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<br />REQUEST FOR COUNCIL ACTION <br />Date: 11/10/2025 <br />Item No.: 7.g. <br />Department ApprovalCity Manager Approval <br />Item Description:Review the 2026 Proposed Utility Rates <br />1 <br />2 Background <br />3 Unlike many city services that are supported by property taxes, our utility or enterprise operations are <br />4 funded primarily by user fees and are operated as separate, stand-alone functions. The City engaged <br />5 Ehlers to perform an updated utility rate study in 2024 of the Water, Sanitary Sewer and Storm Drainage <br />6 Funds. The utility rate study recommendations were used for the 2026 utility rates in these funds. <br />7 <br />8 Water Fund Operations <br />9 The updated Utility Rate Study done by Ehlers on the Water Fund recommends a 5.5% increase in rates <br />10 for 2025-2028 to cover fixed and variable costs, debt service and replenishment of fund reserves. St. <br />11 Paul Regional Water increased their rate charged to Roseville by 9%, which is the main driver of our <br />12 needed increases. In addition, this fund is still working on building fund reserves to cover the minimum <br />13 for operations and capital. <br />14 <br />15 Storm Drainage Operations <br />16 The City provides for the management of stormwater drainage to prevent flooding and pollution control, <br />17 as well as the street sweeping program. The updated utility rate study recommended a 0% increase for <br />18 2026 and this is adequate to cover operating and capital needs at this time. <br />19 <br />20 Sanitary Sewer Operations <br />21 The City maintains a sanitary sewer collection system to ensure the public’s health and general <br />22 welfare. Met Council increased their rates by 1.06% for fiscal year 2026. The updated utility rate study <br />23 recommends a 2% increase; the increase for the past 2 years has been held to 0%. Public Works <br />24 previously deferred capital projects to accommodate the 0% increase. Based on the 2026-2045 CIP, a <br />25 2% increase is necessary at this time. See the chart below that shows the fund balance of the Sanitary <br />26 Sewer Capital Fund after the 2% increase: <br />27 <br />Page 1 of 4 <br />Qbhf!78!pg!74: <br /> <br />