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Home My WebLink About13.F.2. 2010 Sewer and Storm Utility Budgets and Rates /3,P.). CITY OF SHAKOPEE Memorandum TO: Mayor and Council Mark McNeill, City Administrator FROM: Gregg Voxland, Finance Director SUBJ: 2010 Sewer and Storm Utility Budgets and Rates DATE: October 22, 2009 Proposed for inclusion in the 2010 Fee Schedule are rate changes for the Sewer Fund and the Storm Fund. The city's operational budget for the two funds is similar to this year with increasing costs to maintain the storm drainage system. The capital expenditures for the funds were reviewed with the Capital Improvement Plan. Financial position (cash and investments) of the utility funds are measured against the accumulated depreciation of the assets in those funds. This excludes the trunk account portion of monies in the funds. Council was advised by former auditors Delloitte and Touche to have at least as much cash saved as accumulated depreciation to pay for at least part of the replacement cost of depreciating assets. Sewer Fund It is proposed that the base fee of $7.50 per billing cycle be decreased to $7.00. This would be a decrease in revenue of about $58,000. Decreasing this part of the rate structure has a greater relative benefit to small users (residential accounts) than larger users. This supports conservation efforts by relying more on the flow fee. It is recommended to increase the flow charge for sewer. The 2009 flow charge is $1.70 per thousand gallons and it is recommended to increase it to $1.98 to match the Metropolitan Council Environmental Services treatment rate. Based on the cash position of the fund, the city flow rate did not changed for 2008 and therefore for 2009 it continued at a nickel less than the MCES rate. Total service charge revenue is down 4%. Also, the billable flow is decreasing (less water used). One percent of the flow fee is about $15,000. Forecasting revenue is difficult due to the effects of Rahr's flow and the effects of infiltration, inflow, growth, Rahr Malting, current economic declines and weather. Metropolitan Council (MCES) is raising the treatment charge from $1.75 per thousand gallons to $1.98 per thousand gallons for an increase of 13.0%. A change in the cost allocation and SAC charge fee calculations impacted the rate increase. The treatment cost for 2010 is budgeted at $2,383,450. With the proposed flow rate increase, an average residential user's bill would go from $19.4 per month to $20.86 total for both flat fee and flow fee based on 7,000 gallons per month (7.5% 1 . increase). The rate for Whispering Oaks is higher because it flows to the Savage collection system. Metro SAC credits for Rahr coming off line are shown in the budget. An estimated $300,000 is shown. The city will be receiving this money ($3,000,000) over a number of years as SAC charges are collected with building permits but because of the credit, the city keeps the money instead of sending it to the Met Council. The money is included in the Sewer Fund. Council should discuss the use or disposition of this money. The money should stay and be used on the sewer fund or for sewer purposes. One