Enterprise Fund Budgets and Utility Rates; Bishop
CITY OF HOPKINS
Memorandum
To: Honorable Mayor and Council Members
Mike Mornson, City Manager
From: Nick Bishop, Finance Director
Date: October 12, 2021
Subject: Enterprise Fund Budgets and Utility Rates
_____________________________________________________________________
PURPOSE
No formal action is required at this meeting. Staff is requesting input on the proposed
budgets for enterprise funds and utility rates.
INFORMATION
Pavilion Fund
The Hopkins Pavilion is a multi-use, year-round arena and community facility. The
arena is used for a multitude of activities including ice skating, broomball, soccer,
lacrosse, inline skating, rugby, baseball, softball, concerts, company picnics and other
community and private events. The main revenue sources are a property tax levy,
facility rentals and leases. The main expenses are depreciation, salary, benefits and
bond interest. The budget is projecting a decrease in net position of $249,948, which
includes $480,000 of depreciation. The funds cash flow is projected to increase.
Pavilion Proposed
2021 2022 %age
Budget Budget Incr (Decr)
Revenues 823,500$ 836,500$ 1.58%
Expenditures 1,098,360$ 1,086,448$ -1.08%
Revenues over (under) Expenditures (274,860)$ (249,948)$
Finance Department
Utility Funds
The City has four separate utility funds to provide: water, sanitary sewer, storm sewer
and refuse collection services. They are classified as enterprise or business-type
funds. The main source of revenue for all funds is user charges. The main expenses
are salaries, benefits, depreciation, bond costs, municipal wastewater charges and
contracted services for recycling and organic pickup. Collectively, the funds are
projected to end the year with a cash balance of $5.7 million and a net position (fund
balance) of 26.7 million. The water, sanitary sewer and storm sewer funds have a
positive cash flow projection in 2022. The refuse fund is projected to slightly decrease
its cash position in 2022, which can be absorbed within the fund.
Water Proposed
2021 2022 %age
Budget Budget Incr (Decr)
Revenues 2,292,074$ 2,366,750$ 3.26%
Expenditures 2,198,674$ 2,364,599$ 7.55%
Revenues over (under) Expenditures 93,400$ 2,151$
Sanitary Sewer Proposed
2021 2022 %age
Budget Budget Incr (Decr)
Revenues 3,105,587$ 3,213,750$ 3.48%
Expenditures 2,963,236$ 3,152,338$ 6.38%
Revenues over (under) Expenditures 142,351$ 61,412$
Storm Sewer Proposed
2021 2022 %age
Budget Budget Incr (Decr)
Revenues 789,332$ 792,332$ 0.38%
Expenditures 596,969$ 679,722$ 13.86%
Revenues over (under) Expenditures 192,363$ 112,610$
Refuse Proposed
2021 2022 %age
Budget Budget Incr (Decr)
Revenues 1,001,941$ 1,254,420$ 25.20%
Expenditures 1,029,220$ 1,329,059$ 29.13%
Revenues over (under) Expenditures (27,279)$ (74,639)$
Water & Sanitary Sewer Rates
Proposed Water and Sanitary Sewer fund budgets have been prepared for 2022. The
W ater and Sanitary Sewer budgets being proposed include rate increases of
approximately 3.25% based on operational and capital needs. The City has a tiered
rate structure for water consumption.
2021 2022 Percent
Current Proposed Increase
Flat Rates Per Meter Per Month
Residential - 5/8" meter 3.02 3.12 3.31%
Residential - 1" meter 3.02 3.12 3.31%
Apt/Commercial - 1-1/2" to 2" meter 6.05 6.25 3.31%
Apt/Commercial - 3" meter 9.08 9.38 3.30%
Apt/Commercial - 4" meter 12.09 12.48 3.23%
Apt/Commercial - 6" meter 18.14 18.73 3.25%
Consumption Rates, Per 1,000 Gallons
Residential and Multi-Family
0 - 3,000 gallons 3.10 3.20 3.23%
3,001 - 5,000 gallons 3.56 3.68 3.37%
5,001 and over 4.09 4.22 3.18%
Commercial
0 - 10,000 gallons 2.96 3.06 3.38%
10,001 - 20,000 gallons 3.39 3.50 3.24%
20,001 and over 3.91 4.04 3.32%
Irrigation - all usage 3.70 3.82 3.24%
Production meter 3.12 3.22 3.21%
Sanitary Sewer 6.86 7.08 3.21%
The two following charts show the impact of the water and sewer rate increases for
different user types.
