CR 10-130 Proposed Sanitary Sewer Utility & Refuse Rate Increases-4f6aDecember 21, 2010 Council Report 2010-130
City of Hopkins
PROPOSED SANITARY SEWER UTILITY
AND REFUSE RATE INCREASES
Proposed Action
Staff recommends adoption of the following resolution: Move to adopt Resolution No. 2010-078 increasing
sanitary sewer and refuse rates effective January 1, 2011.
Adoption of this motion will result in increasing the sanitary sewer rate from $3.40 to $3.60 per 1,000 gallons of
water used, and the refuse rates to $16.85 for a 30 -gallon container, $19.85 for a 60 -gallon container, and $23.15
for a 90 -gallon container per month effective January 1, 2010 and thereafter.
Overview
Sewer Fund — In 2007 staff prepared a Utility Master Plan which sets forth operational, debt and capital
requirements of the sanitary sewer sytem for the next 10 years. As a result of that plan we presented a schedule
for rate adjustments over that same period of time that will allow us to meet the needs of the utility system while
maintaining our utility infrastructure. This proposed rate increase is a result of the prior adoption of the Utility
Master Plan.
Refuse Fund — The present refuse rates currently do not fully fund the operation of the refuse program.
Operating costs overall have increased from $793,520 in 2008 to an estimated $929,994 in 2011 primarily due to
contractual obligations and fuel related costs. Currently the disposal fees are subsidizing the recycling program in
addition to the yard waste/leaf, bulk and brush collection programs. With the proposed refuse rate increase we are
projecting a 2011 refuse fund net income of $22,376.
Primary Issues to Consider
• How will the increased rates effect the residents and businesses in the City of Hopkins?
• Why is the rate increase recommended?
• What are the proposed capital improvement projects?
Staff Recommendation
To provide funding for the operation, debt and capital needs of the sewer and refuse funds finance recommends
approval of the resolution. The change in rates would take effect January lst, 2011.
Supporting Information
• Resolution No. 2010-078
• Sanitary Sewer, and Refuse CIP Cash Flow analysis
• Sanitary Sewer Utility Master Plan 10 year cash flow analysis
• Sanitary Sewer Capital Requirements
7
Christine M. Harkess, CPA, CGFM
Finance Director
Financial Impact: $114,000 sewer: $50,340 refuse Budgeted: Y/N X N
Source: Sewer Refuuse Funds
Related Documents (CIP, ERP, etc.): CIP and 2007 Utility Master Plan (as revised) Notes:
Additional Information Regarding Rate Increases
Rate Increases and Effect on Residents
Sanitary Sewer — The rate adjustment will increase an average residential sanitary sewer bill by
approximately $1.50 per month and also will maintain Hopkins' rank in the bottom 1/3rd of Metro
cities. The rate increase is a result of Met Council advising us that their annual increase will be in the 5-
7% range for the next 5 years and to provide for necessary improvements to the sanitary sewer system.
Refuse - Refuse rates were last increased in 2009. As a result of the 2011 budget process and an
analysis of increasing operational costs of contractual arrangements and fuel related costs a refuse rate
adjustement was proposed. The rate increase will afect a residential customer using a 60 gallon
container, the most common size used, by $2.30 a month. There is no effect on businesses as the city
does not service commercial customers.
Why are the Rate Increases Recommended ?
In 2007 staff developed a Utility Master Plan covering the next 10 years which was revised in 2009.
Operations, debt service requirements, capital and infrastructure needs were all reviewed along with
associated revenues. In order for us to meet the needs in the water, sanitary sewer and storm sewer
funds scheduled rate increases are necessary. In the past rates were adusted every 3-5 years and in the
case of the sanitary sewer rates were actually decreased for a 6 year period. Rates unfortunately have
not kept up with the needs of the water and sanitary sewer funds and staff recommends annual
incremental increases to minimize the effect on users budgets.
What are the proposed capital improvement proiects?
Sanitary Sewer — Over the next 7 years we have scheduled $914,000 in capital improvemnts with the
largest project being rehab of the sewer lines totaling $700,000.