thought staff had was to "set aside" this money for the future replacement of lift station L-16 (main city lift station). The Sewer Fund has shown an operating loss in recent years but after including other income such as interest income, it has a positive net income. Operating income is basically sales (service charges) less the cost of sales (wages, supplies, treatment and depreciation but excluding capital expenditures) to show how an on-going business operation is profitable based on just operations. Net income adds in non-operating revenues and expenses such as interest income or expense for more of a total bottom line result. Due to interest income on cash balances, the Sewer Fund has shown a positive net income (not losing money overall). Sewer Fund Alternatives 1. Maintain same base rate as 2009. 2. Decrease base rate $0.50. 3. Maintain same flow rate as 2009. 4. Charge same flow rate as MCES ($1.9S). 5. Adopt different rates. Surface Water (Storm) Fund A decrease in the rate is recommended at this time. The current rate per month is $2.92 for a residence. An 8% decrease from $2.92 to $2.69 is recommended based on the financial position ofthe fund at this time. A single family house is one third of an REF (residential equivalence factor). This fund also has shown an operating loss but after including other income such as interest income, it has a positive net income. Surface Water (Storm) Alternatives 1. Maintain rates the same as 2009. 2. Decrease Storm rates 8%. 3. Adopt different rates. Recommendations 1. Reduce the flat rate for sewer $0.50 and increase the flow rate by $0.28. 2. Reduce storm rate by 8%. 2 Action requested Move to accept the Sewer and Surface Water Funds budgets and direct staff to include in the 2010 Fee Schedule the rates of: $7.00 for the Sewer base rate. Sewer flow fee of $1.98 per 1}000 gallons of water use/flow and $3.26 for those accounts served by City of Savage sewer system. $8.07 per residential equivalent factor per acre per billing cycle for the Surface Water Fund. Gregg Voxland Finance Director 3 City of Shakopee Sewer Fund Pro Forma 2007 2008 2009 2010 2011 Actual Actual Budaet Estimated Estimated Operating Revenues $ 2,610,312 $ 2,355,716 $ 2,482,000 $ 2,585,700 $ 2,595,200 Operating Expenditures 320,743 429,962 580,510 579,150 608,108 Treatment Charges 1,952,666 2,167,407 2,118,490 2,383,450 2,434,400 Depreciation 665,545 707,395 885,000 750,000 750,000 Operating Income (Loss) (328,642) (949,048) (1,102,000) (1,126,900) (1,197,308) Non Operating Income 1,178,214 1,000,352 845,800 675,000 630,000 Rahr SAC Credits - 93,075 230,000 300,000 300,000 Non Operating Expense - (4,000) - - - Net Income Before Transfers $ 849,572 $ 140,379 $ (26,200) $ (151,900) $ (267,308) Transfer to General Fund $ 25,000 $ 25,000 $ 50,000 $ 50,000 $ 50,000 Surface Water Pro Forma 2007 2008 2009 2010 2011 Actual Actual Budaet Estimated Estimated Operating Revenues $ 1,266,358 $ 1,265,374 $ 1,279,600 $ 1,155,000 $ 1,160,000 Operating Expenditures 592,995 787,739 459,200 782,270 782,270 Depreciation 759,083 647,637 800,000 680,000 680,000 Operating Income (Loss) (85,720) (170,002) 20,400 (307,270) (302,270) Non