HomeMy WebLinkAbout2020 Rate Study
CITY OF OAK PARK HEIGHTS
WATER AND SEWER RATE STUDY
AND STORM SEWER RATE UPDATE
2020
TABLE OF CONTENTS
Table of Contents
Introduction _____________________________________________________________________________________________ 1
Water User Charges ____________________________________________________________________________________ 2
General _________________________________________________________________________________________________________ 2
Water Usage Estimates ________________________________________________________________________________________ 2
Customer Base _________________________________________________________________________________________________ 3
Consumption __________________________________________________________________________________________________ 5
Water department expenditures ______________________________________________________________________________ 8
Water rates_____________________________________________________________________________________________________ 9
Sewer User Charges ___________________________________________________________________________________ 13
General ________________________________________________________________________________________________________ 13
System flow estimates ________________________________________________________________________________________ 13
Sewer department expenditures _____________________________________________________________________________ 15
Sewer rates ___________________________________________________________________________________________________ 18
Storm Sewer User Charges ___________________________________________________________________________ 20
General ________________________________________________________________________________________________________ 20
CONCLUSIONS AND RECOMMENDATONS ___________________________________________________________ 21
Water __________________________________________________________________________________________________________ 21
Sewer__________________________________________________________________________________________________________ 21
Storm Sewer __________________________________________________________________________________________________ 21
EXHIBIT A – 2019 POSSIBLE RATE INCREASE ______________________________________________________________ 22
INTRODUCTION
Introduction
The City of Oak Park Heights annually reviews the water and sewer rate schedule to assure
receipt of adequate funding for the operation of the utility systems. This report represents
the results of a study undertaken to review the costs to operate and maintain the water
and sewer systems in the City of Oak Park Heights and the revenue needed to support the
costs. The purpose of the study is to determine the user rates required to adequately and
equitably finance the proposed 2020 operating budgets of the Water and Sewer Funds.
This report contains an update to the analysis of the past and projected flows, usages, and
system connections as well as a review of costs and projected expenditures for operation
and maintenance.
In summary, this report contains a review of the past and present schedules and practices
relating to water and sewer user charges in the City and recommendations for rates which
will produce the required revenues in a fair and equitable manner.
While the report focuses on the Water and Sewer Utilities, a review of the Storm Sewer
Utility Charges is also included for 2020.
Page 1
WATER USER CHARGES
Water User Charges
GENERAL
It is necessary to periodically review the water user rates to determine if adequate revenue
is being generated to operate the water supply and distribution system and to meet other
financial obligations for capital improvements and for the renewal and replacement of
infrastructure.
The following sections of this report reviews projected water sales as well as budgeted
expenditures and other financial obligations. Using this information, rates are computed
to produce sufficient revenue to operate and maintain the water system for the coming
year.
WATER USAGE ESTIMATES
Each dwelling and structure connected to the City water system is equipped with a water
meter to measure water usage. Each well supply is also equipped with a water meter to
measure water produced. These two sources are then used to verify and estimate water
consumption.
It can be difficult to predict water usage with great accuracy for a given year because usage
will vary greatly depending upon climatic conditions during the summer growing season.
Billed consumption for the last 10 years is reflected in CHART A. The last 6 years fluctuate
from 174,000,000 to 191,000,000 gallons billed. Variations from year to year can be due
to individuals practicing conservation, climate conditions and possible malfunctioning
water meters. Actual consumption billed for 2018 was 191,000,000 while 2019 is
estimated at 179,000,000 gallons. This change in usage can have a significant impact on
the revenue from billings. A conservative estimate of 182,000,000 gallons is the amount
that will be used for calculating the estimated 2020 rates. This is based on a five average
usage excluding the high and lows for the 5 year period.
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2010 WATER USAGE BILLED-CHART A MILLION GALLONS 200 195 190 185 180 175 170 165 160179,284191,643186,957180,649184,453173,395196,398194,315187,985188,830GALLONS BILLED20192018201720162015201420132012
2011
WATER USER CHARGES
CUSTOMER BASE
The city’s customer base consists of residential, commercial/industrial, public institution
and sprinkler-irrigation accounts. The total of the regular accounts is approximately 1290
and 38 for the irrigation accounts, which are generally billed June through September. For
the purpose of the study 1290 customers are used.
