CR 91-279 Proposed Sewer Rate IncreaseDecember 10, 1991
Propos d Action.
Ov rvi w.
Primary Issues To Consider.
ohn E. Schedler, Finance Director
0
0 K Council Report #91 - 279
PROPOSED SANITARY SEWER RATE INCREASE
Staff recommends adoption of the following motion: Move that Resolution 91 -156
"Sanitary Sewer Utility Rate Increase ", be adopted.
Metropolitan Waste Control Commission disposal fees have risen 21% over the past
three years. The variances in weather and MWCC costs plus the two year lag in
receiving adjustments from estimated flow to actual costs make projections highly
unstable. Disposal fees are about 71% of total sanitary sewer operating costs.
The last City rate increase was in 1991 to the present rate of $2.00 per 1,000
gallons of water used. There was a profit in 1989, however a $140,908 loss was
recorded in 1990. The proposed rate increase for 1992 should produce a profit and
start to rebuild working capital which is extremely low.
The proposed rate increase is to the level of $2.50, an increase of $.50 per 1,000
gallons of water used or on a typical household usage of 5,000 gallons per month,
the cost increase would be $2.50 per month.
In addition, over the next five years $863,000 is proposed to repair and reconstruct
lift stations and other capital items. Part of the increase would be used to pay as
constructed rather than issue bonds. Also, an increase in maintenance of sewer
lines is expected with the increased preventive maintenance program employing more
TV line inspection.
o Retain the present rate of $2.00 thus allowing retained earnings to decrease.
o Select a smaller rate increase with the uncertain hope that the increase trend
will stop, slow down or reverse.
o Will reduced maintenance cause more expensive major repairs?
Supporting Information.
o Water and sewer rates comparison.
o Resolution 91 -156.
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Proposed Sanitary Sewer Rate Increase
Report 91 -279
Page 2
Analysis
A $.50 rate increase is needed for two main reasons.
MWCC charges have risen 21% over the last three years or an average
annual increase of 7 %. The MWCC charges fluctuate with their
operating costs, due to many things, but heavily influenced by weather
and the procedure of not adjusting the City's actual bill until two
years after their operating year.
Consequently City rate increases are not proposed on MWCC annual
estimate of the coming year's charge, but an averaging of actual flow
charges is annually monitored and City rates are proposed to be
adjusted when a firmer trend is identified.
From 1981 to 1984 sewer rates were raised every year in amounts of
$.10 to $.25. Then no raise was made for five years until a $.25
raise was approved in 1989 and another $.25 was approved in 1991.
Rising costs have continued to reduce retained earnings.
The other main component of the rate increase is to fund major work on
three lift stations over the next five years. This part of the rate
increase will need to generate funds to pay for $863,000 of
improvements as outlined in the CIP budget. Increased revenues
started in 1991 will allow the construction to be funded by the Sewer
Fund and avoid issuance of bonds.
This resolution continues to rotate the effective date of an increase
during the first three months of a year, when an increase is deemed
necessary. The last two utility rate increases were effective
January, 1990 and February, 1991, thus this proposed sewer rate as of
March, 1992 would be employing this method for the current increase.
WATER
CITY OF HOPKINS
PUBLIC WORKS
WATER AND SEWER RATE REPORT
12/03/91
CITY BASE RATE /MINIMUM CHG WATER RATE
SEWER
BASE RATE /MINIMUM CHG SEWER RATE
ANOKA $4.75 BASE $0.54 100 CF $4.75 BASE $1.44 100 CF
APPLE VALLEY $5.23 BASE /MONT $0.65 1000 GAL $2.60 BASE /MONTH $0.95 1000 GAL
BLAINE $4.50 BASE $0.55 1000 GAL $33.00 QUARTER
BLAINE $0.75 +50000
BLAINE $0.95 +100000
BLAINE $1.35 +200000
BLOOMINGTON $1.35 1000 GAL $1.35 1000 GAL
BROOKLYN CENTER $0.55 1000 GAL $31.50 QUARTER
BROOKLYN PARK $7.75 1ST /6000 $0.75 1000 GAL $32.00 QUARTER