Operating Income 1,111,760 934,741 529,000 523,220 525,630 Non Operating Expense - - - - - Net Income Before Transfers $ 1,026,040 $ 764,739 $ 549,400 $ 215,950 $ 223,360 Transfer to General Fund $ 48,040 $ 48,040 $ 50,000 $ 50,000 $ 50,000 4 SANITARY SEWER FUND 2010 -11 BUDGET ACTIVITY: Activity in this enterprise fund reflects the operations of the Municipal Sanitary Sewer System. OBJECT DESCRIPTION: Description of lines items: Salaries: Share of Public Works staff/Engineering staff. Supplies and Materials: Repair and maintain current sewer lines including; manhole replacement, repairing lines, GIS/Computer Asset Management System software and hardware, motor fuels, safety equipment, manhole inspection camera, GPS unit for vehicle and supplies, miscellaneous. Professional Services: Attorney, engineering consultant for projects $40,000, televising, foaming $20,000, lining of sewer mains, Lift Station Maintenance I Gopher State One Call $5,000, GIS/CAMS consultant, emergency call center service. Rentals: Building rent and equipment rent. Utility Service: Lift stations, payment to Savage for Whispering Oaks sewer. MCES Treatment Cost: Metro Council Environmental Services. Depreciation: Includes equipment and infrastructure. Capital Expenditures: Projects per CIP, truck 1Ton, $55,000 (2010) , Jetter Vac, $250,000 (2011) Equipment in Sewer Fund: 1993 Ford high pres. Jetter $ 54,527 2000 Ford 1.5 T P/U w/Hoist 52,860 2002 Versa-Vac 60,300 2006 Ford F350 W/Plow 26,369 2007 Sterling Acterra - Jetter 127,612 5 Sanitary Sewer Fund Projected Cash levels 2010-2014 Capital Improvement Program City of Shakopee, Minnesota 2009 2010 2011 2012 2013 2014 TRUNK: Cash Balance January 1 $ 957,711 $ 677,711 $ 772,711 $ 847,711 $ 922,711 $ 1,017,711 Revenue - City SAC 50,000 75,000 75,000 75,000 75,000 75,000 Revenue - Trunk Charges 20,000 20,000 350,000 200,000 20,000 580,000 Expenditures per List-SEWER-T (350,000) (350,000) (200,000) (580,000) Excess (Deficiency) (280,000) 95,000 75,000 75,000 95,000 75,000 Balance Available 12/31 677,711 772,711 847,711 922,711 1,017,711 1,092,711 BASE: (j) Cash Balance January 1 12,044,219 12,157,019 11,386,419 10,758,934 10,253,113 10,290,270 Revenue - Monthly Flat Fee 865,200 808,100 828,100 844,662 861,555 878,786 Revenue - Flow charges 1,616.800 1,673,900 1,757,595 1,845,475 1,937,748 2,034,636 Metro SAC Credits 230,000 300,000 300,000 300,000 300,000 300,000 Revenue - Interest 775,800 450,000 425,570 406,230 391,150 395,780 Operation Expenses (521,510) (559,150) (634,350) (666,068) (699,371 ) (734,339) Treatment Costs (2,118,490) (2.383,450) (2,434,400) (2,556,120) (2,683,926) (2,818,122) Capital Equipment (15,000) (55,000) (250,000) Transfer to General Fund (50,000) (50,000) (50,000) (50,000) (50,000) (50,000) Expenditures per List-SEWER-B (670,000) (955,000) (570,000) (630,000) (20,000) (50,000) Excess (Deficiency) 112,800 (770,600) (627,485) (505,821 ) 37,157 (43,259) Balance Available 12/31 12,157,019 11,386,419 10,758,934 10,253,113 10,290,270 10,247,011 Total Balance 12/31 $ 12,834,730 $ 12,159,130 $ 11,606,645 $ 11,175,824 $ 11,307,981 $ 11,339,722 Accumulated Depreciation $ 8,466,363 $ 9,176,363 $ 9,886,363 R5509BUD SH001 PV CITY OF SHAKOPEE 10/29/200912:25:31 By Company (pb), Object (2 Yr Bdgt) - Portrait Budget Report Page - 1 Fiscal Period: 9 / 09 Level Of Rollup 6 2007 2008 9/30/2009 2009 2010 2011 Actual Actual YTD Final Proposed Proposed Object Code I Description Amount Amount Actual Budget Budget Budget - _._----~ --_._~_._._-_.