Actual 2021 Proposed
2022 $ Increase % Increase
Single Family Residential (Lower User)
Water (1,500 Gallons)7.67$ 7.92$ 0.25$ 3.26%
Sewer (1,500 Gallons)10.29$ 10.62$ 0.33$ 3.21%
Total Monthly Bill 17.96$ 18.54$ 0.58$ 3.23%
Single Family Residential (Median User)
Water (4,000 Gallons)15.88$ 16.40$ 0.52$ 3.27%
Sewer (3,000 Gallons)20.58$ 21.24$ 0.66$ 3.21%
Total Monthly Bill 36.46$ 37.64$ 1.18$ 3.24%
Single Family Residential (High User)
Water (8,800 Gallons)34.98$ 36.12$ 1.13$ 3.24%
Sewer (4,800 Gallons)32.93$ 33.98$ 1.06$ 3.21%
Total Monthly Bill 67.91$ 70.10$ 2.19$ 3.22%
Impact on Low, Median and High Residential User
Actual 2021 Proposed
2022 $ Increase % Increase
Commercial Property (Low User with a 1" Meter)
Water (3,000 Gallons)14.93$ 15.43$ 0.50$ 3.35%
Sewer (3,000 Gallons)20.58$ 21.24$ 0.66$ 3.21%
Total Monthly Bill 35.51$ 36.67$ 1.16$ 3.27%
Commercial Property (High User with a 2" Meter)
Water (35,000 Gallons)128.20$ 132.45$ 4.25$ 3.32%
Sewer (35,000 Gallons)240.10$ 247.80$ 7.70$ 3.21%
Total Monthly Bill 368.30$ 380.25$ 11.95$ 3.24%
Impact on Low and High Commercial User
Storm Sewer Rates
A proposed Storm Sewer fund budget has been prepared for 2022. Residential storm
sewer fees are $5.00/month. There is no proposed rate increase.
Refuse Rates
A proposed Refuse fund budget has been prepared for 2022. New rates and rate
increases are being proposed for operational needs. The current refuse collection and
recycling rates have been in place since January 2016. The cost to the City to collect
refuse and contracted services to collect recycling have both increased over the past
five years. Organic recycling is a new program in 2022. Hennepin County is requiring
that all Cities make this service available to households with curbside recycling service.
2021 2022 Percent
Current Proposed Increase
Refuse Collection
35 Gallon 17.85 18.85 5.60%
65 Gallon 21.85 22.85 4.58%
95 Gallon 25.30 26.30 3.95%
Recycling 5.00 5.25 5.00%
Organic Recycling N/A 5.50 100.00%
Annual Service Cost for Median Value Home
Based on the preliminary tax levy passed on September 7th and the utility rates
proposed in this memo the annual service cost for a median value home is projected to
increase by $288.72 or $24.06 per month. The median value home was $291,000 in
2021 and $315,000 in 2022.
Actual Proposed
2021 2022 $ Increase
City Property Taxes (3.49% Levy Increase)1,854.00$ 2,037.00$ 183.00$
Water - Consumption
7,500 gallons per month
$3.10/$3.56/$4.09 Tiered Rates 356.04
$3.20/$3.68/$4.22 Tiered Rates 367.56
Sewer - Consumption
5,000 gallons per month
$6.86/ 1,000 gallons 411.60
$7.08/ 1,000 gallons 424.80
Refuse Collection
Garbage, 65 Gallon 262.20 274.20 12.00
Recycling 60.00 63.00 3.00
Organic Recycling - 66.00 66.00
Storm Sewer 60.00 60.00 -
Franchise Fees 84.00 84.00 -
Total 3,087.84$ 3,376.56$ 288.72$
11.52
13.20
Annual Service Cost for Median Value Home
City of Hopkins
2022 Budget Preparation Schedule for City Council
The following table outlines the tentative schedule for discussions on important aspects of the City’s Budget.
Meeting Date Meeting Type Subject Details
January 19 Regular Meeting Finance Update -Overview of Community Engagement Plan
and Budget Preparation Schedule for 2022
Budget
January-
February
Regular
Meetings &
Work Sessions
Department Updates -Planning and Development
-Police and Fire
-Public Works
-Community Services and Administration
March 16 Work Session Financial Management Plan -Presentation on FMP
-Decision on Infrastructure Projects in 2022
-Decision on Burnes Park Debt Service in
2022
April-July N/A Internal Preparations -2020 Audit Ongoing
-Departments Prepare Budgets, Equipment
Replacement and Capital Improvement
Schedules
July 13 Work Session Review 2022 Tax Levy and
General Fund Budget
-First Draft
August 10 Work Session Review Capital Improvement Plan
(CIP) and Equipment Replacement
Plan (ERP)
-Park Dedication Fund
-Permanent Improvement Revolving Fund
(Street Projects)
-Equipment Replacement Levy
City of Hopkins
2022 Budget Preparation Schedule for City Council
Meeting Date Meeting Type Subject Details
August 16
(Monday)
Budget
Engagement
Session
Review 2022 Tax Levy and
General Fund Budget
-Presentation
-Question and Answer Session
September 7 Regular Meeting Review 2022 Tax Levy and
General Fund Budget
-Preliminary for approval on September 21
September 21 Regular Meeting Approve Preliminary Tax Levy and
General Fund Budget
-Must be approved by September 30
October 12 Work Session Review Enterprise Fund Budgets
and Utility Rates
-Water -Sewer
-Storm Sewer -Refuse
-Pavilion
November 3 Regular Meeting Approve Utility Rates
November 9 Work Session -Review Special Revenue Budgets
and Activity Center Budget
-Review CIP and ERP
-Review Budget Options
-Chemical Assessment -Parking
-Economic Development -Depot
-Communications -Arts Center
-Activity Center
November 16 Regular Meeting Approve CIP and ERP
December 6
(Monday)
Regular Meeting Truth in Taxation Hearing -Overview of 2022 Budget and Tax Levy
-Public Comment
December 7 Regular Meeting Approve Final Budget & Tax Levy
December 21 Regular Meeting Approve Final Budget & Tax Levy -Last scheduled meeting to approve