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Home My WebLink About2011 11-21 CCP Work Session AGENDA CITY COUNCIL /ECONOMIC DEVELOPMENT AUTHORITY WORK SESSION November 21, 2011 Immediately Following the City Council /Financial Commission Joint Work Session which begins at 6:30 P.M. Council Chambers City Hall A copy of the City Council work session packet is available to the public at the Council table. ACTIVE DISCUSSION ITEMS 1. Consumption Based Sanitary Sewer Rate PENDING LIST FOR FUTURE WORK SESSIONS Later /Ongoing 1. Random Acts of Kindness — November 28, 2011 2. Youth Participation Request — November 28, 2011 3. Neighborhood Designations — December 12, 2011 4. Fire Relief Association — December 12, 2011 5. Progress Reports on Achievement of Strategic Goals — January 2012 6. Annual Department Year End Reports — February 2012 7. Property Maintenance — Including Snow Removal — February 2012 8. National League of Cities Service Line Program — February 2012 9. Highway 252 Update — March 2012 10. Sister City Update — January 2012 11. Active Living Program — January 2012 i MEMORANDUM - COUNCIL WORK SESSION DATE: 15 November 2011 TO: Curt Boganey, City Manager FROM: Daniel Jordet, Director of Fiscal & Support Services SUBJECT: Consumption Based Sanitary Sewer Rates Recommendation: It is recommended that the City Council consider the information relating to three different scenarios for changing the sanitary sewer rates for residential properties from a flat rate system to a consumption based system. Background: Current utility billing practice is to charge residential customers a flat rate for sewer service based on one of three circumstances; a single family residential unit, an apartment and a senior citizen occupancy of a single family residential unit. Staff has been charged with preparing an analysis of the impacts of a change in the method of calculating sewer bills for residential customers. The change would charge for sewer service based on the amount of water used in the winter quarter of the billing year. A number of assumptions must be made. Those assumptions help generate results that may be analyzed to determine impacts on customers. Attached to this packet are charts and graphs showing most of the assumptions and the results generated by using those assumptions. The first page shows the general assumptions made in preparing the analysis. These assumptions were plugged into models developed using actual data for all residential utility customers in the billing system for the winter quarter of 2011, generally defined as mid - December to mid - March. Billings were calculated using the actual data and sorted for comparison and analysis. The data sheets at the front of each set of graphs (Single Family Residential and Senior Residential) show the results from the insertion of data assumptions into each of three models. The three models differ in the amount of base fee charged for sewer service ($ 10.00 per quarter, $ 20.00 per quarter or $ 30.00 per quarter) and the corresponding amount that must be charged against metered water consumption in the winter quarter to generate the required revenue. It would be my intention to review the basic assumptions with the group and then use the graphs to show the analysis of the impact of each billing calculation method on customers. In this way I would hope to elicit not only understanding of the mechanics of the models but also the policy issues involved in each method. Budget Issues: Whatever method of sewer billing calculation is adopted will need to generate the same amount of revenue in each case. Therefore there should be no effect on the formulation of the 2012 operating budget for sanitary sewer. �:ilission: Ensuring; an attraaetive, clean, safe c onununit}% that enhances the qualit of life and preserves the public trust City of Brooklyn Center Sewer Billing Data used for projections Winter Quarter Based Consumption # of Meters/ # of Current Consumption Based Accounts Units Billing per Rate Single Family Residential 6,199 6,199 65.79 unit Base Fee per unit + consumption Duplex /Bungalow single meter 8 7 65.79 unit Base Fee per Unit + consumption Townhouse 26 100 65.79 unit Base Fee per Unit + consumption Senior Sewer Rate 1,651 1,660 36.18 unit Base Fee per Unit + consumption Apartments 172 3,537 46.05 unit Base Fee per unit + account consumption Total Customer Accounts 8,056 Total Residential Units 11,503 Quarterly Income $ 637,348 Basis for Projections: Base Commodity Fee Charge Low Base Fee (2006 Study) $ 10.00 $ 3.17 per 1,000 gallons metered Mid -Range Base Fee $ 20.00 $ 2.48 per 1,000 