- 07100 SEWER FUND 4000 REVENUES AND EXPENDITURES 4001 REVENUES 4005 TAXES 4100 SPECIAL ASSESSMENT 4110 SPECIAL ASSESSMENT PRINCIPAL 261- 24,986- 4111 SPEC ASSESSMENT INTEREST 29,503- 22,579- 19,359- 15,00D- 10,000- 4120 SA PREPAY 26,077- ---~--.--_.._- "--,---.---. --"-- _m___ -_._..---_.~-~----- .-- --- 4100 SPECIAL ASSESSMENT 29,765- 22,579- 70,421- 15,00D- 10,000- 4200 LICENSES AND PERMITS 4400 INTERGOVERNMENTAL 4500 CHARGES FOR SERVICE 4720 SEWER CHARGES 2,801,345- 2,556,259- 2,179,029- 2,782,000- 2,716,000- 2,809,000- 4500 CHARGES FOR SERVICE 2,801,345- 2,556,259- 2,179,029- 2,782,000- 2,716,000- 2,809,000- 4830 MISCELLANEOUS 4832 INVESTMENT INCOME 957,416- 777,230- 34,553 775,800- 600,000- 550,000- --- 4830 MISCELLANEOUS 957,416- 777,230- 34,553 775,800- 600,000- 550,000- 4970 CAPITAL CONTRIBUTIONS 4971 CAPITAL CONTRIBUTIONS 3,280,993- 603,716- 4970 CAPITAL CONTRIBUTIONS 3,280,993- 603,716- -- -" 4001 REVENUES 7,069,519- 3,959,785- 2,214,897- 3,557,800- 3,331,00D- 3,369,000- 6000 EXPENDITURES 6001 WAGES & BENEFITS 6002 WAGES 87,683 169,379 135,178 147,070 189,280 189,280 6100 BENEFITS 72,870 62,829 53,636 49,640 83,450 85,770 6001 WAGES & BENEFITS 160,553 232,208 188,814 196,710 272,730 275,050 6200 SUPPLIES AND SERVICES 6201 SUPPLIES & SERVICES 40,878 24,594 23,735 51,500 55,500 55,500 6300 PROFESSIONAL SERVICES 69,610 120,001 62,751 185,000 155,000 155,000 6330 COMMUNICATIONS 1,479 1,949 2,292 2,000 2,400 6,000 6350 INSURANCE 18,809 30,245 21,175 27,500 26,000 26,000 6360 UTILITY SERVICE 1,952,666 2,167,407 1,629,395 2,194,490 2,383,450 2,503,400 6400 RENTALS 9,972 10,872 14,493 18,000 23,720 24,000 6470 DUESITRAININGITRAVEL 4,043 2,256 2,012 6,800 6,800 6,800 6498 EXPENSE CHARGED BACK 15,400 7,837 17,000 17,000 17,000 6200 SUPPLIES AND SERVICES 2,112,856 2,365,161 1,755,853 2,502,290 2,669,870 2,793,700 6500 DEPRECIATION 6501 DEPRECIATION EXPENSE 665,545 707,395 885,000 750,000 750,000 6500 DEPRECIATION 665,545 707,395 885,000 750,000 750,000 6600 MISCELLANEOUS 6610 AWARDS & DAMAGES 5,200 6600 MISCELLANEOUS 5,200 6700 CAPITAL OUTLAY 6740 EQUIPMENT 10,000 55,000 250,000 6760 IMPROVEMENTS 223,373 7 R5509BUD SH001 PV CITY OF SHAKO PEE 10/29/200912:25 :31 By Company (pb), Object (2 Yr Bdgt) - Portrait Budget Report Page - 2 Fiscal Period: 9 1 09 Level Of Rollup 6 2007 2008 9/30/2009 2009 2010 2011 Actual Actual YTD Final Proposed Proposed Object S:~ode I ~:scrip!ion Amount Amount Actual Budget Budge! Budge! --------.- ,"-- ~-_._---- -----.-- 6700 CAPITAL OUTLAY 223,373 10,000 55,000 250,000 6800 DEBT SERVICE .._---~ __...u........._ ---'-~-- _.'~-.' 6000 EXPENDITURES 2,938,954 3,304,764 2,173,239 3,594,000 3,747,600 4,068,750 8005 TOTAL TRANSFERS IN 8010 OPERATING TRANSFERS IN 8050 TOTAL TRANSFERS OUT 8052 TRANSFERS OUT 8053 TRANSFERS OUT 245,892 25,000 50,000 50,000 50,000 8056 OPERATING TRANSFER/CAPITAL FD 14,819 -~--"--"-~- ----------._-- ....