1144 Residential users are 87% of the water customers, 139 Commercial users are 11%
while 7 Public Institutions are 1%, and 38 Irrigation (Sprinklers) accounts are 1% of the
total customers billed. (CHART B)
While residential users are 87% of the water customers, they generate 48% of the water
usage billings. The other users Commercial, Public Institution and Sprinkler generate the
remaining 52% of the water billings. (CHART C).
Page 3
SPRINKLERPUBLIC INSTITUTIONCOMMERCIALRESIDENTIAL REVENUE BY CUSTOMER TYPE-CHART C 7%SPRINKLER21%INSTITUTIONPUBLIC 24%COMMERCIAL48%RESIDENTIAL SPRINKLERPUBLIC INSTITUTIONCOMMERCIALRESIDENTIAL
CUSTOMER TYPE-CHART B 1%SPRINKLER1%INSTITUTIONPUBLIC 11%COMMERCIAL87%RESIDENTIAL
WATER USER CHARGES
A summary of the customer type and gallons/revenues billed per type is reflected in the
table below:
Page 4
2019Consumption
Customer Type# of CustomersMillion GallonsBillings
Residential1,14491,289$ 386,555
Commercial13942,128$ 192,658
Public732,192$ 170,897
Sprinkler(avg)2013,431$ 59,122
Total1,310179,040$ 809,232
Consumption
Customer Type%of CustomersMillion GallonsBillings
Residential87.33%50.99%47.77%
Commercial10.61%23.53%23.81%
Public0.53%17.98%21.12%
Sprinkler1.53%7.50%7.31%
Total100%100%100%
WATER USER CHARGES
The table reflects residential customers consumed 51% of the gallons billed but actually
generate 47% of the total revenue from billings. This is due to an accelerated tiered rate
structure and residents tend to use less gallons than commercial or public institutions. The
vulnerability in the division of customers is that 13% of the customers (those other than
residential) use 49% of the water and should a large user (Commercial/Public Institution/
Sprinkler) start to dramatically conserve or move from the service area, there would be a
large drop in revenue. This could cause the remaining customers to pay at a higher rate to
cover the loss of revenue.
CONSUMPTION
Presently water billings are based on tiers of consumption. The higher the usage the
higher the rate per gallon. Consumption can vary in the rate tiers during quarterly billing
periods. 2018 reflects a significant increase in billed consumption, while 2019 had a
significant decrease. Projected consumptions are used to project revenues for funding the
current year budget. The increase of consumption in 2018 as compared to projected
consumption was 9,000,000 gallons more while consumption in 2019 was 6,000,000
gallons less than estimated actual consumption. This produced a $43,000 surplus in
expected revenue for 2018 and $30,000 deficit in 2019 revenue. The following charts
reflect projected usage and revenues compared to actual for 2018 and 2019.
Page 5
20182019 PROJECTEDPROJECTEDACTUALACTUALPROJECTEDPROJECTEDACTUALACTUAL
Rate Tier
Rate Tier
/1,000 galUSAGE
REVENUEREVENUE
/1,000 galUSAGE
REVENUEREVENUE
$202,805
0-15,99956,00055,500$205,600
0-15,99955,00054,600$201,882 $200,600
16,000-50,99928,00028,400$93,800 $95,184
16,000-50,99928,00026,500$93,800 $88,600
51,000-99,99915,00015,500$58,500 $60,275
51,000-99,99915,00015,300$58,500 $59,900
100,000-200,99918,00020,000$87,500 $96,782
100,000-200,99919,00019,600$92,340 $95,500
201,000-999,999965,00071,800$381,500 $414,917
201,000-999,999968,00063,200$393,040 $365,300
Total182,000191,200$826,900 $869,963
Total185,000179,200$839,562 $809,900
WATER USER CHARGES
The above tiered revenue amounts show that the greatest amount of revenue is generated
in the >200,000,000 gallons. This is due to two reasons, the rate charged for this tier is
72% greater than the lowest tier, and the usage in this tier is the highest. The revenue
generated is approximated 45% of the total revenue. Shifts of usage from this tier have the
greatest impact on revenue generation, as in 2018, 7,000,000 more gallons were billed
than projected which resulted in $33,000 increase in revenue; while on 2019, 5,000,000
less gallons were billed than projected and resulted in a $28,000 decrease in revenue.
