9.c) Uptown Rates for 2013 � � � �
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SCANDIA
Staff Report
Date of Meeting: December 18, 2012
To: City Council
From: Kristina Handt, City Administrator
Re: Uptown Rates for 2013
Agenda Item#: 9.c)
Background:
Under the current structure,users are billed annually(in August of each year) for usage on the
Uptown Sewer System. Expenses were allocated based solely on water usage. Annual rates for
each user in 2012 and 2011 are included on the attached spreadsheets.
Costs varied greatly over the years not only because of the maintenance style of Washington
County, whom the City previously contracted with,but also because of Council decisions
regarding when and how much general property t�dollars would be used to cover some
expenses. Below is a chart outlining the general fund dollars contributed to the Uptown budget
over the last five years.
Year Pro ert Tax Revenue
2007 $35,668
2008 $1,492
2009 $21,739
2010 $8,144
2011 $1,211
Ave over last 5 ears $13,650
Over the last two ears the users have aid as follows:
User 2012 2011
Annual Annual
Rates Rates
Schmitt Mall $738.00 $3,234.00
Yoga Hus $220.00 $113.00
R&B Auto $100.00 $971.00
Scandia $3,030.00 $7,582.00
Store/Deli/Cafe
Elim Church & $2,744.00 $4,611.00
Parsona e
Community Center $1,074.00 $2,199.00
Warming House $285.00 $3,131.00
Gammelgarden $282.00 $510.00
Edward Jones $100.00 $100.00
Total $8,573.00 $22,451.00
At the November l, 2012 meeting of the Wastewater Advisory Committee,the committee
recommended the rates in the attached ordinance which are a base rate of$114.18/month and a
use rate of$10.71/1,000 gallons used. The rates include a base rate and a volume rate. The rates
are structured so that the base rate covers the fixed costs associated with the system such as
operating supplies, engineering, legal, contractual permit fees, insurance,the base contract rate
with EcoCheck, and staff time for billing and regular maintenance. The volume charge covers
those costs which are related to the amount of usage such as pumping,utilities,machinery and
equipment repair, and misc. contractual (i.e. emergency calls, items beyond EcoCheck's base
rate, etc).
These rates will cover the operating expenses in 2013 and provide a small contingency.
However, the rates would not pay for any of the costs associated with the Uptown System
Improvements completed in 2012. The committee is asking that those funds come out of the
Capital Improvement Fund with no return from the rate payers.
Issue:
What should the 2013 rates be for the Uptown Sewer System? How much of the 2012
Improvement Project should be paid for by rate payers?
Proposal Details:
Ordinance No. 137 is included in your packet. These proposed rates are consistent with the
recommendation from the Wastewater Advisory Committee. Estimated chargers by user are as
follows:
User Ave Ave Ave Ave
Monthly Annual Monthly Annual
Water Water Sewer Sewer Bill
Use Use Bill
al al
Schmitt Mall 7,513 90,156 $194.64 $2,335.73
Yoga Hus 327 3,924 $117.68 $1,412.19
R&B Auto 5,564 66,768 $173.77 $2,085.25
Scandia 19,955 239,460 $327.90 $3,934.78
Store/Deli/Cafe
Elim Church& 12,600 151,200 $249.13 $2,989.51
Parsona e
Community Center 5,490 65,880 $172.98 $2,075.73
Warming House 4,266 51,192 $159.87 $1,918.43
Gaminelgarden 1,570 18,840 $130.99 $1,571.94
Edward Jones 262 3,144 $116.99 $1,403.83
Total 57,547 690,564 $1,643.95 $19,727.38
Staff was also asked to prepare a rate structure that covers 25%of the 2012 Uptown
Improvement Project costs and spread the repayment over 15 years. Staff estimates that the total
cost of the 2012 Uptown Improvement Project is $160,688.78. The base rate would remain the
same and the volume charge would increase to $14.98/1,000 gallons because the loan was added
to the usage charge.
The followin are estimated char es under this scenario:
User Ave Ave Ave Ave
Monthly Annual Monthly Annual
Water Water Sewer Sewer Bill
Use Use Bill
al al
Schmitt Mall 7,513 90,156 $226.72 $2,720.70
Yoga Hus 327 3,924 $119.08 $1,428.94
R&B Auto 5,564 66,768 $197.53 $2,370.34
Scandia 19,955 239,460 $413.11 $4,957.27
Store/Deli/Cafe
Elim Church & 12,600 151,200 $302.93 $3,635.14
Parsona e
Community Center 5,490 65,880 $196.42 $2,357.04
Warming House 4,266 51,192 $178.08 $2,137.02
Garrunelgarden 1,570 18,840 $137.70 $1,652.38
Edward Jones 262 3,144 $118.10 $1,417.26
Total 57,547 690,564 $1,889.67 $22,676.09
If the full loan amount was repaid from the users over a 10 year span at 0%interest the following
would apply with a base rate of$114.18/month and a volume charge of$36.40/1,000 gallons:
User Ave Ave Ave Ave
Monthly Annual Monthly Annual
Water Water Sewer Sewer Bill
Use al Use al Bill
Schmitt Mall 7,513 90,156 $387.65 $4,651.84
Yoga Hus 327 3,924 $126.08 $1,512.99
R&B Auto 5,564 66,768 $316.71 $3,800.52
Scandia 19,955 239,460 $840.54 $10,086.50
Store/Deli/Cafe
Elim Church & 12,600 151,200 $572.82 $6,873.84
Parsona e
Community Center 5,490 65,880 $314.02 $3,768.19
Warming House 4,266 51,192 $269.46 $3,233.55
Gammelgarden 1,570 18,840 $171.33 $2,055.94
Edward Jones 262 3,144 $123.72 $1,484.60
Total 57,547 690,564 $3,122.33 $37,467.97
Fiscal Impact:
While the new rate structure impacts individual users to differing degrees, this proposal should
result in the Uptown System becoming self sufficient,barring any large unplanned expenses.
This would minimize the need in the future to budget from the general tax levy to subsidize this
service. The proposed 2013 general fund budget does NOT include any allocation of property
tax revenues.
The Capital Improvement Fund balance is projected to be at $279,277 by the end of 2013.
Forgiving$160,688.78 will reduce the fund to $118,588.22. Requiring 25%of the loan to be
paid back over 25 years would result in an increase of$2,678.15 per year to the Capital
Improvement Fund. Planned expenditures from the capital improvement fund are $128,000(civil
defense siren, lighted ball field improvements, sidewalks to ball fields) in 2014 and$340,833 in
2015 (civil defense siren, Ozark Ave extension).
Options:
1) Approve Ordinance No. 137 as drafted
2) Amend Ordinance No. 137 and then Approve the new rates effective January 1, 2013
3) Make no change and continue to bill users once a year in July for previous year's
expenses based solely on a volume charge.
Recommendation:
Option 1.
CITY OF SCANDIA
ORDINANCE NO.: 137
AN ORDINANCE ESTABLISHING USER CHARGES AND CONNECTION FEES FOR
THE UPTOWN WASTEWATER TREATMENT SYSTEM
The City Council of the City of Scandia, Washington County, Minnesota hereby ordains:
Section 1. ESTABLISHMENT OF USER CHARGES. User charges and fees for the Uptown
Wastewater Treatment System shall be as follows:
Fee
(A) Base charge: $114.18/month
(B) Volume charge: $10.71/1,000 gallons
(C) Late payment fee: $10.00
(D) Annual interest rate on account balances 30 days 12%
past due:
(E) Annual interest rate on delinquent accounts certified 12%
for collection with property taxes:
(F) Connection fee,per dwelling unit: $4,250.00
Section 2. EFFECTIVE DATE. This ordinance shall be in full force and effect on January 1,
2013, after publication according to law.
Passed and adopted by the City Council of the City of Scandia this 18th day of December,
2012.
Randall Simonson,Mayor
ATTEST:
Kristina Handt, Clerk/Administrator