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Minutes <br /> City Council Work Session <br /> Monday, August 25, 2025, 4:00 PM <br /> 1 <br /> tqIP(:---?-tkESHo�``` City Council Chambers 12780 Kelley Parkway, Orono,MN 55356 <br /> ROLL CALL <br /> Council members present: Mayor Bob Tunheim, Alisa Benson, Jacqueline Ricks, Steve Persian, Jon <br /> Schwingler. <br /> Staff present: City Administrator Adam Edwards, Finance Director Maggie Jin, Accountant Anne <br /> Hentges, City Clerk Christine Lusian, Parks and Facilities Superintendent Joe Ruthenberg, Public <br /> Works Superintendent DJ Goman, and Abdo Financial Solutions CPA Justin Nilson. <br /> UTILITY RATE STUDY <br /> Nilson presented a utility rate plan designed to meet cashflow goals, with the study emphasizing <br /> data-driven recommendations to ensure adequate reserves and long-term stability. Water remains the <br /> most pressured utility,with declining revenues and reserves not projected to reach targets until 2032, <br /> driving a proposed 15% rate increase and acknowledgment of future treatment plant needs. The <br /> sewer and stormwater funds are more stable, with modest increases (3%for sewer and 10% initially <br /> for stormwater, followed by 5% annually) expected to maintain positive cash flow by 2030. <br /> Key challenges include Orono's low density, limited commercial base, and high fixed infrastructure <br /> costs, all of which constrain revenue growth. The average water customer uses about 4,000 gallons <br /> per month, resulting in a utility bill of roughly$141 that covers water, sewer, stormwater, and <br /> recycling. Because new homes are not required to connect to municipal water and only about 30% of <br /> residents use the system(most rely on private wells), the financial burden is carried by a relatively <br /> small group of users. Options beyond rate increases, such as connection fees, assessments, or levy <br /> support, were discussed and staff were directed to model alternatives to the 15%water rate increase. <br /> ENTERPRISE FUND BUDGET <br /> In the 2026 enterprise fund budget, challenges are driven by inflation, union negotiations,paid <br /> family medical leave requirements, health insurance, as well as rising information technology and <br /> facilities priorities. While cable fund revenues continue to decline and training and development <br /> costs rise with staff turnover, golf course green fees have remained stable. The Metropolitan Council <br /> wastewater fee increase (5.85%) may be split out for transparency. The next steps in the budget <br /> process include a September 8 work session on the general and internal service funds, followed by <br /> adoption of the preliminary budget and levy on September 22. <br /> ADJOURNMENT <br /> Work session ended at 5:51 p.m. <br /> ATTEST: CITY COUNCIL <br /> qa----L____. <br /> Chris ' usia , Clerk Bob Tunheim, Mayor <br />