Page 6
20192018201720162015-TYPE FOR 2015WATER CONSUMPTION BY CUSTOMER MILLION GALLONS SPRINKLERCOMMRES13,431 32,192 42,128 91,289 15,639 32,106 42,188 97,866 17,960 32,177 41,969 94,845 15,192
33,154 36,667 97,420 15,273 35,095 37,787 96,293
WATER USER CHARGES
There was a shift in customer usage for 2019. The consumption by customers decreased
in 2019 for residential and sprinkler types. The sprinkler customer is usually billed at the
higher rate tiers due to the higher volume used. This resulted in a reduction in revenue for
2019 as compared to the projected revenue for 2019.
The previous chart shows the usage by year from 2015-2019 for the various customer
types. Though the chart reflects the Residential Customer uses the most water the average
quarterly water usage per customer account is:
Residential 19,900 gallons (includes apartments, duplexes, condo, and individual)
Commercial 75,800 gallons
Public Institution 1,150,000 gallons
Sprinkler (seasonal) 191,000 gallons
Page 7
WATER2016201720182018201920192020
ACTUALACTUALBUDGETACTUALBUDGETESTIMATEBUDGET
REVENUES
CUSTOMER BILLINGS$ 750,552 $ 784,520 $ 826,860 $ 873,146$ 840,000$ 810,000 $ 825,800
OTHER REVENUES 41,472 22,595 6,000 26,564 6,000 14,000 5,000
TOTAL REVENUES$ 792,024 $ 807,115 $ 832,860 $ 899,710$ 846,000$ 824,000 $ 830,800
EXPENSES
PERSONNEL$ 185,037 $ 180,730 $ 193,410 $ 184,085$ 200,625$ 200,000 $ 215,600
CONTRACTUAL 126,227 138,586 161,915 119,329 166,385 135,000 163,100
MATERIAL AND SUPPLIES 15,685 26,413 35,000 25,407 35,000 28,000 35,000
CAPITAL OUTLAY 91,934 95,900 90,100 90,100 86,600 86,600 87,100
TRANSFER CAPITAL IMP 238,979 250,815 238,479 252,002 252,079 252,079 252,579
TRANSFER FOR DEBT 101,000 102,000 103,000 103,000 104,000 104,000 105,000
TOTAL EXPENSES$ 758,862 $ 794,444 $ 821,904 $ 773,923$ 844,689$ 805,679 $ 858,379
WATER USER CHARGES
NET REVENUE$ 33,162$ 12,671$ 10,956$ 125,787$ 1,311$ 18,321$ (27,579)
WATER DEPARTMENT EXPENDITURES
To determine a water usage rate schedule, it is necessary to estimate the amount of the
expenditures anticipated and revenue required. Expenditures can be generally classified
in the following categories:
a. Operation and maintenance
b. Capital Outlay
c. System renewal and replacement
d. Debt Service
Operation and maintenance costs are to be included in the rate calculation and are taken
directly from the City Budget. The City presently plans for current and future
improvements within the current budget. Funds for current capital outlay are transferred
to the Budgeted Projects Fund. Funds for capital improvements are transferred to the
Capital Project Funds for Tower, Well and Renewal and Replacement for the future
improvements and replacement of facilities and infrastructure. The following is a financial
statement of the Water Fund.
Based on estimated consumption of 182,000,000 gallons and 2019 water rates, 2020
reflects a revenue of $825,800 and net revenue loss of $(27,579). Water Rates were last
increased in 2018 by an average of 8%.
The expenditures for capital improvement transfers is budgeted in 2020 for the actual
amount that was transferred in 2018. It has been City policy to transfer funds equal to
infrastructure depreciation to the Renewal and Replacement Fund for future construction.
Page 8
WATER USER CHARGES
A continuing analysis of the policy helps to determine what would be an appropriate
amount to set aside for replacement within an acceptable fee base for the users of the
system.
The City did a street reconstruction project during 2014 and 2015 that utilized the funds
in the Utility Renewal and Replacement Fund to partially fund the water infrastructure
replacement that was required. The total amount needed to fund the water improvement
portion of the project was also funded with a utility revenue bond. The future debt service
of this bond is $100,000-$110,000/year for 2015-2025 (Total of $1,155,000). The water
utility rates have included this expenditure into the rate structure for 2015 and forward
for the term of the bond issue.
Since 2012 Council directed that the Administrative Charge (7% of current expenditures)
be allocated to the Renewal Replacement Fund. In prior years this was transferred to the
General Fund for the Utility’s share of administration, accounting and billing. This
reallocation of funds does not increase the expenditures of the water fund. This amount is
still calculated and transferred out to the Renewal and Replacement Fund instead of the
General Fund.
