CR 05-150 Approve Sanitary & Storm Sewer Rate Adjustment
November 10, 2005
Council Report 2005-150
APPROVE SANITARY AJ'ID STORM SEWER RATE ADJUSTMENTS
ProDosed Action
Staff recommends adoption oUhe following: Move to aDDrove Resolution No. 2005-110 increasing the sanitary sewer rate bv $.25
Der 1,000 gallons of metered water usage and Resolution No. 2005-111 increasing the storm sewer utility rate bv $1.50 Der
residential equivalencv factor effective on billings rendered from and after January 1. 2006.
Adoption of this motion will result in increasing the sanitary sewer rates from $2.25 to $2.50 per 1,000 gallons of water used and
increase the storm sewer from $12.00 to $13.50 per residency equivalent factor (REF). The storm sewer utility charge is a flat
monthly charge.
Overview
Sanitary Sewer - The current rate for sanitary sewer is $2.25 per 1,000 gallons of water used and has been in place since 1999.
The last rate adjustment was a DECREASE of$0.25. The proposed 2006 rate adjustment of$0.25 to $2.50 per 1,000 gallons of
water used will restore the sanitary sewer rates to 1998 levels.
Following a review of the sanitary sewer fund, the projected expenditures and capital needs it has been detennined that a rate
adjustment is necessary to maintain the current level of service and provide for scheduled capital needs. While rates have remained
stable over the past six years, operating costs have increased 29% and revenues have decreased by 18% primarily due to the loss of
large commercial customers. In the next five years the sewer fund will incur costs of approximately $752,000 as we continue to
maintain our sewer system. The increase in sewer revenue will be used to pay for operations and future improvements to the sewer
system.
Storm Sewer Utility - The current rate for storm sewer utility is $4.00 per residential equivalency factor (REF) per month, the
proposed rate would be $4.50 per REF or $13.50 per acre per month. The last rate increase was $0.60 per residential REF in 1999.
Following a review of the storm sewer fund, the projected expenditures and capital needs it has been detennined that a rate adjustment
is necessary to maintain the current level of service and provide for scheduled capital needs. Over the last six years expenditures have
increased 34% and revenues have increased 9%. In addition to providing for operations we need to plan for future capital
improvements scheduled for the next five years that will total over $1.5 million dollars. Improvements currently scheduled include
storm drainage system maintenance at Nine Mile Creek, storm water management projects at Shady Oak Pond, upgrade of sanitary
sewer lift station #1 and the 5th Street South culvert replacement.
Primarv Issues to Consider
How will these rates affect the residents and businesses of Hopkins?
What were the last rate changes?
Staff Recommendation
Finance recommends increasing the sanitary sewer rates by $0,25 to $2.50 per 1,000 gallons of water used and increasing the storm
sewer utility rate by $1.50 per REF or by $0.50 per single-family residential unit. Both rate increases are needed for sufficient
operating capital and to provide for future planned system improvements.
SUDDortin!?: Information
. Resolution No. 2005-110
. Resolution No. 2005-111
. Financial analysis of sewer and storm sewer funds
~~?-
Christine M. Harkess, CPA, CGFM
Finance Director
CITY OF HOPKINS
HENNEPIN COUNTY, MINNESOTA
RESOLUTION 2005-110
SANITARY SEWER UTILITY RATE INCREASE
WHEREAS, the City of Hopkins has established Ordinance No. 92-712, City Code
section 715 - Sewer and Water Utility rates effective 1993; and
WHEREAS, the ordinance authorizes sanitary sewer utility drainage charge rates
to be set forth by council resolution;
NOW, THEREFORE, be it hereby resolved that the City Council of the City of
Hopkins hereby sets the service charge for the Sanitary Sewer Utility at the following rates
to be paid to the City upon billing therefore as follows:
The sanitary sewer service charge for all classes of users on the system at $2,50 per
1,000 gallons of water used.
The provisions ofthis resolution shall take effect and be in force in connection with all
billings rendered hereunder from and after January 1, 2006.
Adopted by the City Council of the City of Hopkins this 15th day of November, 2005.
