VII.2. Enterprise Fund Budgets and Utility Rate Review; Bishop
CITY OF HOPKINS
Memorandum
To: Honorable Mayor and Council Members
Mike Mornson, City Manager
From: Nick Bishop, Finance Director
Date: October 10, 20223
Subject: Enterprise Fund Budgets and Utility Rate Review
_____________________________________________________________________
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 2024 budget includes $100,000 for capital projects (replacement of a
water heater, entrance doors and flooring). The budget is projecting a decrease in net
position of $219,773, which includes $480,000 of depreciation. The funds cash flow is
projected to increase.
Pavilion Proposed
2023 2024 %a ge
Budget Budget Incr (Decr)
Revenues 819,000$ 913,700$ 11.56%
Expenditures 1,080,961$ 1,133,473$ 4.86%
Revenues over (under) Expenditures (261,961)$ (219,773)$
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 $6.1 million and a net position (fund
balance) of 26.7 million. The sanitary sewer and storm sewer have a positive cash flow
projection in 2023. The water and refuse funds are projected to slightly decrease cash
position in 2023, which can be absorbed within the funds.
Water Proposed
2023 2024 %a ge
Budget Budget Incr (Decr)
Revenues 2,513,000$ 2,892,400$ 15.10%
Expenditures 2,627,587$ 2,858,975$ 8.81%
Revenues over (under) Expenditures (114,587)$ 33,425$
Sanitary Sewer Proposed
2023 2024 %a ge
Budget Budget Incr (Decr)
Revenues 3,460,000$ 3,635,000$ 5.06%
Expenditures 3,397,964$ 3,584,058$ 5.48%
Revenues over (under) Expenditures 62,036$ 50,942$
Storm Sewer Proposed
2022 2023 %a ge
Budget Budget Incr (Decr)
Revenues 810,332$ 810,332$ 0.00%
Expenditures 793,522$ 826,094$ 4.10%
Revenues over (under) Expenditures 16,810$ (15,762)$
Refuse Proposed
2023 2024 %a ge
Budget Budget Incr (Decr)
Revenues 1,271,200$ 1,340,085$ 5.42%
Expenditures 1,324,891$ 1,477,104$ 11.49%
Revenues over (under) Expenditures (53,691)$ (137,019)$
Water & Sanitary Sewer Rates
Proposed Water and Sanitary Sewer fund budgets have been prepared for 2024. The
Water and Sanitary Sewer budgets being proposed include rate increases of
approximately 16% and 5%, respectively. Rates are based on operational needs, capital
needs and debt repayment. The City has a tiered rate structure for water consumption.
2023 2024 Percent
Current Proposed Increase
Flat Rates Per Meter Per Month
Residential - 5/8" meter 3.34 3.87 15.87%
Residential - 1" meter 3.34 3.87 15.87%
Apt/Commercial - 1-1/2" to 2" meter 6.69 7.76 15.99%
Apt/Commercial - 3" meter 10.04 11.65 16.04%
Apt/Commercial - 4" meter 13.35 15.49 16.03%
Apt/Commercial - 6" meter 20.04 23.25 16.02%
Consumption Rates, Per 1,000 Gallons
Residential and Multi-Family
0 - 3,000 gallons 3.42 3.97 16.08%
3,001 - 5,000 gallons 3.94 4.57 15.99%
5,001 and over 4.52 5.24 15.93%
Commercial
0 - 10,000 gallons 3.27 3.79 15.90%
10,001 - 20,000 gallons 3.75 4.35 16.00%
20,001 and over 4.32 5.01 15.97%
Irrigation - all usage 4.09 4.74 15.89%
Production meter 3.45 4.00 15.94%
Sanitary Sewer 7.58 7.96 5.00%
The two following charts show the impact of the water and sewer rate increases for
different user types.
Actual 2023 Proposed
2024 $ Increase % Increase
Single Family Residential (Lower User)
Water (1,500 Gallons)8.47$ 9.83$ 1.36$ 16.00%
Sewer (1,500 Gallons)11.37$ 11.94$ 0.57$ 5.01%
Total Monthly Bill 19.84$ 21.77$ 1.93$ 9.70%
Single Family Residential (Median User)
Water (4,000 Gallons)17.54$ 20.35$ 2.81$ 16.02%
Sewer (3,000 Gallons)22.74$ 23.88$ 1.14$ 5.01%
Total Monthly Bill 40.28$ 44.23$ 3.95$ 9.81%
Single Family Residential (High User)
Water (8,800 Gallons)38.66$ 44.83$ 6.18$ 15.98%
Sewer (4,800 Gallons)36.38$ 38.21$ 1.82$ 5.01%
Total Monthly Bill 75.04$ 83.04$ 8.00$ 10.66%
Impact on Low, Median and High Residential User
Actual 2023 Proposed
2024 $ Increase % Increase
Commercial Property (Low User with a 1" Meter)
Water (3,000 Gallons)16.50$ 19.13$ 2.63$ 15.94%
Sewer (3,000 Gallons)22.74$ 23.88$ 1.14$ 5.01%
Total Monthly Bill 39.24$ 43.01$ 3.77$ 9.61%
Commercial Property (High User with a 2" Meter)
Water (35,000 Gallons)141.69$ 164.31$ 22.62$ 15.96%
Sewer (35,000 Gallons)265.30$ 278.60$ 13.30$ 5.01%
Total Monthly Bill 406.99$ 442.91$ 35.92$ 8.83%
Impact on Low and High Commercial User
Storm Sewer Rates
A proposed Storm Sewer fund budget has been prepared for 2024. 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 2024. Refuse increases of
approximately 5% are being proposed for operational needs. The City has a five year
contract with an outside service provider to provide recycling and organic recycling.
Rates increases of approximately 2.5% are being proposed based the contract.
2023 2024 Percent
C urrent Proposed Increase
Refuse Collection
35 Gallon - Every Other Week 13.85 14.55 5.05%
35 Gallon 18.85 19.80 5.04%
65 Gallon 22.85 24.00 5.03%
95 Gallon 26.30 27.60 4.94%
Recycling 5.50 5.64 2.55%
Organic Recycling 5.75 5.89 2.43%
Refuse, Recycling and Organic Recycling Rates
Annual Service Cost for Median Value Home
Based on the preliminary tax levy passed, franchise fee ordinances and the utility rates
proposed in this memo the annual service cost for a median value home is projected to
increase by $109.16 or $8.85 per month. The median value home was $361,000 in
2023 and $369,300 in 2024.
Actual Proposed
2023 2024 $ Increase % Increase
City Property Taxes (4.86% Levy Increase)2,188.00$ 2,187.00$ (1.00)$ -0.05%
Water - Consumption
7,500 gallons per month
$3.20/$3.68/$4.22 Tiered Rates 393.36$
$3.42/$3.94/$4.52 Tiered Rates 456.24$
Sewer - Consumption
5,000 gallons per month
$7.08/ 1,000 gallons 454.80$
$7.58/ 1,000 gallons 477.60$
Refuse Collection
Garbage, 65 Gallon 274.20$ 288.00$ 13.80$ 5.03%
Recycling 66.00$ 67.68$ 1.68$ 2.55%
Organic Recycling 69.00$ 70.68$ 1.68$ 2.43%
Storm Sewer 60.00$ 60.00$ -$ 0.00%
Franchise Fees (based on average)84.00$ 91.32$ 7.32$ 8.71%
Total 3,589.36$ 3,698.52$ 109.16$ 3.04%
62.88$
22.80$
Annual Service Cost for Median Value Home
15.99%
5.01%