gallons metered High Base Fee $ 30.00 $ 1.79 per 1,000 gallons metered Range of Consumption Zero 1 to 18 19 to 30 31+ Residential 141 4,209 1,283 566 Senior 50 1,447 133 21 Apartment - 6 5 161 1 City of Brooklyn Center Sewer Billing Data Single Family Residential $ 10.00 Base $ 20.00 Base $ 30.00 Base Fee - Fee Fee Line Notes Total Customers 6,199 6,199 6 199 , 199 Current Rate $ 65.79 $ 65.79 $ 65.79 per quarter Customer Bills Reduced 4,165 4,350 4,686 % of Customer Bills Reduced 67.2% 70.2% 75.6% Median Bill in Group $ 41.70 $ 47.28 $ 49.69 Median Reduction in $ $ 24.09 $ .18.51 $ 16.10 Median Reduction in % 36.6% .28.1% 24.5% Bills Increased < $ 34.21 1,538 1,404 1,253 increase to $ 100.00 from current flat rate % of Bills Increaded < $ 34.21 24.8% 22.6% 20.2% Median Bill in Group $ 79.74 $ 77.04 $ 76.54 Median Increase in $ $ 13.95 $ 11.25 $ 10.75 Median Increase in % 21.2% 17.1% 16.3% Bills Increasing > $ 34.21 496 445 260 bills more than $ 100; a 51.9% increase % of Bills Increasing > $ 34.21 8.0% 7.2% 4.2% Median Bill in Group $ 126.80 $ 124.16 $ 121.29 Median Increase in $ $ 61.01 $ 58.37 $ 55.50 Median Increase in % 92.7% 88.7% 84.4% Highest Bill $ 1,227.28 $ 972.32 $ 717.36 Consumption on Highest Bill 384 384 384 2 N N A Q) W O N A O O O O O O O O O O O O p O O O O O O O O O O O O O 1 125 249 E rD c 373 r — 497 m' 11 621 rD 745 0 L 869 993 3 ° g 1117 r' w 1241 � 1365 Ln 3 1489 r - Q O 1613 v v O 1737 C O 1861 O 1985 2109 (D (D 2233 2357 (D 2481 (D 2605 2729 2853 CrQ 2977 3101 3225 cu 3349 3 3473 3597 3721 3845 N 3969 Q 4093 (D 4217 4341 4465 — 4589 4713 4837 4961 5085 5209 5333 5457 5581 5705 5829 5953 6077 N A Q) Oo O N p O O O O O p p O O p O p O O O O O p O O O O O 1 125 s 249 a 373 - CD 497 rD 11 621 n X 745 3. 869 993 3 �• 1117 o' F 1241 s 1365 ° 3 Vr rD 1489 N 1613 m C 1737 (D fD O 1861 O 1985 W 2109 c�/1 2233 fD 2357 T 2481 fD 2605 i 2729 (/f 2853 � 2977 G 3101 fD 3225 T 3349 3473 3597 3721 3845 fD 3969 N 4093 4217 (D 4341_ 4465 � 4589 4713 4837 4961 S085 5209 5333 5457 5581 5705 5829 5953 6077 U'i Ol W O O O O O O O O O O O O O O O O O O O O O O O O O O 1 123 245 c CD 367 m 489 D 'D 611 fD 11 n ro 733 0 L 855 =3 �• c 977 C 1099' 1221 1343 v 1465 "' 3 1587 W 1709 1 rD r 831 O 1953 2075 2197 N 2319 -D TI 2441 fD 2563 M v, 2685 2807 2929 3051 3173 T 3295 cu 3417 3 3539 .� 3661 3783 CD 3905 N 4027 4149 4271 e�h 4393 4515 4637 4759 4881 5003 5125 5247 5369 5491 5613 5735 5857 5979 6101 City of Brooklyn Center Sewer Billing Data Senior Residential $ 10.00 Base $ 20.00 Base $ 30.00 Base Fee Fee Fee Line Notes Total Customers 1,651 1,651 1,651 Current Rate $ 36.18 $ 36.18 $ 36.18 per quarter # of Customer Bills Reduced 791 535 193 % of Customer Bills Reduced 47.9% 32.4% 11.7% Median Bill in Group 25.85 29.92 33.58 Median Reduction in $ $ 10.33 $ 6.26 $ 2.60 Median Reduction in % 28.6% 17.3% 7.2% # of Bills Increased < $ 29.61 670 963 1346 up to the current $ 65.79 for single family % of Bills Increaded < $ 29.61 40.6% 58.3% 81.5% Median Bill in Group 48.04 47.28 46.11 Median Increase in $ $ 11.86 $ 11.10 $ 9.93 Median Increase in % 32.8% 30.7% 27.4% # of Bills Increasing > $ 29.61 190 153 112 above the current $ 65.79 for single family % of Bills Increasing > $ 29.61 11.5% 9.3% 6.8% Median Bill in Group 79.74 77.04 74.75 Median Increase in $ $ 43.56 $ 40.86 $ 38.57 Median Increase in % 120.4% 112.9% 106.6% Highest Bill 257.26 213.44 169.62 Consumption on Highest Bill 78 78 78 6 i $10.00 Base Fee - Senior Residential 300.00 red line = existing senior rate green line = existing regular single family rate blue line = consumption based rate 250.00 200.00 150.00 100.00 50.00 o m �o rn N �n oo .� v � o m �o rn N �n oo � v � o m� rn ni v ) oo a) v Ln o N Ln oo ni N 66 r M Ln ,n �n �n � M l0 o M � Cn M rj N N M M M M w M r4 V1 t N W lD I r4 10 t\ r, r` 00 00 00 M M 0) 0 o O 1 r4 ri c-1 rl 7 $ 20.00 Base Fee - Senior Residential 300.00 red line = existing senior rate green line = existing regular single family rate blue line = consumption based rate 250.00 200.00 150.00 100.00 rrrr) 50.00 rH M RT r, lD O M l0 Gl M 1.0 Ql M lD Ql OM lD Ol N l0 Cn N lD Ql N l0 Ql N L(1 Ql N 01 N lIl Ol N L(1 00 N i11 00 N M M O N L!1 00 11'1 00 Ln LD r-1 r-1 -1 -1 N N N M M M d' d' '' Ln Ln Ln (.0 LO lU I r- r M 00 W M M M O O O .�-I `--I -1 . -I . . -I . � -4 e�-I i .�-I r�-I .