Eugene J, Maxwell, Mayor
ATTEST:
Terry Obermaier, City Clerk
CITY OF HOPKINS
HENNEPIN COUNTY, MINNESOTA
RESOLUTION 2005-111
STORM SEWER UTILITY RATE INCREASE
WHEREAS, the City of Hopkins has established Ordinance No, 89-640, City Code
section 720 - Storm Sewer Drainage Utility effective September 5, 1989; and
WHEREAS, the ordinance authorizes storm sewer utility drainage charge rates to be set
forth by council resolution;
NOW, THEREFORE, be it hereby resolved that the City Council of the City of Hopkins
hereby sets the service charge for the Storm Sewer Utility at the following rates to be paid to the
City upon billing therefore as follows:
Storm
Charge Water
REF Rate Drainage
'Class Land Uses Rate Per REF Rate/Month
1 Single family & duplex residential 1/3 $13,50 $ 4.50/unit
2 Multiple family residential 3 $13.50 $ 40.50/acre
3 Commercial institutional uses 5 $13.50 $ 81.00/acre
4 Public and private schools 1.25 $13,50 $ 16,88/acre
5 Churches 3 $13,50 $ 40,50/acre
6 Parks 0.25 $13.50 $ 3.38/acre
7 Golf courses 0.25 $13.50 $ 3,38/acre
8 Vacant improved and unimproved 0 $13.50 0
9 Industrial 5 $13 .50 $ 81.00/acre
*as established by Ordinance code section 720.05
The monthly storm water drainage fee is determined by multiplying the storm water drainage rate
by the parcel's acreage for all classes except single family and duplex residential (Class 1). Single
family and duplex residential is determined by the storm water drainage unit rate for each Class I
parcel regardless of acreage,
EFFECTIVE DATE: The provisions of this resolution shall take effect and be III force in
connection with all billings rendered hereunder from and after January 1,2006.
Adopted by the City Council of the City of Hopkins, Minnesota, this 15th day of November 2005,
Eugene J, Maxwell, Mayor
ATTEST:
Terry Obermaier, City Clerk
SEWER FUND - WORKING CAPITAL PROJECTION
2003 2004 2005 2006 2007 2008 2009 2010
749,588 1,064,939 654,635 464,882 107,662 (490,441 ) 174,498 (241,170)
1,324,254 1,253,771 1,250,700 1,350,700 1,350,700 1,450,700 ,450,700 1,450,700
0 0 19,000 0 0 0 0 0
26,559 26,228 24,500 20,920 4,845 (22,070) 7,852 (10,853)
400,000 0 0
0 0 0 0 0 1,000,000 0 0
1,750,813 1,279,999 1,294,200 1,371,620 1,355,545 2,428,630 ,458,552 1,439,847
1,366,115 1,314,143 1,348,953 1,553,840 1,577,148 1,608,691 ,632,821 1,649,149
30,000 28,500
0
0 0 10,000 50,000 51,500 10,000 36,400 10,000
68,510 327,497 75,000 75,000 275,000 95,000 75,000 75,000
50,000 50,000
0 50,000 50,000 50,000 50,000 50,000 50,000 50,000
1,434,625 1,691,640 1,483,953 1,728,840 1,953,648 1,763,691 .874,221 1,862,649
316,188 (411,641) (189,753) (357,220) (598,103) 664,940 (415,(,68) (422,802)
(837) 1,337
1,064,939 654,635 464,882 107,662 (490,441) 174,498 (241,170) (663,972)
Balance 12/31/2010 $ (663,972)
Notes - Bonds sold in 2008 with a 10 year payback at 3% average interest
Payment ~ 50/50/75/75/100/100/125/125/150/150
2002
9,530
,334,592
3,423
35,007
o
o
,373,022
,3
2001
,098,596
60,090
o
o
,408,799
o
Beginning Year
Operating Revenues
Othcr
Interest
Transfer In
Bond Issuance
Total
Working Capital
,275,767
566,108
500
00,908
o
,943,283
,468,889
o
22,256
,225,777
Sources
Operation Expense
Other Expense (interest on bonds)
Transfer Out
Capital Outlay
Capital Improvements
Principal Bond payment
Capital Lease (PW Facility)
Total Uses
(570,26
319
,248,033
220,856
78
Change in available funds
Inventory change
749,588
1,319,530
Working Capital Ending Year
989 $1.75
991 $2.00
993 $2.50
999 $2.25 Rate DECREASE
2006 $2.50 rate increase
2008 $2,75 rate increase
2011 $3.00 rate increase
Rate Historv
1983 $1.50
STORM IER FUND - WORKING CAPITAL PROJECTION
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
,017,485
860,900
5,000
45,787
98,544
860,900
5,000
53,934
289,953
760,900
5,000
3,048
754,537
760,900
5,000
33,954
o
718,736
760,900
5,000
32,343
935,339
660,900
5,400
22,000
,062,480
674,553
43,137
24,140
(145,471)
628,971