The actual financial activity of 2018 was positive as the revenue was more than expected
and expenditures were less than budgeted. This provided a surplus of $125,000. Although
2019 has a significant reduction in revenue, at this time it is expected that the expenditures
will be less than budgeted also. This should result in a surplus of $18,000 for 2019.
The expenditure for contractual services fluctuates from year to year. This is primarily due
to the repairs of watermain breaks. This expense can fluctuate because of the weather, as
harsh winters can drive the frost deep and as the thaws come in the spring, the breaks
occur.
WATER RATES
The estimated unit cost to produce and supply water in the City of Oak Park Heights can
be determined by dividing the estimated operating expenditures by the assumed flow.
The budgeted expenditure cost per unit is summarized in the following chart:
.
Page 9
2020 BUDGETED EXPENDITURES PER UNIT COST
(182,000 gallons)(1290 Cust)
/1,000 GALLONS/CUSTOMER
Operation & Maintenance$ 413,700 $ 2.27$ 320.70
Renewal & Replacement 252,579 $ 1.39$ 195.80
Debt Service 105,000$ 0.58$ 81.40
87,100 $ 0.48$ 67.52
Capital Outlay
Total$ 858,379 $ 4.72$ 665.41
Minimum quarterly bill 15,000 gallons /
or based on per customer cost$ 70.75 $ 166.35
Actual minimum quarterly bill-volume base$ 38.41 $ 38.41
WATER USER CHARGES
A per unit cost is $4.72/1,000 gallons ($858,379/182,000,000 gallons) or $665.41 per
customer. This would result in a minimum quarterly bill based on 15,000 gallons of usage
of $70.75 or a minimum bill “per customer” of $166.35. Our current minimum bill based
on 15,000 gallons is $38.41. The difference as to the cost per 1,000 gallons per the chart
($70.75) and the actual amount charged for a minimum quarterly bill ($38.41) is funded
by the tiered rate structure which incorporates volume billing rates. In addition to the unit
cost, the City is also required to submit $9.72 per water connection per year to the State of
Minnesota for water connection service fees.
The Current established water rates for are as follows:
$2.43/quarter for State Water Connection Fee- Per Connection
Minimum Charge $38.41/quarter for up to 15,000 gallons
$3.35/1,000 gallons for usage from 16,000 to 50,000 gallons/qtr.
$3.90/1,000 gallons for usage from 51,000 to 99,000 gallons/qtr.
$4.86/1,000 gallons for usage from 99,000 to 200,000 gallons/qtr.
$5.78/1,000 gallons for usage over 200,000 gallons/qtr.
The 2020 Revenue is estimated in the present tier billing rates as indicated in the following
chart based on the 3 year average usage in the individual tiers. Water Rates were last
increased in 2018 by an average of 8%.
Page 10
20202019
Rate TierEstimated Revenue
Rate TierEstimated Revenue
/1,000 galRate
/1,000 galRate
0-15,99955,000$38.41/acct$200,600
0-15,99954,600$38.41/acct$200,600
16,000-50,99926,000$3.35 $87,100
16,000-50,99926,500$3.35 $88,600
51,000-99,99915,000$3.90 $58,500
51,000-99,99915,300$3.90 $59,900
100,000-200,99919,000$4.86 $92,300
100,000-200,99919,600$4.86 $95,500
201,000-999,999967,000$5.78 $387,300
201,000-999,999963,200$5.78 $365,300
Total182,000$825,800
Total179,200$809,900
WATER USER CHARGES
2020 REVENUES FROM PRESENT RATES
For budget 2020, $825,800 is not sufficient to fund the 2020 estimated expenditures.
2019 REVENUES (ESTIMATED) BASED ON ACTUAL VOLUMES
The Budgeted Revenue for 2019 is $840,000. It is estimated that $810,000 will be
generated from all billings in 2019. This will be $30,000 less than projected but should
still be sufficient to meet 2019 budgeted expenditures due to estimated expenses being
$39,000 less than budgeted.
Using the estimated revenue of $825,800 for 2020 based on the tier usage, is short an
estimated $28,000 for meeting the budgeted expenses.