--I $ 30.00 Base Fee - Senior Residential 300.00 red line = existing senior rate green line = existing regular single family rate blue line = consumption based rate 250.00 200.00 150.00 100.00 50.00 e Cr I O M to a) N Ln 00 —1 -* I\ O M LD a) N V) oo e j -t n O. M Lo al N Ln 0o r-I �t n O M to m N Ln 00 - cP r O M LD 01 N Ln o0 M to O M to al M Lo O M LD a) M LD m N LD Ol N Lo a) N 6 Ol N V1 in N Ln 0) N Vl 0) N Ln 00 N Ln 00 N Ln 00 N Ln 00 �4 Ln 00 r-i ri ci i - N N N M M M C' cP -zY Ln Ln Ln Lo to Lo r� n n 00 00 00 M Ol Ol O O O r1 � -i N N N M M M I;t d' IT ul Ln Ln W r - I r - I r-I r-I r1 i--1 r-I ri e-I r-I r-I 9 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 AUGUST 22, 2011 CITY HALL — COUNCIL 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 7:28 p.m. ROLL CALL Mayor/President Tim Willson and Councilmembers /Commissioners Carol Kleven, Kay Lasman, and Dan Ryan. Also present were City Manager Curt Boganey, Director of Fiscal and Support Services Dan Jordet, Public Works Director /City Engineer Steve Lillehaug, Director of Business and Development Gary Eitel, Assistant City Manager/Director of Building & Community Standards Vickie Schleuning, City Attorney Charlie LeFevere, and Carla Wirth, TimeSaver Off Site Secretarial, Inc. PUBLIC ART PROPOSAL — CONTINUED FROM STUDY SESSION The City Council/EDA reviewed the legal opinion provided by City Attorney Charlie LeFevere, noting the City Council/EDA could take action to amend the ordinance to recognize the distinction of murals as public art instead of a sign. City Attorney Charlie LeFevere explained the definition of "sign" in the ordinance is broad enough to include murals. He referenced his memorandum indicating the City Council/EDA could create an exception and permit public art that is defined in a way to include it only on property created by or under the supervision of a governmental entity. The City Council/EDA indicated it did not want to consider approval of the requested mural if it created a precedence. Rather, it supported action to protect the City by amending the ordinance. Mr. LeFevere explained that if the City Council/EDA agreed the current definition includes murals, then it could go ahead. However, if the City Council/EDA agreed the current definition does not include murals then it could amend the ordnance. The City Council/EDA asked if denying a mural may result in the applicant claiming a violation of first amendment rights. Mr. LeFevere described first amendment protection and explained the sign ordinance does not prohibit signs based on content except in limited ways (off- premises advertisement/commercial billboards). 'The City Council/EDA noted the current request is for a mural (public art) on the freeway sound wall by the Earle Brown School and all students would participate in its painting, which would 08/22/11 -1- improve the image of the City, create pride for students, parents, and grandparents, and be considered "art" not "signage." Mr. LeFevere explained it can still be defined as a sign under the ordinance and be permitted. However, if the City Council/EDA feels this kind of an artwork mural is appropriate, the ordinance can be amended to allow it. The City Council/EDA indicated it did not want to establish a precedence that would "open the door" to privately generated murals, such as on the side of a commercial building. Mr. LeFevere advised there would not be a prohibition, unless in this section of the sign ordinance. Following discussion, the consensus of the City Council/EDA was to support the pending mural request and direct staff to prepare an ordinance amendment draft that includes the restrictive provisions as recommended by staff and a distance requirement from residentially zoned properties. GRADUATED SANITARY UTILITY RATE STUDY City Manager Curt Boganey introduced the item and reviewed past consideration of a graduated sanitary utility rate. It was noted the City had implemented a new computer utility program and electronic meter system in response to the statutory requirement that all cities adopt graduated rates for water consumption. The City Council/EDA adopted a new rate system several years ago to encourage lower water consumption and had suggested looking at flat rates for sanitary sewer usage as a way to encourage less water consumption through the sanitary system. With the new utility program, the City has more and better data so that option can now be considered. Director of Fiscal and Support Services Dan Jordet presented staff's memorandum and described issues involved in converting from a flat rate sanitary sewer charge to a rate based on water consumption. He described the basic assumptions used in staff s presentation. Mr. Boganey explained staff used the assumption that the rationale behind the senior rate had to do with seniors consuming less water /sewer services than a family. However, there may have been other value