VII.3. Enterprise Fund Budgets and Utility Rate Increases; Bishop
CITY OF HOPKINS
City Council Report 2025-167
To: Honorable Mayor and Council Members
Mike Mornson, City Manager
From: Nick Bishop, Finance Director
Date: November 18, 2025
Subject: Enterprise Fund Budgets and Utility Rate Increases
_____________________________________________________________________
RECMMENDED ACTION
MOTION TO Approve Resolution No. 2025-070 Increasing Water, Sanitary Sewer,
Refuse Collection, Recycling and Organic Recycling Rates Effective January 1, 2026.
OVERVIEW
Budgets for all Enterprise Funds have been prepared, including Water, Sanitary Sewer,
Storm Sewer, Refuse and Pavilion. Rate increases are proposed for the Water Fund
(6.8%), Sewer Fund (6.1%) and Refuse Funds (3.5%). Storm Sewer rates will not
change.
SUPPORTING INFORMATION
• Pavilion Fund Budget Overview
• Utility Funds Budget Overview
• Rate Increases and Effect on Residential and Commercial Customers
• Annual Service Cost for Median Value Home
• Resolution No. 2025-070 Increasing Water, Sanitary Sewer, Refuse Collection,
Recycling and Organic Recycling Rates Effective January 1, 2025
Finance Department
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 2026 budget includes $91,000 for capital projects (replacement of
exit doors and a floor scrubber). The budget is projecting a decrease in net position of
$225,754, which includes $480,000 of depreciation. The funds cash flow is projected to
increase.
Proposed
2025 2026 %a ge
Budget Budget Incr (Decr)
Revenues 931,500$ 948,000$ 1.77%
Expenditures 1,212,351$ 1,173,754$ -3.18%
Revenues over (under) Expenditures (280,851)$ (225,754)$
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 $7.4 million and a net position (fund
balance) of $28.1 million. The sanitary sewer, storm sewer and refuse funds have a
positive cash flow projection in 2026. The water fund is projected to slightly decrease
cash position in 2026, which can be absorbed within the fund.
Water Proposed
2025 2026 %age
Budget Budget Incr (Decr)
Revenues 3,101,000$ 3,332,000$ 7.45%
Expenditures 2,995,096$ 3,133,082$ 4.61%
Revenues over (under) Expenditures 105,904$ 198,918$
Sanitary Sewer Proposed
2025 2026 %age
Budget Budget Incr (Decr)
Revenues 3,835,000$ 4,105,000$ 7.04%
Expenditures 3,685,007$ 3,920,608$ 6.39%
Revenues over (under) Expenditures 149,993$ 184,392$
Storm Sewer Proposed
2025 2026 %a ge
Budget Budget Incr (Decr)
Revenues 810,332$ 882,332$ 8.89%
Expenditures 776,094$ 933,776$ 20.32%
Revenues over (under) Expenditures 34,238$ (51,444)$
Refuse Proposed
2025 2026 %age
Budget Budget Incr (Decr)
Revenues 1,398,603$ 1,481,991$ 5.96%
Expenditures 1,519,451$ 1,546,646$ 1.79%
Revenues over (under) Expenditures (120,848)$ (64,655)$
Water & Sanitary Sewer Rates
Proposed Water and Sanitary Sewer fund budgets have been prepared for 2025. The
Water and Sanitary Sewer budgets being proposed include rate increases of
approximately 6.8% and 6.1%, respectively. Rates are based on operational needs,
capital needs and debt repayment. The City has a tiered rate structure for water
consumption.