-."--- ---- 6052 TRANSFERS OUT 245,892 39,819 50,000 50,000 50,000 --~~._~. ------ ---------- 8050 TOTAL TRANSFERS OUT 245,892 39,819 50,000 50,000 50,000 8100 GAINILOSS ON DISPOSAL OF ASSET 8101 PROCEEDS FROM SALE (GAIN/LOSS) 8102 NET BOOK VALUE 4,000 -----~_.~-- --'-- ---- ------ 8101 PROCEEDS FROM SALE (GAIN/LOSS) 4,000 ----.._--- ---...'.- -----~ __.__m.,___ 8100 GAIN/LOSS ON DISPOSAL OF ASSET 4,000 4000 REVENUES AND EXPENDITURES 3,884,673- 611,202- 41,658- 86,200 466,600 749,750 - - - 07100 SEWER FUND 3,884,673- 611,202- 41,658- 86,200 466,600 749,750 8 SURFACE WATER FUND 2010-11 BUDGET ACTIVITY: Activity in this enterprise fund reflects the operations of the Municipal Storm Drainage System. OBJECT DESCRIPTION: Description of lines items: Salaries: Share of Public Works staff/Engineering staff. Supplies and Services: Materials for maintaining/repairing storm sewer facilities, GIS/CMMS software and hardware, GPS unit for vehicle, motor fuels. Professional Services: Engineering consultant to update storm water plans, storm water model, review of storm water utility policy and procedures and rate study, water quality monitoring study in infiltration areas and downtown area, GIS/CMMS consultant service, Gopher State One Call. Rentals: Building Rental ($15,000) and equipment rental. Utility Service: ($1,000) . Depreciation: Includes equipment and infrastructure. Capital Expenditures: Projects per CIP. Equipment in Surface Water Fundi 2002 Leaf collection sys $ 30,507 2003 Street Sweeper 127,653 2005 Tanker truck 109,139 2005 Terratrac TT75 mower 90,268 2008 Bobcat S185 24,280 2008 JD 6430/mower 94,167 2009 Regenerative sweeper 175,000 9 Surface Water Fund Projected Cash levels 2010-2014 Capital Improvement Program City of Shakopee, Minnesota TRUNK: 2009 2010 2011 2012 2013 2014 Cash Balance January 1 $ 5,223,759 $ 4,918,759 $ 4,938,759 $ 4,673,759 $ 4,693,759 $ 4,713,759 Revenue - Trunk Charges 20,000 20,000 20,000 20,000 20,000 20,000 Expenditures per List-Storm- T (325,000) (285,000) Excess (Deficiency) (305,000) 20,000 (265,000) 20,000 20,000 20,000 Balance 12/31 4,918,759 4,938,759 4,613,759 4,693,759 4,713,759 4,733,759 BASE: Cash Balance January 1 9,240,646 10,030,296 10,157,246 10,545,856 10,993,396 11,474,012 Revenue - User Fees 1,279,600 1,155,000 1,160,000 1,171,600 1,183,316 1,195,149 ...... Revenue - Grant - - - - - 1,000,000 0 Revenue - Interest 506,250 523,220 528,360 532,690 549,050 566,570 Operation Expenses (476,200) (704,270) (756,750) (756,750) (756,750) (756,750) Capital Equipment (190,000) (275,000) Transfer to General Fund (50,000) (50,000) (50,000) (50,000) (50,000) (50,000) Expenditures per List (280,000) (797,000) (493,000) (450,000) (170,000) (1,310,000) Expenditures per List - Grant (1,000,000) Excess (Deficiency) 789,650 126,950 388,610 447,540 480,616 (355,031 ) Balance 12/31 10,030,296 10,157,246 10,545,856 10,993,396 11,474,012 11,118,981 Total Balance 12/31 $ 14,949,055 $ 15,096,005 $ 15,219,615 $ 15,687,155 $ 16,187,771 $ 15,852,740 Accumulated Depreciation $ 8,790,311 $ 9,440,311 $ 10,090,311 R5509BUD SH001PV CITY OF SHAKOPEE 10/29/2009 8:50:43 By Company (pb), Object (2 Yr Bdgt) - Portrait Budget Report Page - 1 Fiscal Period: 9 / 09 Level Of Rollup 6 2007 2008 913012009 2009 2010 2011 Actual Actual YTD Final Proposed Proposed Object Code I Description Amount Amount Actual Budget Budget Budget _0.