judgments as well. The City Council/EDA expressed its support for the senior rate and noted consuming less water would result in lower discharge to the sanitary sewer. Mr. Boganey answered questions relating to companies that internally treat wastewater prior to discharge. He explained that since the company would be subject to bearing the cost for pretreatment, the City would not be charged more based on that source of the affluent. Mr. Boganey advised the current information indicates such users are not adding higher expenses to maintain the system even though the service is of a larger size. The City Council/EDA discussed the importance of the fixed base charge creating an adequate revenue stream to cover the City's costs to maintain/operate the infrastructure. Mr. Boganey explained that the\initial water study identified overhead and fixed costs (as a percentage of the total) that should be equally shared among customers and a variable cost that should be consumption based. Mr. Boganey noted the City can create a very precise and elaborate system; however, the computer software may not be able to implement it. Whatever choice the City 08/22/11 -2- Council/EDA makes, it has to weigh the cost of accuracy if it involves costly software to implement. The City Council/EDA concurred that the rate system should not be excessively costly to administer or need customized software. Staff was asked about common assumptions used to model the amount of water consumption going through the sanitary sewer system for uses such as a car wash. Mr. Jordet advised of the data sources used in staff s analysis and hard data from the. City's billing system to create examples. Mr. Jordet explained the standard method is to use winter consumptions to establish a water flow that goes into the sewer system. In the examples .being discussed, staff used the winter quarter data to look at the preliminary impact of this type of sewer rate. It was noted that to deal with car washing or lawn watering, residents can meter that water usage so it is not included in the sanitary sewer rate. Mr. Jordet presented a chart depicting fixed base charges of 12 %, 20 %, and 40% as a flat charge to all in addition to corresponding commodity charges of 88%,.80% and 60% based on a per thousand gallon charge. He explained that no matter what is set up or who pays it, the City needs $3.480 million to operate the system. i Mr. Jordet referenced the 2012 flat rate and water usage by number of users within the household and explained how the winter quarter usage would be determined. He then described how a rate could be structured that included flat and commodity charges based on a range of percentages. If based on the winter quarter usage, a single person's rate will drop from $67.76 to $22.87 based on a 12%/88% formula. However the cost to a family with high water usage would greatly increase, from $67.76 to $94.59 or $117.41 based on a 12 %/88% formula. In addition, the bus garage, manufacturing uses, and restaurants will have a higher bill because of higher water usage. He noted a shift in the percentage billed between the fixed base charge and commodity charge would moderate the increase /decrease in billing. The City Council/EDA acknowledged that while an argument can be made that the charge should be based on usage, some households will see bills double and ask why it is necessary. Mr. Boganey stated the answer would be that for the last several years they have been enjoying a subsidy from other customers. It was noted that under the current rate structure, lower water users are subsidizing rates for higher water users. However, a family of five may be the least i able to afford to have its water bill doubled. The City Council/EDA discussed the options for structuring rates and consensus was reached that a ratio of 12% fixed/88% commodity would result in the least impact while still creating a predictable and adequate revenue stream. Mr. Boganey noted the goal is to encourage residents to change behaviors and consume less water; however, the 12 %fixed/88% commodity formula does not create as much incentive as the 20 1 /o/80% or 40 0 /o/60% formulas. But, if water consumption behaviors are changed and water usage goes down the City's revenue stream will also go down and the City will not collect the $3.480 million necessary to operate the system. Should that occur, there will need to be a fairly i i 08/22/11 -3- significant increase in overall rates. Mr. Boganey noted the more the City relies on consumption for revenues, the more potential for volatility in the revenue stream. The City Council /EDA