The complete detail for all scheduled capital improvements can be found further in this report. With any
scheduled capital improvement before deciding to move forward they are reanalyzed for feasibilty,
financial availabilty and the capital schedule revised if necessary.
Refuse Fund — The are no capital items in the 2011 budget.
CITY OF HOPKINS
HENNEPIN COUNTY, MINNESOTA
RESOLUTION 2010-078
SANITARY SEWER AND REFUSE RATE INCREASES
WHEREAS, the City of Hopkins has established Ordinance No. 92-712 Sewer and Water Utility
rates, City Code section 715.07 which defines sanitary sewer rates; and Ordinance No. 92-707, City Code
section 605.04 which defines refuse charges for collection services; and
WHEREAS, the ordinances authorizes water, sanitary sewer and refuse rates to be set
forth by council resolution; and
WHEREAS, it is estimated the present sewer utility rates are not sufficient to cover operating
expenses over the next five years and will not provide sufficient funding for capital improvement projects
identified in the 2011 - 2015 Capital Improvement Plan and the 10 year Utility Master Plan completed in
2007 and revised in 2009; and
WHEREAS, it is estimated the present refuse rates are not sufficient to cover current and future
operating expenses for the refuse program;
NOW, THEREFORE, be it hereby resolved that the City Council of the City of Hopkins hereby
sets the service charge for Sanitary Sewer Utililities and Refuse Collection 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 $3.60 per 1,000 gallons
of water used.
The refuse rates at $16.85 for a 30 gallon container, $19.85 for a 60 gallon container; and $23.15
for a 90 gallon container.
EFFECTIVE DATE: The provisions of this resolution shall be effectiver January 1, 2011.
Adopted by the City Council of the City of Hopkins, Minnesota, this 21 st day of December 2010.
Eugene J. Maxwell, Mayor
ATTEST:
Debbie Sperling, Deputy City Clerk
SEWER FUND - WORKING CAPITAL PROJECTION
06/2812010
Actual Actual Projected Projected
Projected
Projected
Projected
Projected
2008 2009 2010 2011
2012
2013
2014
2015
Working Capital Beginning Year
(17,786) (397,606) 413,499 226,875
942,562
699,099
701,729
732,710
Revenues:
Operating Revenues
1,453,029 1,579,518 1,938,000 2,109,000
2,280,000
2,451,000
2,622,000
2,793,000
Grants/Other Govt Funding
190,000
Other
21,445 19,199 23,000 23,000
23,000
20,000
20,000
20,000
Interest
0 0 5,007 23,967
22,270
27,596
33,415
32,767
Transfer In - Storm Sewer Fund
Bond issuance
1,031,077 800.000
Total Revenues
1,474,474 2,629,794 2,156,007 2,955,967
2,325,270
2,498,596
2,675,415
2,845,767
Expenditures:
Operation Expense
541,276 498,304 671,926 693,479
715,749
738,762
762,545
787,123
MWCC Charges (3% inflation)
1,072,061 1,102,794 1,149,204 1,288,051
1,365,334
1,447,254
1,534,089
1,626,135
Interest Expense - 2009 Debt
21,501 33,750
32,650
31,450
30,100
28,450
Interest Expense - 2011 Debt
25,000
40,000
38,500