To Fund this deficit for 2020 there are a couple of options:
1) No increase in water rates is for 2020 water operations.
a) Cut expenditure budget for Contractual Expenses by $23,000
Page 11
20192020
20172018
PROPOSED
Rate Tier
RateRateRateRate
0-15,999$36.60/acct$38.41/acct$38.41/acct$40.67/acct
16,000-50,999$3.05 $3.35 $3.35 $3.50
51,000-99,999$3.55 $3.90 $3.90 $4.05
100,000-200,999$4.42 $4.86 $4.86 $5.01
201,000-999,9999$5.24 $5.78 $5.78 $5.93
WATER USER CHARGES
b) Cut expenditure budget for Supplies $5,000
If the expenditures for these accounts exceeds this amount, then the use
of Unrestricted Funds could be utilized or determine if billings are going
to fund the added expenditure. This would utilize excess funds collected
in 2018.
2) Increase the water rates:
The needed increase would be approximately $.15/1,000 gallons.
The comparison of rates would be as follows:
This increase in rates would generate an estimated $28,000 in additional revenue.
Page 12
SEWER USER CHARGES
Sewer User Charges
GENERAL
The City of Oak Park Heights regularly reviews, adopts, and/or modifies its sewer user rate
schedule to assure that sufficient revenue is being generated for the payment of all
expenditures associated with the operation and maintenance of the sewage collection
system and treatment facilities. This review is also undertaken to verify that all
classification of sewer users are charged for service in a manner which is fair and equitable
as defined in State and Federal regulations.
The following sections of this report will describe the system usage, financial obligations,
and budgeted expenditures as well as a suggested rate schedule to provide adequate
revenues to operate and maintain the system in 2020.
SYSTEM FLOW ESTIMATES
Utility user rates can be established by equating the amount of service sold to the
estimated expenditures anticipated by the utility. In the case of a sanitary sewer system,
the use or service can be measured by sewage flow with projections for future use being
dependent upon growth by number and type of connections to the system.
The Metropolitan Council Environmental Services (MCES) maintains flow-measuring
devices which are used to total all sewage flows from the entire City. The MCES utilizes a
“firm flow” allocation method in order to stabilize the flow revenue for the MCES and the
charges to the municipalities. This means instead of estimating a system flow, the MCES
uses the last known flow numbers to allocate their budget for the coming year. To
determine the 2020 annual billing amount, the calculation is based on flows from January
1, 2018 and ending December 31, 2018. The annual charge is a flat rate and billed to the
city in equal monthly installments.
The City has continuously questioned the accuracy of the MCES measurement of the sewer
flows. During 2018 the MCES revised the City’s Flow Allocation Volumes from 2011
through 2016. This resulted in a credit of 204,140,000 gallons to the billed 1,200,780,000
for that period. The following table summarizes the credit of $463,620.25 that MCES
calculated to the City’s past billings.
Page 13
CostImplied Original Volume RevisedCorrection to
Monitoring Allocation RateAllocaedAdjustmentAllocated Billed
YearYear($/MG)Volume (MG)(MG)Volume (MG)Amount ($)
2011-201220132029.00194.48-17.64176.84-$35,781.98
2012-201320142141.55190.66-29.98160.68-$64,214.12
2013-201420152084.38199.01-44.32154.69-$92,382.41
2014-201520162348.25199.01-35.02163.99-$82,235.27
201520172484.71200.80-34.44166.36-$85,576.01
201620182421.54216.82-42.74174.08-$103,430.46
Total Adjustment -REFUNDED IN 20181200.78-204.14996.64-$463,620.25
SEWER USER CHARGES
The sewer flow of 171,600,000 gallons is the MCES measurement for the city 2018 and is
used for the calculation of the 2020 charges due the MCES. This is more in line with the
total amount of water billed which was 174,000,000 for the same period (Excludes
Sprinkler Billed). The difference can be attributed to unbilled water, such as broken
meters, unmetered usage and if the city has any Inflow and Infiltration of storm/ground
water.
The MCES daily flow calculations will continue to be monitored by city staff and compared
to the City’s water pump reports. This is to catch any discrepancies/errors that may
return.
Assumptions and estimates must be used to apportion flows and resulting costs to the
various types of users on the system. The budgeted billable flow for sewer for 2019 is
150,000,000 gallons. Actual 2019 billed flow is estimated at 147,000,000. For 2020,
150,000,000 will be used for calculating the rates. This is a based on historical billing flows
of 150,000,000 for the last 5 years. The decrease for 2019 is reflective of a portion of the
decrease in billed water for 2019.