BURNSVILLE $0.96 1000 GAL $18.15 QUARTER
COLUMBIA HEIGHTS $0.85 100 CF $0.85 100 CF
COON RAPIDS $5.00 BASE $0.98 1000 GAL $20.00 QUARTER
COTTAGE GROVE $18.75 1ST/15000 $0.90 1000 GAL $31.50 QUARTER
CRYSTAL $11.30 MINIMUM $0.82 100 CF $27.30 QUARTER
DELANO $3.00 1ST /3000 $0.75 1000 GAL $0.37 BASE $3.48 1000 GAL
EDEN PRAIRIE $3 85 BASE $0.95 1000 GAL $7.65 BASE $1.90 1000 GAL
EDINA $0.44 100 CF $1.35 100 CF
FRIDLEY $7.20 MINIMUM $0.60 1000 GAL $24.65 QUARTER
GOLDEN VALLEY $0.98 1000 GAL $22.00 QUARTER
HASTINGS $0.73 1000 GAL $1.57 1000 GAL
HOPKINS $0.85 1000 GAL $2.00 1000 GAL
LAKEVILLE $2.50 BASE $0.77 1000 GAL $2.50 BASE $1.77 1000 GAL
TLE CANADA $1.50 1000 GAL $34.00 QUARTER
NG LAKE $2.25 1000 GAL $1.95 1000 GAL
MAPLE GROVE $3.30 BASE $0.90 1000 GAL $32.00 QUARTER
MINNETONKA $12.75 MINIMUM $0.85 1000 GAL $18.00 MINIMUM $1.20 1000 GAL
MINNETONKA BEACH $1.27 1000 GAL $42.50 QUARTER
MOUND $0.95 1000 GAL $39.75 QUARTER
NEW BRIGHTON $0.55 1000 GAL $1.75 1000 GAL
NEW HOPE $3.60 1ST /1000 $0.95 1000 GAL $4.00 1ST /1000 $1.44 1000 GAL
OAKDALE $2.00 BASE /MONT $0.79 1000 GAL $4.00 BASE /MONTH $1.71 1000 GAL
ORONO $15.55 1ST /10000 $1.27 1000 GAL $51.15 QUARTER
PLYMOUTH $0.75 1000 GAL $1.56 1000 GAL
ROBBINSDALE $9.50 1ST /1000C $0.90,100 CF $23.60 QUARTER
SPRING LAKE PARK $17.50 1ST/18000 $0.73 1000 GAL $30.20 QUARTER
ST ANTHONY $0.80 100 CF $1.41 100 CF
ST. CLOUD $6.00 1ST /400CF $0.95 100 CF $0.70 100 CF
ST. LOUIS PARK $0.48 +50000 CF
ST. LOUIS PARK $0.52 +4700 CF
ST. LOUIS PARK $0.56 100 CF $7.28 QUARTER $1.01 100 CF
ST. PAUL PARK $11.00 1ST /10000 $1.00 1000 GAL $21.00 1ST /10000 $1.50 1000 GAL
STILLWATER $11.00 1ST/10000 $1.10 1000 GAL $39.00 1ST/10000 $2.10 1000 GAL
WAYZATA $3.33 BASE $0.70 1000 GAL $5.00 BASE $0.70 1000 GAL.
WAYZATA $3,33 BASE $1.50 +3400 GAL $5.00 BASE $2.50 +3400 GAL
WOODBURY $8.00 1ST /8000 $0.66 1000 GAL $23.70 QUARTER $1.45 +8000 GAL
Budget Projections:
Expenditures:
Operating
MWCC
Depreciation
GIP & Capital
TOTAL
Revenues:
Sewer Charges
Current
Rate
2.00
Cash Balances:
End 1992
End 1993
End 1994
End 1995
End 1996
1992
A
1992 - 2.25
1993 - 2.50
1996 - 2.65
(148,000)
24,000
115,000
95,000
4,000
Notes:
(1) Rates are per 1000 gals. of water usage
1992 Budget
Sanitary Sewer Fund
1993
1994
$ 362,500 $ 373,000 $ 384,000 $
806,000 870,000 940,000
100,000 110,000 120,000
446,500 75,000 75,000
$ 1,715,000 $ 1,428,000 $ 1,519,000 $ 1,630,000 $ 1,800,000
Dependent on rate options below
Rate Options (1)
1992 - 2.50
(1,000)
171,000
262,000
242,000
62,000
1995
1996
403,200 $ 425,000
982,000 1,060,000
120,000 130,000
124,800 185,000
C
1992 - 2.25
1994 - 2.50
1996 - 2.75
$ (148,000)
(123,000)
32,000
12,000
(19,000)
Proposed Monthly
Usage 1991 Rates 1992 Rates Increase
2,000 26.82 28.32 1.50
4,000 32.52 35.02 2.50
5,000 35.37 38.37 3.00
8,000 43.92 48.42 4.50
10,000 49.62 55.12 5.50
15,000 63.87 71.87 8.00
20,000 78.12 88.62 10.50
TOTAL MONTHLY UTILITY BILL
1991
Rates:
Refuse + Tax 19.12
Water 0.85/1000 gal
Sanitary Sewer 2.00/1000 gal
Storm Sewer 2.00
1992
19.12
0.85
2.50
2.50
ATTEST:
James A. Genellie, City Clerk
CITY OF HOPKINS
Hennepin County, Minnesota
RESOLUTION NO. 91 -156
SANITARY SEWER UTILITY RATE INCREASE
WHEREAS, Section 715 of the 1986 Hopkins Code of Ordinances defines
sewer and water rates and Ordinance 91 -680 allows adoption of
fees through a resolution, and
WHEREAS, it is estimated the present sewer rate will result in
operating losses over the next ensuing years;
NOW THEREFORE BE IT RESOLVED, that the City Council of the City of
Hopkins hereby sets:
(1) The gross sanitary sewer service charge for all classes of
users on the system at $2.50 per 1,000 gallons of water used plus
10% of the sewer charge.
(2) The water service charge for water usage remains at $.85 per
each 1,000 gallons of water used plus 10% of the water charge.
EFFECTIVE DATE: The provisions of this resolution shall take effect
and be in force in connection with all billings rendered hereunder
from and after March 1, 1992.
Adopted by the City Council of the City of Hopkins this 17th day of
December, 1991.
By
Nelson W. Berg, Mayor