37,553
23,844
o
,608,070
690,075
8,777
300,160
676,492
o
47,333
o
Beginning Year
Operating Revenues
Other
Interes
Working Capital
,000,000
,778,948
,265,000
,955,368
9,334)
o
o
689,518
,610,000
Transfer In
Bond Issuance
Total Sources
,687
28,116
77,319
9
28,500
o
o
00,000
919,834
24,992
91,901
30,000
o
o
414,000
22,54
105,816
799,854
120,138
118,900
798,243
7,782
30,660
688,300
15,473
34,430
741,830
10,094
41,647
30,682
3.178
05,523
41,379
2,333,825
18,498
88,844
o
o
252,000
o
8,400
642,000
o
o
59,000
o
o
305,000
o
o
262,230
o
253,557
o
o
o
o
105,000
225,000
55,000
50,000
25,000
793,935
100,0(
215,00(
100,000
215,000
50,000
95,000
205,000
50,000
90,000
195,000
45,000
85,000
95,000
45,000
80,000
90,000
60,000
80,000
70,000
329,205
,765,000
75,000
o
50,000
50,000
25,000
00,893
25,000
870,357
25,000
,264,438
25,000
762,442
25,000
904,903
25,000
868,97
o
747,417
26,952
2,443,059
Operation Expense
Other Expense (interest on bonds)
Other Expense (int on 2008 bonds)
Transfer Out
Capital Outlay
Capital Improvements
1989 Principal Bond payment
1999 Principal Bond payment
2001 Principal Bond payment
2003 Principal Bond payment
2008 Principal Bond payment
Lease
Total
488,573
60,000
70,000
o
Capital
1,
,025,915
Uses
117,75
81,058)
908,59
(464,584)
35,80
(216,603)
(127,141)
,207,95
,753,541)
,307,910
Change in available funds
1,135,237
1,017,485
1,198,544
289,953
754,537
718,736
935,339
1,062,480
(145,471)
1,608,070
Working Capital Ending Year
1,135,237
$
Balance 12/3112010
Notes - 2005 includes $200,000 to Hennepin Co, $105,000 for projects
Rate increase is calcuated into 2006 and 2009 revenues
Rate Histof' er month
1989 $4.75 per quarter
1991 $6.00 per quarter
1992 $2.50
1993 $3.00
1998 $3.20
1999 $4.00
2006 $4,50
2009 $5,00
ANALYSIS OF NET INCOME
Budget
2006
-
,437,500
Estimated
2005
,294,200
2004
,279,999
2003
,350,813
2002
,369,599
2001
,468,890
2000
,527,468
1999
,490,368
1998
,584,436
1997
,621,549
SEWER
Total Operating Reveunes
,574,313
,348,953
,314,143
115
,366
,275,757
,225,776
138,321
.206,811
,242,526
1,249,930
Total Operating Expenditures
(136,813)
96,414
(54,753)
196,414
(34,144)
446,057
(15,302)
93,628
93,842
312,178
243,114
46,414
389,147
96,885
283,557
74,093
341,910
663,015
371,619
112,520
Operating Income (Loss)
Non-Operating Expenses
Depreciation, transfers
(333,227)
42,000
75,000
(251,167)
50,000
575,000
(480,201
(108,930)
68,510
(218,336)
500
100,408
96,700
5,583
16,673
292,262
167,131
599,293
109,464
5,976
10,565)
(321,105)
626,742
259,099
45,266
279,645
(Loss)
Capital Outlay
Construction Expenses
Net Income
Memo
Memo
Budget
2006
697,500
Estimated
2005
688,300
2004
741,831
2003
690,367
2002
689,518
2001
723,825
2000
701,757
1999
681,323
1998
567,046
1997
469,938
STORM SEWER
Total Operating Reveunes
74,184
115,475
110,093
96,967
04,821
118,497
23,082
82,193
110,294
88,715
Total Operating Expenditures
523,316
308870
572,825
319430
631,738
320950
593,400
312315
584,697
313130
605,328
363795
578,675
348282
599,130
600,000
286622
456,752
350256
381 ,223
265061
Operating Income (Loss)
Non-Operating Revenue (transfer In)
Non-Operating Expenses
Depreciation, transfers
214,446
9,000
59,000
253,395
310,788
281,085
253,557
567
138,388
271
241,533
2,046
486,795
230,393
218
785,890
912,508
0,612
535,453
106,496
103,225
116,162
148,266
Net Income (Loss)
Capital Outlay
Construction Expenses
Memo
Memo
CITY OF HOPKINS, MN
ANALYSIS OF PROPOSED SEWER RATE INCREASE
1999 rate compared to 2006 proposed rate, at Various Levels of Consumption
Consumption Monthly
in gallons 1999 rate 2006 rate Increase
1,500 $ 3.38 $ 3.75 $ 0.38
2,000 $ 4.50 $ 5.00 $ 0.50
2,500 $ 5.63 $ 6.25 $ 0.63
3,000 $ 6,75 $ 7.50 $ 0.75
3,500 $ 7.88 $ 8.75 $ 0.88
4,000 $ 9.00 $ 10.00 $ 1.00
5,000 $ 11.25 $ 12.50 $ 1.25
6,000 $ 13.50 $ 15.00 $ 1.50
7,500 $ 16.88 $ 18.75 $ 1.88
8,500 $ 19.13 $ 21.25 $ 2.13
10,000 $ 22.50 $ 25.00 $ 2.50
12,000 $ 27.00 $ 30.00 $ 3.00
15,000 $ 33.75 $ 37.50 $ 3.75