discussed the potential impact of a graduated sanitary utility rate and requested staff provide information on the number of households this will impact and how it may impact seniors. Mr. Boganey noted that all who qualify for a senior discount may not take it but with the data the City has .for customers who have taken the senior discount, staff could determine their level of consumption as well as an indication on the impact to seniors. Mr. Boganey stated staff can do the same analysis for the whole customer base and a distribution analysis to help answer the City Council/EDA's questions on what percentage of customers are most likely to be impacted the most negatively or positively by these adjustments. The City Council/EDA questioned whether the current rate system needs to be modified if it is providing sufficient revenues to support the system, noting that no one is complaining about the rates or if they are subsidizing other higher users. Mr. Jordet advised that staff does get complaints and one resident is very interested and asking what progress is being made on this matter. Mr. Boganey pointed out that is why an impact analysis is worth doing, so the City knows ahead of time the number of customers impacted. The City Council/EDA indicated it was not convinced the City should change from the current flat sewer rate and requested staff provide additional information including an impact analysis.. ADJOURNMENT Councilmember /Commis i n er Lasrnan moved and Cou c n ilmember /Commissioner Kleven s o seconded adjournment of the City Council/Economic Development Authority Work Session at . 8:52 p.m. Motion passed unanimously. 08/22/11 -4- MINUTES OF THE PROCEEDINGS OF THE CITY COUNCIL OF THE CITY OF BROOKLYN CENTER IN THE COUNTY OF HENNEPIN AND THE STATE OF MINNESOTA STUDY SESSION OCTOBER 25, 2010 CITY HALL — COUNCIL CHAMBERS CALL TO ORDER The Brooklyn Center City Council met in Study Session called to order by Mayor Tim Willson at 6:02 p.m. ROLL CALL Mayor Tim Willson and Councilmembers Kay Lasman, Tim Roche, Dan Ryan, and Mark Yelich. Also present were City Manager Curt Boganey, Director of Fiscal and Support Services Dan Jordet, Public Works Director /City Engineer Steve Lillehaug, Director of Business and Development Gary Eitel, Assistant City Manager/Director of Building and Community Standards Vickie Schleuning, City Clerk Sharon Knutson, and Carla Wirth, TimeSaver Off Site Secretarial, Inc. CITY COUNCIL DISCUSSION OF AGENDA ITEMS AND QUESTIONS With regard to Item 6c Resolution Accepting Work Performed and Authorizing Final Payment, Improvement Project Nos. 2009 -01, 02, 03, 04, 09, 11, and 12, 2009 Neighborhood Street and Utility Improvements (Aldrich Area), James Circle Watermain Relocation, Centerbrook Golf Course Watermain Improvements and Emergency Bypass for Lift Station No. 6, City Manager Curt Boganey stated in response to an inquiry from Councilmember Ryan, the Council may want to consider establishing a policy addressing liquidated damages; however, he would caution that if the policy is too rigid, contractors may start to build the policy into their pricing. He explained that staff met to discuss the amount of liquidated damages and agreed that $50,000 was consistent with the contract, fair to all concerned, and an amount that would avoid a protracted litigation that would follow if the amount was higher. Mr. Boganey felt this level of liquidated damages would send the correct message to this contractor and other contractors that the City takes this matter seriously. The Council thanked Mr. Boganey for providing additional information on this matter. MISCELLANEOUS Councilmember Roche reported that about 200 feet of the bicycle trail, between Bass Lake Road and the marsh on Shingle Creek Parkway, is in very poor condition. He asked when signage will be installed. Mr. Boganey will check and report back on timing. i i 10/25/10 -1- Councilmember Roche stated it looks like there is room for a shelter on Shingle Creek Parkway, 50 feet north of Bass Lake Road. Councilmember Roche described the "Yield to Pedestrian" signage being used by other municipalities and suggested staff look into the select placement of this type of signage in locations where vehicles do not yield, such as by Shingle Creek and Evergreen Park. The Council agreed to direct staff to look into the use of "Yield to Pedestrian" signage and report back. Mayor Willson asked about the incident with a pedestrian in a crosswalk at Highway 252 and 65 Avenue. Mr. Boganey stated he had received no response so he will follow up. DISCUSSION OF WORK SESSION AGENDA ITEMS AS TIME PERMITS