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HomeMy WebLinkAbout2010 10-25 CCM Work Session MINUTES OF THE PROCEEDINGS OF THE CITY COUNCIL/ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF BROOKLYN CENTER IN THE COUNTY OF HENNEPIN AND THE STATE OF MINNESOTA WORK SESSION OCTOBER 25, 2010 CITY HALL — COUNCIL/EDA CHAMBERS CALL TO ORDER The Brooklyn Center City Council/Economic Development Authority (EDA) met in Work Session called to order by Mayor/President Tim Willson at 7:51 p.m. ROLL CALL Mayor /President Tim Willson and Councilmembers /Commissioners Kay Lasman, Tim Roche, Dan Ryan, and Mark Yelich. Also present were City Manager Curt Boganey, Public Works Director /City Engineer Steve Lillehaug, Assistant City Manager /Director of Building and Community Standards Vickie Schleuning, Carla Wirth, TimeSaver Off Site Secretarial, Inc. GRADUATED SANITARY UTILITY RATE STUDY Discussion continued on the graduated sanitary utility rate study. City Manager Curt Boganey explained the revenue generated would vary significantly from user to user. The City will need to determine, to some degree, distribution of various sized users to estimate what the appropriate aggregate revenue would be. Director of Fiscal and Support Services Dan Jordet reviewed the percentage of water usage based on property use. Mayor/President Willson complimented Mr. Jordet on this analysis, noting the goal is not to create a revenue generator. The Council/EDA addressed the status of water treatment, which used to be mentioned periodically. Mr. Boganey stated it used to come up in the past because the EPA rules were adopted and Minnesota requirements for potable water have become more stringent. In addition, as technology developed to assess water quality, more things are found that can be treated which generates additional regulation. Mr. Jordet presented 2005 rates, updated to 2009, and rates for different household scenarios, noting this gives an idea of the percentage of change this billing method, based on consumption, will result in. Mr. Boganey noted this analysis uses real accounts but may not be typical of a particular family. Mr. Jordet agreed it is not a representative sample. The Council/EDA discussed the benefit of providing residents with information on best management practices such as water efficient shower heads. It also discussed that the City does not want to discourage residents from watering their lawns. Mr. Jordet explained that when determining an average usage, the months of highest and lowest water usage would not be used. Mr. Boganey stated the objective is to identify the period of time 10/25/10 -1- when the water being consumed is also going into the sanitary sewer and not for some other use. The Council/EDA indicated this is a move in the right direction. Mr. Jordet reviewed an analysis including personnel and operations in the fixed charge, resulting in $13.15 and $2.73 per 1,000 gallons consumption charge. The next analysis included personnel, operations, and average capital into the fixed charge, resulting in $33.89 per quarter fixed charge and $1.85 per 1,000 gallons consumption charge. He explained how the Metropolitan Council calculates sewage rates based on the previous year. Mr. Jordet presented another analysis that included capital because that is also a fixed charge. He noted the more that is put into fixed charge, the less shock on the higher users to make up for the reductions that the lower users get, yet generate the same level of revenue. Councilmember /Commissioner Ryan stated his concern that while it may be appropriate to significantly increase the charge to households with higher water consumption and sewer flow, he thinks there will be a lot of residents who will not accept this change. He asked if there is a way that is reasonable and equitable to flatten out and mitigate that impact. Mr. Boganey stated the City will not hear from the accounts that get the big reduction and noted these rates show the most scientific relationship between fixed and variable costs. He pointed out that the 2005 Rate Study is the most accurate in allocating expenditures between fixed and variable but that is the one farthest away from what the City is doing now and would make for some significant cost shifts. Councilmember /Commissioner Lasman noted it is related to fixed and consumption charges but also in a way that is more reflective in the 2005 Rate Study where you pay for what you are using. She felt the City needed to find a balance because seniors and snowbirds are now paying more and higher water users are getting the discount. Mayor /President Willson agreed and noted the 2005 Rate Study addressed "pay as you use" but also talked about conservation and to provide an incentive to conserve usage. Councilmember /Commissioner Yelich stated it seems this approach would compliment or supplement the City's conservation water rate which has already been implemented and be an additional incentive for less water consumption. He noted there is a benefit to the City as a whole since it has less than optimal water storage and additional storage would be a cost to the whole City. Mayor /President Willson stated when the new system was installed, the City anticipated it would be able to find leaks. Mr. Jordet advised that Public Works has indicated that leaks have been identified. Mr. Boganey stated the City has sent letters to the property owners regarding possible leaks. Mr. Jordet stated he will prepare scenarios with variables and provide as much information as possible so the Council/EDA is comfortable with its decision. Mr. Jordet requested Council /EDA direction on the following: what consumption indicator to use, what to include in the fixed charge, what to include in the consumption charge, and what to do about senior rates. 