Sewage flows from residential connections are assumed to be equal to the quarterly water
usage experienced during the winter months when no lawn sprinkling occurs. Actual
quarterly water meter readings are used for sewage discharge billing for all commercial,
industrial, institutional and high end residential connections (> 3 units). The following
chart reflects the billed sewer for each type of user for the 2019 year.
Page 14
SEWER USER CHARGES
Water meters exist at each connection which measures the water purchased, but does not
provide information on the quantity discharged to the sewer. Generally, almost all water
purchased enters the sewer system with the exception of that water used for lawn
irrigation. Lawn sprinkling is primarily confined to single family, townhouse, and similar
land uses. Where large institutional facilities or other users have high irrigation demands,
separate meters are becoming common so that sewer billing is limited to the non-sprinkler
water usage only. There is an approximate total of 1300 customers, 200 commercial,
residential >3 units and public institution who are billed on actual water usage and 1,100
billed on winter water usage.
SEWER DEPARTMENT EXPENDITURES
In addition to estimating the volume of sewage flow, the other basic factor required in
establishing user rates is the amount of expenditures anticipated and revenue required.
Expenditures can be generally classified in the following categories:
Page 15
SEWER FUND201620172018201920192020
ACTUALACTUALACTUALBUDGETESTIMATEBUDGET
REVENUES
CUSTOMER BILLINGS$ 908,570$ 972,017 $ 1,030,293$ 995,000 $ 988,000$ 993,000
REBATE$ -$ (103,275)
OTHER REVENUES 22,265 45,398 20,548 10,000 10,000 10,000
TOTAL REVENUES$ 930,835$ 1,017,415$ 947,566 $ 1,005,000$ 998,000$ 1,003,000
EXPENSES
PERSONNEL$ 105,569$ 118,289 $ 121,371 $ 127,420 $ 127,420$ 132,100
CONTRACTUAL 111,727 102,075 123,452 156,760 154,000 154,110
MCES 458,379 498,930 421,608 445,828 445,828 460,043
MATERIAL AND SUPPLIES 12,772 13,853 7,962 14,850 14,850 15,450
CAPITAL OUTLAY 46,400 49,725 51,725 47,625 47,625 47,625
SEWER USER CHARGES
TRANSFER CAPITAL IMP 161,987 171,303 173,061 169,140 169,140 169,140
TOTAL EXPENSES$ 896,834$ 954,175 $ 899,179 $ 961,623 $ 958,863$ 978,468
NET REVENUE$ 34,001 $ 63,240$ 48,387$ 43,377$ 39,137 $ 24,532
a. Metropolitan Council Environmental Services billing
b. Local operation and maintenance
c. Capital Outlay
d. System renewal and replacement
The Sewer Utility Budgets for 2019 and 2020 along with actual expenditures for 2016-
2018 and estimated 2019 are in the following table.
The 2018 revenues reflect a rebate given by the City for the credit that was received from
MCES for 2018. This was a onetime $80.00 reduction in each sewer customer’s bill.
Revenues have provided sufficient amounts to fund the expenditures for 2016 and
projected 2020.
The Metropolitan Council Environmental Services fee will be $460,043 for 2020 as
compared to $445,828 for the year 2019. This represents a 3.2% increase in the MCES fee.
The MCES charges since 2010 are in the following chart.
Page 16
MCES CHARGES BASED ON FLOWS AND BUDGET CHANGES
OPH % of%
MCESOPH TOTAL% INC INMCESINCREASE
YearsTOTAL FLOWFLOWSFLOWSMCES BUDGETBUDGETANNUAL CHG(DECREASE)
2010 84,519.05 196.950.23302% 167,410,000 3.77%$ 390,106.136.53%
2011 85,293.98 201.050.23571% 172,784,609 3.21%$ 407,277.814.40%
2012 93,680.78 194.900.20805% 173,649,000 0.50%$ 361,271.44-11.30%
2013 88,133.97 176.840.20065% 178,823,786 2.98%$ 358,808.28-0.68%
2014 86,007.24 160.680.18682% 184,188,500 3.00%$ 344,103.68-4.10%
2015 91,494.90 154.690.16907% 190,710,000 3.54%$ 322,432.51-6.30%
2016 85,601.13 163.990.19157% 201,013,000 5.40%$ 376,143.4616.66%
2017 85,298.36 166.360.19503% 211,941,538 5.44%$ 413,356.069.89%
2018 90,747.95 174.110.19186% 219,749,756 3.68%$ 421,614.262.00%
SEWER USER CHARGES
2019 89,991.18 176.400.19602% 227,440,997 3.50%$ 445,828.055.74%
2020 87,891.72 171.600.19524% 235,629,000 3.60%$ 460,042.613.19%
The chart shows an increases in the MCES budget for 2020 of 3.60%, however the
percentage increase in the annual MCES charge for the city for 2020 is 3.2%. This is due
to the City’s flow decrease to 171.6 and the total MCES flow percentage of .19524%.
Local operation and maintenance costs for sewer are incorporated into the rate structure
and have been taken directly from the City Budget or from actual expenditures when
available. The City presently plans for current and future improvements within the current
budget.
Since 2012 Council directed that the Administrative Charge (7% of current expenditures)
be allocated to the Renewal Replacement Fund. In prior years this was transferred to the
General Fund for the Utility’s share of administration, accounting and billing. This
reallocation of funds does not increase the expenditures of the sewer fund. This amount
is still calculated and transferred out to the Renewal and Replacement Fund instead of the
General Fund.
Like the Water Utility Fund, it has been City policy to transfer funds equal to depreciation
to the Renewal and Replacement Fund for future construction. This amount is reviewed
and analyzed on occasion along with policy to determine if funding for future renewal and
replacement of infrastructure is sufficient to achieve the expected capital improvement.
Page 17
SEWER USER CHARGES
SEWER RATES
Sewer costs can be computed by simply dividing the various operating costs by the
estimated flow. This generates a per unit cost. The present rates based on per unit and
volume billing are calculated in the chart.
A per unit cost is $6.52/1,000 gallons ($978,468/150,000,000 gallons) or $752.67 per
customer ($978,468/1300 customers). This would result in a minimum quarterly bill
based on 15,000 gallons of usage of $97.80 or a minimum bill “per customer” of $188.17.
Our current minimum bill based on 15,000 gallons is $78.50
The current established quarterly sewer rates are as follows:
Minimum Charge $78.50/quarter for up to 15,000 gallons
$5.70/1,000 gallons for usage over 15,000-50,000 gallons
$5.95/1,000 gallons for usage above 50,000 gallons
The projected revenue for 2019 is estimated to be at $988,000, the budgeted amount was
$995,000. This is attributable to the decrease in the gallons billed for 2019 as compared
to the estimate for 2019.
The following tables reflects the actual rates and revenue for 2019 based on the estimate
of 147,000,000 gallons of flow and 2020 estimate utilizing the current rates with the
projected billed flow of 150,000,000.
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2020 BUDGET
2019 PROJECTED
Estimated
Rate Tier
Estimated
Revenue
/1,000 galRate
Rate Tier
Revenue
/1,000 galRate
0-15,99951,000$78.50/acct$408,700
0-15,99948,000$78.50/acct$403,700
16,000-50,99919,000$5.70 $108,300
16,000-50,99919,000$5.70 $108,300
51,000-999,99980,000$5.95 $476,000
51,000-999,99980,000$5.95 $476,000
Total150,000$993,000
Total147,000$988,000
SEWER USER CHARGES
If rates for 2020 were to remain the same as 2019 there would be an approximate surplus
of $24,000 for the 2020 budget. The projected revenue for 2020 is sufficient to support
the expected expenditures for 2020.
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ResidentialResidential$3.00 per quarter per unit (up to 4 units)$4.50 per quarter per unit (up to 4 units)
Vacant LandVacant Land$1.50 per quarter$2.0 per quarter
Developed Commercial, Industrial & Developed Commercial, Industrial &
High Density Residential High Density Residential$30.00 per acre per quarter$33.00 per acre per quarter
Undeveloped Commercial, Industrial & Undeveloped Commercial, Industrial &
High Density Residential High Density Residential$4.50 per acre per quarter$5.00 per acre per quarter
STORM SEWER USER CHARGES
Storm Sewer User Charges
GENERAL
Storm Sewer Charges were established by the City in 1999. The purpose of all funds
derived from the storm water drainage utility is to pay for all or part of the construction,
reconstruction, repair, enlargement, improvement, regulatory response, maintenance,
operation and use of the storm sewer utility as established by the City of Oak Park Heights.
The fees are established as:
Presently the fees generate $83,000 revenue, and the budgeted expenses for 2020 are
$98,565. The actual expenses for 2018 and 2019 are $79,923 and $81,010 respectively. In
preparation for MS4 (Municipal Separate Storm Sewer System) requirements by the state,
additional expenses of $12,500 have been included in 2019 for engineering services for
assistance with the requirements. Storm Sewer Fees should be increased to cover the
current rise in costs and in preparation for the states criteria in managing the storm water.
Proposed Storm Sewer Rates:
This is an 11% increase and generates $9,800.00 more in revenues.
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Residential$4.50 per quarter per unit (up to 4 units)
Vacant Land$2.00 per quarter
Developed Commercial, Industrial &
High Density Residential$33.00 per acre per quarter
Undeveloped Commercial, Industrial &
High Density Residential$5.00 per acre per quarter
CONCLUSIONS AND RECOMMENDATONS
CONCLUSIONS AND RECOMMENDATONS
WATER
Based on the study and review of rates, it is concluded that a rate increase is assumed to
generate adequate revenue for the Water Fund for 2020.
See EXHIBIT A for a possible rate increase.
An Alternative to a rate increase at this time would be to keep the rates at the 2019 level.
In 2018 excess revenue was generated over the budgeted amount while in 2019 a loss of
revenue is expected as compared to the budgeted amount. This is due to the unusual high
usage in 2018 and the unusual low usage in 2019. Because the last two years have been
outside the normal expected billing range and expenditures have been below expected
levels, the revenue from the present billing rates have funded the expenses. Although 2020
Budget is projected to have a deficit of $28,000, if this does occur, the excess funds obtained
in 2018 and 2019 can fund this amount. If the average “normal” billing gallons does not
stabilize in 2020, then the rates may need to be adjusted in 2021.
The State Water Connection Charge is increasing to $2.43/quarter from $1.59, so a
Resolution changing our rates will need to be adopted reflecting that increase.
SEWER
An increase for 2020 is NOT necessary to generate enough revenue for the operations of
the Sanitary Sewer Fund.
STORM SEWER
An increase is proposed for the increase in expenses that are due to the MS4 state
requirement.
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EXHIBIT A
WATER RATE ALTERNATIVES-EXAMPLES OF CUSTOMER BILLS
CURRENT WATER RATES 2019
EXAMPLES
4,500,000150,00015,000MINIMUM
WaterLARGE USERMID USERRESIDENTIALRESIDENTIAL
Tiers/1000 GALMINIMUM
0-15,999$ 2.56$ 38.41$ 38.41 $ 38.41$ 38.41 $ 38.41
16,000-50,999$ 3.35$ 117.25 $ 117.25$ -$ -
51,000-99,999$ 3.90$ 191.10 $ 191.10$ -$ -
100,000-200,000$ 4.86$ 490.86 $ 247.86$ -$ -
>200,000$ 5.78$ 24,854.00 $ -$ -$ -
$ 25,691.62 $ 594.62$ 38.41 $ 38.41
CONCLUSIONS AND RECOMMENDATONS
STATE WATER CONNECTION FEE $ 1.59$ 1.59$ 1.59 $ 1.59
PROPOSED 2020
EXAMPLES
$.15/1000 GALLON INCREASE
4,500,000150,00015,000MINIMUM
Water
LARGE USERMID USERRESIDENTIALRESIDENTIAL
Tiers/1000 GALMINIMUM
0-15,999$ 2.71 $ 40.67$ 40.67$ 40.67$ 40.67$ 40.67
16,000-50,999$ 3.50 $ 122.50 $ 122.50 $ - $ -
51,000-99,999$ 4.05 $ 198.45 $ 198.45 $ - $ -
EXHIBIT A – 2019 POSSIBLE RATE INCREASE
100,000-200,000$ 5.01 $ 490.86 $ 255.51 $ - $ -
>200,000$ 5.93 $ 25,499.00 $ -$ - $ -
TOTAL$ 26,351.48 $ 617.13 $ 40.67$ 40.67
% INC OVER 2019 RATE2.57%3.79%5.88%5.88%
STATE WATER CONNECTION FEE **$ 2.43$ 2.43$ 2.43 $ 2.43
**The State Water Connection fee is increasing so a RATE RESOLUTION will need to be adopted to incorporate that
increase into the above rates.
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