I FIREHOUSE PARK UPDATE Due to absence of Police Commander Tim Gannon to attend a funeral, Mr. Boganey noted this item will be presented at the next meeting. GRADUATED SANITARY UTILITY RATE STUDY Director of Fiscal and Support Services Dan Jordet explained that interest was expressed in developing a consumption based sanitary sewer rate that can address the differentiation between lower occupancy residential properties and higher occupancy properties. He described water rate structures used by other cities, noting a consumption charge was based on an average of water usage during non -lawn watering months. Mr. Jordet presented a chart containing examples of different household size scenarios, water usage per quarter, and explained how to calculate an average water usage that could be the basis for sewer usage. Mr. Jordet explained that by using the more reliable readings of water consumption generated by ! the new meter reading system installed in 2009, it is now possible to develop a consumption based sanitary sewer rate that can address the differentiation between lower occupancy residential properties and higher occupancy properties. Mr. Jordet reviewed fixed charges including personnel, operations, Metropolitan Council charges, depreciation, debt and capital, and explained how to use personnel plus operations plus actual or average capital to determine the fixed charge. Councilmember Yelich noted the sewer billing would be based on last year's data. Mr. Jordet stated that is correct and the only other way is to install a separate metered service for outside water usage. He reviewed the lawn watering calculations distinction for different scenarios and explained that if the home had been vacant the previous year, a minimum charge would be used. Councilmember Ryan asked if there are fixed costs per unit of waste water treated by the Met Council. Mr. Jordet stated that is not a fixed charge, it is a rate charged against a variable flow. 10/25/10 -2- A fixed charge is for costs incurred even if the system is not being used. Councilmember Ryan stated his concern is that the administrative costs are not too high to create a more nuanced billing system. Mr. Jordet stated staff will have to determine the capabilities of the billing software. Councilmember Roche asked if a graduated sanitary sewer billing is an evolution of the process to improve tracking of water usage. Mr. Jordet explained that an advantage of the new meters was to get more regular and accurate readings so if the City wanted to base the sanitary sewer charge on water usage, it would be more accurate. A graduated sanitary sewer billing was one of the ideas to pursue when the new water meters were being considered. Councilmember Lasman stated this has been talked about for a long time and the new metering system now provides a more accurate reading on water usage so the City also has a better reading on sanitary sewer usage. She felt this was a natural next step in that process and believes it is equitable and fair because it is a user fee. She stated the City will need to determine how to implement, noting this is not intended to be a new revenue stream but would shift the cost among users. Mayor Willson asked if this is enough data to plan out 15 years. Mr. Jordet stated staff can do projections out 15 years but anything beyond 3 years will need to be updated each year. Mayor Willson noted that the availability of better data allows for better projections. He stated his agreement with Councilmember Lasman that user based fees are equitable. Councilmember Roche concurred and noted this is a natural evolution. ADJOURN STUDY SESSION TO INFORMAL OPEN FORUM WITH CITY COUNCIL Councilmember Lasman moved and Councilmember Roche seconded to close the Study Session at 6:43 p.m. Motion passed unanimously. RECONVENE STUDY SESSION Councilmember Lasman moved and Councilmember Roche seconded to reconvene the Study Session at 6:53 p.m. Motion passed unanimously. GRADUATED SANITARY UTILITY RATE STUDY — CONTINUED Discussion continued on the graduated sanitary utility rate study. Mr. Boganey explained this item was originally discussed as a matter of fairness and equity. He noted the Metropolitan Council charges represent a dramatic cost to the system and are based on the flow of water so an argument can be made that it is a reasonable approach for the City to also use a fee that is based on the flow of water. 10/25/10 -3- The Council noted that considering graduated sewer utility rates will create another incentive for water conservation, which will also meet the State's mandate to encourage conservation. Mr. