11-24-2014 Council Minutes - Laserfiche WebLink

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MINUTES OF THE ORONO CITY COUNCIL MEETING Monday, November 24, 2014 7:00 o’clock p.m. _____________________________________________________________________________________ Page 2 of 21 (5. 2015 FEE SCHEDULE – ORDINANCE NOS. 128 AND 129 (Summary Publication), continued) Olson said regarding the water increase, the base fee would increase to $34.54, which is a $3.42 increase. For a household that uses 25,000 gallons, the quarterly increase would amount to $12.22. Olson noted some homes will use less than that and some homes will use significantly more than that, but the Metropolitan Council has determined that the average family uses 25,000 gallons per quarter. Olson stated for the municipal sewer, a residential customer is charged a flat fee based on units, and 99 percent of Orono residents are only charged one unit. With a 4 percent increase, the average resident will see an increase of $5.60 over 2014 to $130.04 in 2015. The increase in the stormwater fee would amount to $1.58 per quarter in 2015 over 2014. The recycling fee increase would result in an additional $2.89 annually. Olson noted the City Council has proposed the increased rates due to operating budget deficits. The operating expenditures for the water budget in the 2015 will be operating at a $91,000 loss even with the 11 percent increase. Olson stated part of the shortfall is due to the fact that the City did not attempt to cover depreciation in its rates. In 2009, a rate study was done and was calculated to cover 75 percent of depreciation with the rates. Orono is now attempting to cover 100 percent of depreciation with rates. Olson stated what that means is when the City does improvements to the water system; in theory the City would not require special assessments. Olson said as it relates to sewer, in 2015 a $124,000 loss is being projected even with the increase. Part of the reason is the Metropolitan Council Environmental Services is increasing the City’s fee for I & I by $89,000. Olson stated the City Council feels that will be a one-time charge and resulted from the very heavy rains experienced earlier this summer and the inflow and infiltration in the City’s system. The City Council has decided they are not going to try to adjust the City’s rates to cover that. Olson stated for the storm sewer, the City is projecting an increase in operating profits of $89,000 as a result of the fee increase. This fund mainly exists to pool money to pay for state and federal mandated stormwater projects. In the future the City will need to pay for cleaning of stormwater ponds and disposing of the sediment that is removed from the stormwater ponds. Olson noted those fees are very expensive. According to the City’s 2009 rate study, those fees need to increase by approximately 10 percent to meet the needs in the future. Olson said in regards to the recycling budget, the City is projecting an operating profit of $150. Olson stated part of that is the City receives a credit on their bill for the recycled materials picked up by the recycling company. Olson stated the bottom of the recycling market has dropped out in the past few years and now the City’s RMO is zero. Olson stated the City now needs to offset that, especially given the fact that this is a brand-new fund. Council Member Printup asked the Finance Director Olson to further explain the Metropolitan Council fees. Olson stated when the groundwater levels are higher than the City’s pipes, any crack or gap in the pipes leads to infiltration, which is groundwater entering the pipes through the cracks. The other part of the