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9.c) Uptown Rates for 2013 � � � � �, +� '`r. 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