring. Mr. Miller noted that Roseville water flows had been dropping over the years, but not to any significant amount; and compared to other cities, Roseville was taking a bigger hit than those other cities resulting in opposite course corrections in the past. Over the long-term, Mr. Miller reported the rate increases realized by Roseville from the Metropolitan Council had been much closer to inflationary impacts; but reiterated this one stood out as an anomaly. At the request of Member Seigler, Finance Director Miller confirmed that the City of Roseville was tied to using the Metropolitan Council's services versus being able to revert to private septic systems or other options such as building its own wells. Specific to water, given economies of scale with St. Paul, Mr. Miller clarified that the City of Roseville could not replicate that service, upon investigation several years ago. Mr. Miller further clarified that with the contractual relationship in place, St. Paul costs didn't bleed over into the broader system and other communities purchasing water from the(SPRWS)with a formula in place and only shared equipment costs captured based on a proportionate share, and nothing more. Page 3 of 20