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Sanitarv Sewer O�erations: The City maintains a sanitary sewer collection system to ensure the <br />general public's health and general welfare. The single largest operating cost to the sanitary <br />sewer operation is the treatment costs paid to the Metropolitan Council Environmental Services <br />Division (MCES). The MCES has notified us that our treatment costs are expected to increase <br />3% in 2005. In addition, the City's own operating costs are expected to increase by <br />approximately 3%. Unlike the Water Fund, the Sanitary Sewer Fund has a strong reserve level <br />that can be used to offset some of these increases. <br />Storm Water Drainage Operations: The City provides for the management of storm water <br />drainage to prevent flooding and pollution control, as well as street sweeping and the leaf pickup <br />program. The storm sewer costs are expected to Increase substantially in 2005, due to the <br />planned replacement of Stormwater systems. In an effort to ensure adequate funds are on hand <br />for these replacements as well as other operating costs, an increase in the rates will be needed. <br />Recvclin�O�erations: The recycling operation provides for the contracted curbside recycling <br />pickup throughout the City. The primary operating cost is the amounts paid for a contractor to <br />pickup recycling materials. Per the City's contract with the Recycling Hauler, a rate increase of <br />2% is being suggested. <br />Recommendation <br />After reviewing the needs of the various enterprise-type operations and the current rate structure, <br />Staff feels a rate adjustment is warranted. This is based on the following: <br />1) The City will realize a 2-5% increase from various service providers including the City of <br />St. Paul, MCES, and Waste Management. <br />2) The City is projecting a 3-5% increase in City-controlled operating costs. <br />3) Substantial capital replacement costs will be incurred in the next several years that will <br />require both the use of existing reserves, as well as planned rate increases. <br />4) The City has fixed costs that it must recoup independent of the amount of citywide usage. <br />5) The City has typically applied rate adjustments on an equal percentagebasis across various <br />property types. <br />Based on these reasons, Staff is recommending the following rate adjustments as shown in the <br />tables below: <br />