2025 2026 Percent
Adopted Proposed Increase
Flat Rates Per Meter Per Month
Residential - 5/8" meter 4.16 4.44 6.73%
Residential - 1" meter 4.16 4.44 6.73%
Apt/Commercial - 1-1/2" to 2" meter 8.35 8.92 6.83%
Apt/Commercial - 3" meter 12.54 13.39 6.78%
Apt/Commercial - 4" meter 16.67 17.80 6.78%
Apt/Commercial - 6" meter 25.02 26.72 6.79%
Consumption Rates, Per 1,000 Gallons
Residential and Multi-Family
0 - 3,000 gallons 4.27 4.56 6.79%
3,001 - 5,000 gallons 4.92 5.25 6.71%
5,001 and over 5.64 6.02 6.74%
Commercial
0 - 10,000 gallons 4.08 4.36 6.86%
10,001 - 20,000 gallons 4.68 5.00 6.84%
20,001 and over 5.39 5.76 6.86%
Irrigation - all usage 5.10 5.45 6.86%
Production meter 4.30 4.59 6.74%
Sanitary Sewer 8.40 8.91 6.07%
Water and Sanitary Sewer Rates
The two following charts show the impact of the water and sewer rate increases for
different user types.
Actual 2025 Proposed
2026 $ Increase % Increase
Single Family Residential (Lower User)
Water (1,500 Gallons)10.57$ 11.28$ 0.72$ 6.77%
Sewer (1,500 Gallons)12.60$ 13.38$ 0.78$ 6.19%
Total Monthly Bill 23.17$ 24.66$ 1.50$ 6.45%
Single Family Residential (Median User)
Water (4,000 Gallons)21.89$ 23.37$ 1.48$ 6.76%
Sewer (3,000 Gallons)25.20$ 26.76$ 1.56$ 6.19%
Total Monthly Bill 47.09$ 50.13$ 3.04$ 6.46%
Single Family Residential (High User)
Water (8,800 Gallons)48.24$ 51.50$ 3.25$ 6.75%
Sewer (4,800 Gallons)40.32$ 42.82$ 2.50$ 6.19%
Total Monthly Bill 88.56$ 94.31$ 5.75$ 6.49%
Impact on Low, Median and High Residential User
Actual 2025 Proposed
2026 $ Increase % Increase
Commercial Property (Low User with a 1" Meter)
Water (3,000 Gallons)20.59$ 22.00$ 1.41$ 6.85%
Sewer (3,000 Gallons)25.20$ 26.76$ 1.56$ 6.19%
Total Monthly Bill 45.79$ 48.76$ 2.97$ 6.49%
Commercial Property (High User with a 2" Meter)
Water (35,000 Gallons)176.80$ 188.17$ 11.37$ 6.43%
Sewer (35,000 Gallons)294.00$ 312.20$ 18.20$ 6.19%
Total Monthly Bill 470.80$ 500.37$ 29.57$ 6.28%
Impact on Low and High Commercial User
Storm Sewer Rates
A proposed Storm Sewer fund budget has been prepared for 2026. 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 2026. Refuse increases of
approximately 3.5% 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 3.5% are being proposed based the contract.
2025 2026 Percent
Current Proposed Increase
Refuse Collection
35 Gallon - Every Other Week 15.21 15.74 3.48%
35 Gallon 20.70 21.42 3.48%
65 Gallon 25.09 25.97 3.51%
95 Gallon 28.85 29.86 3.50%
Recycling 5.84 6.04 3.42%
Organic Recycling 6.10 6.31 3.44%
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 $313.09 or $26.09 per month. The median value home was $378,800 in
2025 and $376,200 in 2026.
Actual Projected
2025 2026 $ Increase % Increase
City Property Taxes (7.98% Levy Increase)2,260.00$ 2,490.00$ 230.00$ 10.18%
Water - Consumption
7,500 gallons per month
$4.27/$4.92/$5.64 Tiered Rates 490.92$
$4.56/$5.25/$6.02 Tiered Rates 524.04$
Sewer - Consumption
5,000 gallons per month
$8.40/ 1,000 gallons 504.00$
$8.92/ 1,000 gallons 535.20$
Refuse Collection
Garbage, 65 Gallon 301.08$ 311.64$ 10.56$ 3.51%
Recycling 70.08$ 72.48$ 2.40$ 3.42%
Organic Recycling 73.20$ 75.72$ 2.52$ 3.44%
Storm Sewer 60.00$ 60.00$ -$ 0.00%
Franchise Fees (based on average)91.32$ 94.61$ 3.29$ 3.60%
Total 3,850.60$ 4,163.69$ 313.09$ 8.13%
Based on preliminary levy adopted on 9/16/2025, proposed utility rates and projected franchise
fees implemented on 1/1/2024.
33.12$
31.20$
City of Hopkins
Annual Service Cost for Median Value Home
Actual 2025 and Proposed 2026
6.75%
6.19%
CITY OF HOPKINS
HENNEPIN COUNTY, MINNESOTA
RESOLUTION 2025-070
INCREASING WATER, SANITARY SEWER, REFUSE COLLECTION, RECYCLING
AND ORGANIC RECYCLING RATES EFFECTIVE JANUARY 1, 2026
WHEREAS, the City of Hopkins has established Ordinance No. 92-712 Sewer and
Water Utility rates, City Code section 40-22 which defines water rates and section 40-24
which defines sanitary sewer rates; and
WHEREAS, The City of Hopkins has established Ordinance No. 92-707 Solid Waste
Management and City Code section 34-28 which defines billing rates; and
WHEREAS, the ordinances authorize billing rates to be set forth by council resolution;
and
WHEREAS, billing rates were analyzed to determine the long-term viability of the water,
sewer and refuse funds; and
WHEREAS, it was determined that current rates are insufficient to meet operation and
capital needs;
NOW THEREFORE BE IT RESOLVED, that the City Council of the City of Hopkins
hereby sets the service charge for the water, sanitary sewer, refuse, recycling and
organic recycling at the following rates to be paid to the City upon billing as follows:
The water service usage charge be set at the rates shown
Flat Rates
Residential – 5/8” meter 4.44
Residential – 1” meter 4.44
Apt/Commercial – 1-1/2” to 2” meter 8.92
Apt/Commercial – 3” meter 13.39
Apt/Commercial – 4” meter 17.80
Apt/Commercial – 6” meter 26.72 Residential and Multi-Family
0 – 3,000 gallons 4.56
3,001 – 5,000 gallons 5.25
5,001 and over 6.02 Commercial
0-10,000 gallons 4.36
10,001 – 20,000 gallons 5.00
20,001 and over 5.76
Irrigation – all usage 5.45
Production Meter 4.59
All water rates are per 1,000 gallons of water consumed.
The sanitary sewer service charge for all classes of users on the system at $8.91 per
1,000 gallons of water used.
Refuse Collection (per month)
35 Gallon – Every Other Week $15.74
35 Gallon $21.42
65 Gallon $25.97
95 Gallon $29.86
Recycling (per month) $6.04
Organic (per month) $6.31
Adopted by the City Council of the City of Hopkins this 18th day of November, 2025.
By:___________________________
Patrick Hanlon, Mayor
ATTEST:
_______________________________
Amy Domeier, City Clerk
Enterprise Fund Budgets and Utility Rates
November 18, 2025
Pavilion FUnd
Multi-use, year-round arena and community facility
Ice skating, broomball, soccer, lacrosse, inline skating,
rugby, baseball, softball, concerts, company picnics and
other community and private events
Pavilion Fund
Main revenue sources are property tax levy ($431,000),
facility rentals and leases
Main operating expenditures are depreciation, salary,
benefits and bond interest
Budgeted $91,000 for capital projects
•Exit doors and floor scrubber
Depreciation budget is set at $480,000
Pavilion Fund
Decrease net position by $225,754 (including
depreciation)
Cash flow is projected to increase
Proposed
2025 2026 %age
Budget Budget Incr (Decr)
Revenues 931,500$ 948,000$ 1.77%
Expenditures 1,212,351$ 1,173,754$ -3.18%
Revenues over (under) Expenditures (280,851)$ (225,754)$
Utility Funds
Four separate utility funds
•Water
•Sanitary Sewer
•Storm Sewer
•Refuse Collection
Enterprise or Business-Type Funds
Utility Funds
Main source of revenue is user charges
Main expenditures in all funds are salaries, benefits,
depreciation and bond costs
•Sanitary Sewer fund also pays municipal wastewater charges to Met Council
•Refuse fund will pay Republic Services for Recycling & Organic Recycling
Water Fund
Proposed rate increase of 6.8%
Water Proposed
2025 2026 %age
Budget Budget Incr (Decr)
Revenues 3,101,000$ 3,332,000$ 7.45%
Expenditures 2,995,096$ 3,133,082$ 4.61%
Revenues over (under) Expenditures 105,904$ 198,918$
Sewer Fund
Proposed rate increase of 6.1%
Sanitary Sewer Proposed
2025 2026 %age
Budget Budget Incr (Decr)
Revenues 3,835,000$ 4,105,000$ 7.04%
Expenditures 3,685,007$ 3,920,608$ 6.39%
Revenues over (under) Expenditures 149,993$ 184,392$
Storm Sewer Fund
No rate increase
$5.00/month for residential property
Storm Sewer Proposed
2025 2026 %age
Budget Budget Incr (Decr)
Revenues 810,332$ 882,332$ 8.89%
Expenditures 776,094$ 933,776$ 20.32%
Revenues over (under) Expenditures 34,238$ (51,444)$
Refuse Fund
Proposed rate increase of 3.5% for Refuse, Recycling and
Organic Recycling
Refuse Proposed
2025 2026 %age
Budget Budget Incr (Decr)
Revenues 1,398,603$ 1,481,991$ 5.96%
Expenditures 1,519,451$ 1,546,646$ 1.79%
Revenues over (under) Expenditures (120,848)$ (64,655)$
Efficiency and Fee Recovery in 2026
Quarterly Billing
•Main goal is staff efficiency and ability to operate at current staffing levels
•Cost Savings of approximately $20,000 for printing/mailing
•Would be offset by cost of Neptune My360 Consumer Portal
Efficiency and Fee Recovery in 2026
Credit Card Fees
•Included in utility fund budgets
•Begin as early as January 1st
•Between 3-4% based on review of costs
Debt Payoff Opportunity
City will refinance 2023A GO Temp Bonds in December
Storm Sewer Portion is $700,000
Not aligned with Central Park Funding Plan
Actual Projected
2025 2026 $ Increase % Increase
City Property Taxes (7.98% Levy Increase)2,260.00$ 2,490.00$ 230.00$ 10.18%
Water - Consumption
7,500 gallons per month
$4.27/$4.92/$5.64 Tiered Rates 490.92$
$4.56/$5.25/$6.02 Tiered Rates 524.04$
Sewer - Consumption
5,000 gallons per month
$8.40/ 1,000 gallons 504.00$
$8.92/ 1,000 gallons 535.20$
Refuse Collection
Garbage, 65 Gallon 301.08$ 311.64$ 10.56$ 3.51%
Recycling 70.08$ 72.48$ 2.40$ 3.42%
Organic Recycling 73.20$ 75.72$ 2.52$ 3.44%
Storm Sewer 60.00$ 60.00$ -$ 0.00%
Franchise Fees (based on average)91.32$ 94.61$ 3.29$ 3.60%
Total 3,850.60$ 4,163.69$ 313.09$ 8.13%
Based on preliminary levy adopted on 9/16/2025, proposed utility rates and projected franchise
fees implemented on 1/1/2024.