37,000
35,250
Transfer Out -Storrs Sewer Fund
Capital Outlay (per ERP)
0 0 0 0
0
0
35,700
6,800
Met Council 1/1 Charge
Capital Improvements
186,991 167,836 450,000 100,000
275,000
100,000
100,000
450,000
Capital Improvements - PW Bldg
Principal Bond payment (2009)
50,000
60,000
60,000
60,000
60,000
Principal Bond payment (2011)
30,000
30,000
35,000
35,000
Capital Lease (PW Facility)
50,000 50,000 50,000 50,000
50,000
50,000
50,000
50,000
Total Expenditures
1,850,328 1,818,934 2,342,631 2,240,280
2,568,733
2,495,966
2,644,434
3,078,758
Change in available funds
(375,854) 810,860 (186,624) 715,687
(243,463)
2,630
30,981
(232,991)
Inventory change
(3,966) 245
Working Capital Ending Year
(397,606) 413,499 226,875 942,562
699,099
701,729
732,710
499,719
Rate History
AM1983 $1.50
2009 - 2017 financial data was taken from the Utility Master Plan done by City Engineer
989 $1.75
1991 $2.00
Notes -
1993 $2.50
Income - 2008 and forward used utility master plan rates (no fixture option)
1999 $2.25 Rate DECREASE
2006 $2.50 rate increase
2009 - Residential Street Improvements - $200,000; MSA Road Improvements - $50,00(
Per Utility Master Plan (10/07)
2010 - Residential Street Improvements - $150,000; Lift Station #4 - $160,000; Upgrade Lift Station #1 - $220,000
2008$2.70
Lift Station #4 - $90,000 and Lift Station #1 - $110,000 - revenue from other governments
2009$3.10
2011 - Residential Street Improvements - $100,000;
2010$3.40
2012 - Residential Street Improvements - $100,000; Lift Station Maintenance
- $15,000; Lift Station #4 - $160,000
2011 $3.70 - ac 3.60
2013 - Residential Street Improvements- $100,000;
2012 $4.002014
- Residential Street Improvements - $100,000;
2013$4.30 projected rate
2015 - Residential Street Improvements - $100,000; 8th Ave LRT - $350,000
2014$4.60 increases
2015$4.90
2016$5.00
2017$5.25
= � � = 4 z � N
°' ami � O
A �? t, �h u o
REFUSE FUND -WORKING CAPITAL PROJECTION
12/01,2010
Actual
Actual
Projected
Projected
Projected
Projected
Projected
Projected
2008
2009
2010
2011
2012
2013
2014
2015
Working Capital Beginning Year
230,536
218,619
306,507
216,540
414,873
617,686
866,640
1,018,071
Revenues:
G &
Operating Revenues
702,751
R 809,755
R 818,365 R
873,365 G
889,365 R
944,365 G
960,365 R
1,008,365
Miscellaneous (penalties)
10,519
11,873
11,985
Grants
24,776
24,581
34,195
23,000
23,000
19,060
18,500
18,000
Gain on sale
605
Interest
8,408
5,010
3,000
2,165
4,149
6,177
8,666
10,181
Total Revenues
746,454
851,824
867,545
.898,530
916,514
969,542
987,531
1,036,546
Expenditures:
Operation. Expense
724,027
739,032
668,512
675,197
688,701
695,588
709,500
716,595
Transfer Out
Capital Outlay (per ERP)
8,850
264,000
0
0
0
101,600
204,800
Capital Projects per CIP
Capital Lease (PW Facility)
25,000
25,000
25,000
25,000
25,000
25,000
25,000
25,000
Total Expenditures
757,877
764,032
957,512
700,197
713,701
720,588
836,100
946,395
Change in available funds
(11,423)
87,792
(89,967)
198,333
202,813
248,954
151,432
90,151
Inventory change
(494)
96
Working Capital Ending Year
218,619
306,507
216,540
414,873
617,686
866,640
1,018,071
1,108,222
Rate History
1989 $15.10
1991 $17.25
G =Garbage
fee increase
1995 $11.00-14.45 refuse
R = Recycling fee increase
I
$2.25 recycling fee
'
a 2002 $2.75 recycle fee
2005 $13.20, 15.90, 17.25, refuse
2008 $3.25 recycling fee
2009 $15.85, 18.55, 21.25, refuse
2009 $3.50 recycling fee
2010 $3.75 recycling fee
2011 $16.85,19.85, 23.15 refuse
Recycling - 2008 revenues totaled $111,945.11
2012 $4.00 recycling fee
On average recycling accounts total 2870 per month
2013 $17.85, 20.85, 24.15 refuse
2014 $4.25 recycling fee
= � � = 4 z � N
°' ami � O
A �? t, �h u o
, a.ua�gr ai,cagYia ai,�+co,ouc ai,rc>,>vv ai,�>o,vw aq iu i,vov ai,»o,ouu aywc,vuu ac,coquuu ac,�aa,wu ac,ucc,uuu ac,i>a,uuu ac,o�
,ce
Budeet Co
$654,635
$420,723
$414,387
$13,532
$450,085
$111;272
$532,611
$437,899
$553,671
$680,320
$663,101-
$751
400
$1,258,415
$1,428,862
$1,429,900
$1,596,000
$1,767,000
$1,938,000
$2,052,000
$2,280,000
$2,451,000
$2,622,000
$29793,000
$2,85C
418
$14,320
$2,794
$15,000
$15,000
$15,000
$15,000
$15,000
$15,000
$15,000
$15,000
$15,000
$if
419
$5,059
$195,855
$8,000
$8,000
$8,000
$8,000
$8,000
$8,000
$8,000
$8,000
$8,000
$E
446
$0
$20,000
$0
$0
$0
$0
$0
$0
1$0
$0
$0
on ending balance)
370
$12,731
$26,504
$27,000
$609
$20,254
$5,007
$23,967
$19,705
$24,915
$30,614
$29,840
$33
WE
$1,290,525
$1,674,015
$1,479,900
$1,619,609
$1,810,254
$1,966,007
$2,098,967
$2,322,705
$2,498,915
$2,675,614
$2,845,840
$2,906
NDITURES
Budeet Codes
ee Benefits
,es
500
$115,618
$129,233
$142,560
$179,837
$185,232
$157,789
$162,523
$167,398
$172,420
$177,593
$182,921
$18E
-Time
501,503
$14,318
$14,661
$6,770
$6,973
$7,182
$7,398
$7,620
$7,848
$8,084
$8,326
$8,576
$E
525
$6,946
$8,099
$8,516
$8,771
$9,035
$9,306
$9,585
$9,872
$10,169
$10,474
$10,788
$11
526
$9,449
$10,433
$9,550
$9,837
$10,132
$10,436
$10,749
$11,071
$11,403
$11,745
$12,098
$12
:)nv/L.TD, Health, WC;
524, 527, 531
$18,871
$23,233
$27,506
$28,881
$30,325
$31,842
$33,434
$35,105
$36,861
$38,704
$40,639
$42
ual
535
$6,959
'$200)
$2,304
$2,373
$2,444
$2,518
$2,593
$2,671
$2,751
$2,834
$2,919
$3
m to ee Benefits
$172,161
$185,459
$197,206
$236,672
$244,350
$219,287
$226,503
$233,966
$241,687
$249,675
$257,940
$266
nd Services
o, General Supplies, and Postagc
540, 541, 542, 560
$5,783
$7,983
$11,200
$11,536
$11,882
$12,239
$12,606
$12,984
$13,373
$13,775
$14,188
$14
lehicle:
543,549,563
$32,609
$15,006
$42,100
$43,363
$44,664
$46,004
$47,384
$48,805
$50,270
$51,778
$53,331
$54
s
545
$0
$2,295
$0
$0
$0
$0
$0
$0
$0
$0
$0
544,565,567
$11,352
$8,915
$22,000
$22,660
$23,340
$24,040
$24,761
$25,504
$26,269
$27,057
$27,869
$2E
lies and Services
$49,744
$34,199
$75,300
$77,559
$79,886
$82,282
$84,751
$87,293
$89,912
$92,610
$95,388
$9E
W
602
$410
$372
$750
$788
$827
$868
$912
$957
$1,005
$1,055
$1,108
$1
604
$10,852.
