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7. BACKGROUND-letter to users with March 2008 bill explaining changes March 3, 2008 TO: All Users of the Scandia “201” Community Sewage Treatment System RE: Changes to Your Bill Starting in 2008 Starting this year, the City of Scandia will bill your share of costs for the “201” Community Sewage Treatment System to you in four quarterly installments. Your first invoice is enclosed. There are some other changes that you should know about:  Billing procedures have been updated. The ordinance governing the sewage treatment system had not been updated in 20 years and the previous practice of invoicing was not consistent with the ordinance. An updated ordinance will allow us to bill quarterly, on a more predictable cycle with smaller installments due each quarter. Bills will be mailed by the 5th of the month in March, June, September and November, and will be due by the 5th of the following month. A late charge will be applied to overdue bills. Balances overdue by 30 days or more will be charged interest.  All users of the system are now billed an equal amount for service. Previously, different rates were charged depending upon the number of bedrooms in a home and whether it is a seasonal or permanent residence. This was originally set up as a way to estimate the volume of wastewater generated by a residence. However, it is not a reliable measure and as property changes hands or is remodeled, these factors change. Installing meters at each home, at a considerable cost to the property owner, would be the only equitable way to charge for service based on volume. Since only a small portion (less than 10%) of the cost of operating and maintaining the system is related to volume, the City Council found that it would be much more equitable for each property to be charged equally.  Energy charge adjustments will continue. If your home is served by a lift station shared with other users, which is connected to your home electrical system, your bill will be adjusted downward to reflect the energy cost you contribute to the operation of the system. If your home is served by a shared lift station, for which another user pays the electric bill, your bill will be adjusted upward. (Most users will not see any energy charge adjustment.) March 3, 2008 Page 2 of 2  Rates for 2008 are higher than in 2007. User charges for the sewer system are based on the city’s actual cost for operating and maintaining the system, including a small amount set aside each year for replacement of system components. The budget has fluctuated as some costs (repairs, pumping) have varied greatly from year-to-year. User charges must cover costs. Property tax revenues are not used to pay for sewage treatment. The following chart shows the total budget for the 2008 and the previous 5 years, along with the average user charge for that year. $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 2003 2004 2005 2006 2007 2008 Year Ex p e n s e s $0.00 $100.00 $200.00 $300.00 $400.00 $500.00 $600.00 Av e r a g e C h a r g e Expenses Avg. Charge In 2009 and beyond, the city will strive to reduce the need for significant budget and user charge increases, by planning for upcoming pumping and maintenance costs in each year’s budget. We will also examine the reserves in the fund, as the city has been criticized by the State Auditor that we may not have been setting aside sufficient funds for long-term replacement costs. Please feel free to contact either myself or City Treasurer Colleen Firkus if you have any questions about this information. You can reach us at 651 433-2274. My e-mail address is a.hurlburt@ci.scandia.mn.us, and Colleen’s is c.firkus@ci.scandia.mn.us. Sincerely, Anne Hurlburt City Administrator