33.12$
31.20$
City of Hopkins
Annual Service Cost for Median Value Home
Actual 2025 and Proposed 2026
6.75%
6.19%
Special Revenue Fund and Activity Center Budgets
November 18, 2025
Chemical Assessment Team
Provides emergency response to chemical hazards
Reimbursed by Minnesota
Proposed
2025 2026 Percentage
Budget Budget Incr (Decr)
Revenues 65,000$ 65,000$ 0.00%
Expenditures 65,000$ 65,000$ 0.00%
Revenues over (under) Expenditures -$ -$
Economic Development Fund
Economic Development:
Elevate Hennepin, technical
assistance for businesses
Façade Improvement Program
Think Hopkins
Support for Hopkins Business and
Civic Association
ACE Program
Economic Development Fund
Housing
Affordable Housing Policies and Programs
Development
Grant writing and grant support/administration
Public Art & Placemaking
ArtStreet
Public Art, Arts Center
Economic Development Fund
Main Revenue Sources
•HRA Levy -$551,750
•Excess Tax Increment Financing -$50,000
Proposed
2025 2026 Percentage
Budget Budget Incr (Decr)
Revenues 591,646$ 656,750$ 11.00%
Expenditures 555,646$ 692,520$ 24.63%
Revenues over (under) Expenditures 36,000$ (35,770)$
Parking Fund
Parking Enforcement and Operations
Main Revenue Sources
•Parking permits, leases and fines
Main Expenditures
•Salaries, benefits, insurance, maintenance
Parking Fund
Continue to see low permit sales
•Ovation Apartments reduced lease from 40 to 8 Permits
•Lowest possible based on 1 to 1 parking in zoning code
$100,000 tax levy in 2025
Proposed
2025 2026 Percentage
Budget Budget Incr (Decr)
Revenues 164,000$ 173,000$ 5.49%
Expenditures 161,185$ 171,932$ 6.67%
Revenues over (under) Expenditures 2,815$ 1,068$
Communication Fund
Primary communications functions were transferred into
the general fund in 2025
Revenue/Expenditures for Public, Educational, and
Government (PEG) Access
Proposed
2025 2026 Percentage
Budget Budget Incr (Decr)
venues 30,961$ 40,000$ 29.19%
penditures 30,961$ 40,000$ 29.19%
evenues over (under) Expenditures -$ -$
Sustainability Fund
Main Revenue Source is Franchise Fees ($365,000)
Main expenditures are
•Salary/Benefits of Sustainability Coordinator and 1/3 Associate
Planner
•Hopkins Climate Solutions Fund ($125,000)
Sustainability Fund
Proposed
2025 2026 Percentage
Budget Budget Incr (Decr)
evenues 345,000$ 366,000$ 100.00%
xpenditures 345,000$ 363,745$ 100.00%
evenues over (under) Expenditures -$ 2,255$
Depot Fund
Depot Youth
Programming
•Depot Youth Board
•ACE Internship Program
Depot Fund
Depot operating by Center for the Arts
•Expanded programming
•Rental Reservations
•Trailhead
•Concessions
Depot Fund
Major revenue sources are support from
•Hopkins Economic Development Fund -$63,500
•City of Minnetonka -$63,500
•Hopkins School District -$50,000
•Three Rivers Park District -$19,500
Major expenditures are salaries, benefits and concession
supplies
Depot Fund
Proposed
2025 2026 Percentage
Budget Budget Incr (Decr)
evenues 285,611$ 322,700$ 12.99%
xpenditures 270,611$ 304,051$ 12.36%
evenues over (under) Expenditures 15,000$ 18,649$
Arts Center Fund
Premiere cultural and artistic destination drawing over
250,000 visitors annually
715 seat theater, black-box theater, art gallery, dance
studio, classrooms, meeting and multipurpose spaces
Arts Center Fund
Main revenue sources are property tax levy, rents,
leases, ticket sales, grants and transfers in
•Preliminary levy of $380,000
Major expenditures include salaries, benefits and
payments to artists
Proposed
2025 2026 Percentage
Budget Budget Incr (Decr)
Revenues 1,232,470$ 1,290,784$ 4.73%
Expenditures 1,219,259$ 1,240,434$ 1.74%
Revenues over (under) Expenditures 13,211$ 50,350$
Activity Center (General Fund)
Mission is to provide pathways to “Experience the Upside
of Aging”
Gathering place for mature adults to participate in
recreational, social, educational, fitness and volunteer
activities
Facility Rentals and Community Space
Activity Center (General Fund)
Main revenue sources are member fees and facility
rentals
Main expenditures are salaries and benefits and
payments to instructors or for other programming
Part of the general fund and does not have a fund
balance
Activity Center (General Fund)
Indirectly funded amount is provided by property taxes,
local government aid, franchise fees and interest
Proposed
2025 2026 Percentage
Budget Budget Incr (Decr)
evenues 168,500$ 191,500$ 13.65%
xpenditures 609,694$ 678,866$ 11.35%
ndirectly funded amount (441,194)$ (487,366)$