$11,251
$14,000
$14;700
$15,435
$16,207
$17,017
$17,868
$18,761
$19,699
$20,684
$21
623
$5,980
$8,400
$6,000
$6,180
$6,365
$6,556 $6,753
$6,956
$7,164
$7,379
$7,601
$i
:hazgeback
622
$181,641
$234,808
$236,553
$243,650
$250,959
$258,488-
$266,242
$274,230
$282,457
$290,930
$299,658
ME
(Telephone; Cellulaf
584,586
$2,662
$3,176
1 $4,800
$4,896
$4,994
$5,094
$5,196
$5,300
$5,406
$5,514
$5,624
$'_
$1,124,286
$1,217;306
51,282,360
$1,351,686
$1,424,941
$1;502,355
$1,584,171
$1,670,644
$1,762,047
$1,858,667
$1,960,810
$2,065
ervices
$16,103
$30,634
$54,700
$56,341.
$58,031
$59,772
$61,565
$63,412
$65,315
$67,274
$69,292
$71
mrance
$15,837
$17,181
$20,189
$21,198
$22,258
$23,371
$24,540
$25,767
$27,055
$28,408
$29,828
$31
680
$97,457
$123,337
$150,000
$154,500
$159,135
$163,909
$168,826
$173,891
$179,108
$184,481
$190,016
$195
LTING EXPENDITURES
$1,475,588
$19608,116
$1,779,755
$1,897,956
$1,988,602
$2,050,977
$2,150,356
$2;254,974
$2,365,124
$2,481,115
$2,603,274
$2,731
NGOME [LOSSI
€$185,06x)
$65,899
(,$M,85"5)
(;"278.;14 L)
' (5I78;349;
iS8q=r3")
($5L,3883
$67,731
5133,791
$194,499
$242,566
$174
INCOME (LOSS)
s
$40,000
$38,000
$75,750
$71,250
$66,250
$60,500
$54,000
$4i
930
$50,000
$50,000
$50,000
$50,000
$50,000
TAa
$50,000 $50,000 $50,000
0
$50,000
$50,000 $50,000
$5(
'ING INCOME (LOSS)
f550,i7€117)
(517,00€I)
$50,000
$750,000
(sgo,000)
$812,000
$74,250
$178,750
$33,750
6110,500)
($104,€100)
t`"s9i
ES
740
$57,278
760
$17,000
t (ERP)
790
$32,229
$26,000
$0
$0
$0
$6,800
$0
$5,000
$35,700
$0
$33
$95,458
$39,065
$275,000
$100,000
$100,000
$335,000
$100,000
$115,000
$100,000
$120;000
$100,000
$125
EXPENSES
$95,458
$145,572
$301,000
$189,600
$189,600
$424,600
$196,400
$204,600
$105;000
$155,700
$100,000
$15E
IPLE PAYMENTS
iFund
$10(
incipal Payment (15 yr'
$40,000
$45,000
$50,000
$55,000
$65,000
$75,000
$80,000
$8C
'rmcipal Payment (15 yr;
$40,000
$45,000
$50,000
$55,000
$60,000
$65
ND PRINCIPLE PAYMENTS
$0
$0
$0
$0
$40,000
$45,000
$90;000
$100,000
$115,000
$130,000
$140,000
$24'_
HOPKINSONESOTA
SANITARY SEWER ENTERPRISE
CAPITAL AND EQUIPMENT REPLACEMENT EXPENDITURES
SANITARY SEWER
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
CAPITAL EXPENDITURES
Eliminate LS No. 1
$200,000
Rehab Sewer (10% of TV'd Areas)
$100,000
$100,000
$100,000
$100,000
$100,000
$100,000
$100,000
$100,000
$100,000
$100,000
Rehab LS No. 4
$35,060
Regular LS Major Maint.
$15,000
$20,000
$25,000
Blake Road Sewer Imp.
$154,000
TOTAL CAPITAL EXPENDITURES
$100,000
$100,000
$335,000
$100,000
$115,000
$100,000
$120,000
$100,000
$125,000
$100,000
$154,000
E UIPMENT EXPENDITURES
3/4 Ton Truck
$35,700
$33,600
Telephone System
$6,800
Generator
$26,400
Billing System
$5,000
Radio System
$59,700
TOTAL E UIPEMENT EXPENDITURES
$0
sol
$0
$6,800
$0
$5,000
$35,700
$0
$33,600
$26,400
$59,700