10/25/10 -2- Staff would like to set up the system before the end of the year so it can be explained to residents. The billing implementation may go into the second quarter of 2011 because the software will have to be modified and tested. Councilmember /Commissioner Yelich stated he wanted to simplify the administrative process. He asked whether the City would need to hire a consultant every few years to determine fixed cost or if the City would start at this point and make periodic percentage adjustments. Mr. Jordet stated between Finance and the Public Works Department, staff can create a spreadsheet with detailed information or an outside consultant could be hired. Mr. Boganey stated if the model is adjusted from year to year, a consultant may not be needed more than once every ten years. The Council/EDA discussed whether additional storage capacity is needed. Mr. Jordet clarified that this matter deals with sewer rates, not water storage capacity, and redistributing the cost to users in a more equitable fashion. He advised that costs will remain about the same for the sanitary sewer system, depending on the Metropolitan Council rates. Mr. Jordet stated the more detailed the study gets, the lower the fixed charge will be and the more the City will depend on the consumption charge. He asked whether the Council/EDA supported a heavier fixed charge or a heavier consumption charge. Councilmember /Commissioner Roche stated he favors developing a graduated sanitary utility rate and thinks personnel, operations, and capital should be included in the fixed charge. He supports a heavier consumption charge. Councilmember /Commissioner Ryan supported a heavier fixed charge because it will have less impact on households of larger families even if senior users would slightly subsidize those households. Mr. Jordet stated staff looked at "equitable" in two ways: tied into the formula and also stress based on income levels. Mayor /President Willson supported a heavier consumption rate because it is more equitable to pay for what you use than a flat rate, which would also result in less conservation. Councilmember /Commissioner Lasman supported paying for what you use and felt the 2005 Rate Study most closely relates to that method. She noted that fixed costs are still much higher per quarter and that is not controllable but there are some things a household can do to reduce consumption. Councilmember /Commissioner Lasman stated there are some educational opportunities for higher usage consumers to change habits in a positive way, noting it would also teach their children more positives methods of using water. Councilmember /Commissioner Yelich favored the 2005 Rate Study approach with smaller fixed costs and a larger consumption costs. He noted the City will need to do an analysis on distribution of different uses and there is a need for a longer view approach. He felt a graduated rate was another tool to encourage being more conscious of how you use resources and the cost to the City to deliver sewage services and water. 10/25/10 -3- Public Works Director /City Engineer Steve Lillehaug addressed the cost to provide additional water storage and to maintain water towers. He advised that the City's water system has adequate capacity at this time. Mayor/President Willson stated the need for new capital equipment is another good incentive for the City to encourage conservation. Mr. Boganey agreed that controlling the demand is important. Mr. Jordet summarized the Council's discussion. Mr. Boganey stated it is fair to assume the City wants to remove the cost from the sewer rates that is not attributable to water going into the sanitary sewer system. The Council/EDA indicated that is correct. Councilmember /Commissioner Ryan indicated he was basically in agreement to weight towards usage but would like staff to present an analysis on a variation that would weigh more in fixed costs for the reasons he outlined earlier. Mr. Boganey stated a strong majority of the Council/EDA is leaning in the other direction. The Council /EDA did not support staff preparing that analysis. It was the consensus of the City Council /EDA to direct staff to gather data on Brooklyn Center's consumption patterns as a basis for determining graduated sanitary sewer charges, to support a conservation incentive, consumption based sewer rates, and a program of education. ADJOURNMENT Councilmember /Commissioner Roche moved and Councilmember /Commissioner Lasman seconded adjournment of the City Council/Economic Development Authority Work Session at 8:58 p.m. Motion passed unanimously. 10/25/10 -4- STATE OF MINNESOTA) COUNTY OF HENNEPIN) ss. Certification of Minutes CITY OF BROOKLYN CENTER) The undersigned, being the duly qualified and appointed City Clerk of the City of Brooklyn Center, Minnesota, certifies: 1. That attached hereto is a full, true, and complete transcript of the minutes of a Work Session of the City Council of the City of Brooklyn Center held on October 25, 2010. 2. That said meeting was held pursuant to due call and notice thereof and was duly held at Brooklyn Center City Hall. 3. That the City Council adopted said minutes at its November 8, 2010, Regular Session. City Clerk Mayor 10/25/10 -5-