__________ 07300 SURFACE WATER FUND 4000 REVENUES AND EXPENDITURES 4001 REVENUES 4005 TAXES 4100 SPECIAL ASSESSMENT 4200 LICENSES AND PERMITS 4400 INTERGOVERNMENTAL 4500 CHARGES FOR SERVICE 4740 STORM DRAINAGE 1,489,66B- 1,379,821- 837,574- 1,299,600- 1,239,000- 1,199,000 _._--~-----_._- ."- 4500 CHARGES FOR SERVICE 1,489,668- 1,379,821- 837,574- 1,299,600- 1,239,000- 1,199,000 4830 MISCELLANEOUS 4832 INVESTMENT INCOME 888,450- 820,293- 41,378 509,000- 600,000- 580,000 -_._----~- 4830 MISCELLANEOUS 888,450- 820,293- 41,378 509,000- 600,000- 580,000 4970 CAPITAL CONTRIBUTIONS 4971 CAPITAL CONTRIBUTIONS 693,194- 13,800- ---~~_._- 4970 CAPITAL CONTRIBUTIONS 693,194- 13,800- --.- ---.-.-----------.-- _.- 4001 REVENUES 3,071,312- 2,213,915- 796,196- 1,808,600- 1,839,000- 1,779,000 6000 EXPENDITURES 6001 WAGES & BENEFITS 6002 WAGES 160,897 228,211 196,425 174,920 239,150 239,150 6100 BENEFITS 56,742 80,590 71,362 49,180 103,900 106,600 -------- 6001 WAGES & BENEFITS 217,639 308,800 267,787 224,100 343,050 345,750 6200 SUPPLIES AND SERVICES 6201 SUPPLIES & SERVICES 104,774 42,144 37,842 57,500 74,900 74,900 6300 PROFESSIONAL SERVICES 221,912 406,919 100,575 140,000 230,000 280,000 6330 COMMUNICATIONS 1,484 1,796 1,233 2,500 2,500 2,500 6350 INSURANCE 7,834 5,968 12,277 9,700 12,200 12,200 6360 UTILITY SERVICE 943 1,015 594 1,000 1,000 1,000 6400 RENTALS 21,232 12,371 14,493 20,000 21,220 21,000 6470 DUESITRAININGITRAVEL 1,778 888 361 4,400 4,400 4,400 6498 EXPENSE CHARGED BACK 15,400 7,837 15,000 15,000 6200 SUPPLIES AND SERVICES 375,357 478,939 167,374 235,100 361,220 411,000 6500 DEPRECIATION 6501 DEPRECIATION EXPENSE 759,083 647,637 800,000 680,000 680,000 6500 DEPRECIATION 759,083 647,637 800,000 680,000 680,000 6600 MISCELLANEOUS 6700 CAPITAL OUTLAY 6740 EQUIPMENT 190,000 6760 IMPROVEMENTS 7,428 550,000 6700 CAPITAL OUTLAY 7,428 740,000 6800 DEBT SERVICE 6000 EXPENDITURES 1,352,079 1,435,376 442,590 1,999,200 1,384,270 1,436,750 11 R55098UD SHOO1PV CITY OF SHAKOPEE 10/29/2009 8:50:43 By Company (pb), Object (2 Yr Bdgt) - Portrait Budget Report Page - 2 Fiscal Period: 9 / 09 Level Of Rollup 6 2007 2008 9/30/2009 2009 2010 2011 Actual Actual YTD Final Proposed Proposed Object Code I Description Amount Amount Actual Budget Budget Budget ----- -- 8005 TOTAL TRANSFERS IN 8010 OPERATING TRANSFERS IN 8050 TOTAL TRANSFERS OUT 8052 TRANSFERS OUT 8053 TRANSFERS OUT 191,285 48,040 50,000 50,000 50,000 8056 OPERATING TRANSFER/CAPITAL FD 24,293 --.'-.-...- ---_.~ ----~._---- -~---~.- 8052 TRANSFERS OUT 191,285 72,333 50,000 50,000 50,000 - __..__. _u.____ ___'~_~ __~._ . ".<___' 8050 TOTAL TRANSFERS OUT 191,285 72,333 50,000 50,000 50,000 8100 GAIN/LOSS ON DISPOSAL OF ASSET 8101 PROCEEDS FROM SALE (GAIN/LOSS) --~------ ------ ----- 4000 REVENUES AND EXPENDITURES 1,527,949- 706,205- 353,606- 240,600 404,730- 3,265,750 ---.---- -- - 07300 SURFACE WATER FUND 1,527,949- 706,205- 353,606- 240,600 404,730- 3,265,750 12