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Regular City Council Meeting Monday, November 17, 2008 Page 7 Roll Call Ayes: Pust; Wilhnus; Roe; Ihlan; and Klausing. Nays: None. 10. Presentations 11. Public Hearings 12. Business Items (Action Items) a. Consider Adopting a Resolution for the 2009 Utility Rate Adjustments Finance Director Miller reviewed staff's annual review of the City's utility opera- tions (i.e., water, sanitary sewer, storm water drainage, and solid waste recycling operations) to determine whether rate adjustments were necessary to accommo- date fixed costs (i.e., personnel, supplies, maintenance and depreciation); variable costs including purchase of water from the City of St. Paul and water treatment costs paid to the Metropolitan Council and recycling contractor costs; capital re- placement costs; and the City's current customer base, rates and rate structure. Mr. Miller advised that the proposed utility rate adjustments for 2009 represented rates necessary to accommodate the 2009 budget, and scheduled capital replace- ments over the next 10 years. Mr. Miller advised that staff had also instituted a proposed conservation rate for implementation in 2009, that was mandatory under state statute by 2010, and encourage homeowners to enact conservation efforts through implementation of a tiered usage rate structure for residential users, with higher rates proposed for 2009 for users in excess of 30,000 gallons per quarter, impacting approximately 10-15% of Roseville residential households. Staff's re- port included an analysis of current and projected usage and rate impacts (page 3) based on typical household use. Discussion included state mandates and their lack of guidance to municipalities in how to structure rates; review of municipal rates by the Department of Natural Resources (DNR) and the Metropolitan Council; current consumption behavior for single-family households in the community and a history of that usage; weather-related impacts and other criteria on which to base assumptions; fees paid by all Roseville households whether on City or County streets having storm sewer based on the recognition that there is still run off and drainage from all properties that requires treatment by a pond system once it reaches that destination; and whether additional incentives for lowering consumption would be prudent. Additional discussion included the need to implement conservation measures for commercial properties and users; different rate structures indicated in the staff re- port; and difficulties in enacting a tiered rate for commercial users given the vari- ety of uses and business practices and needs; and current high rates for commer- cial users as indicated in Schedule A for quarterly consumption.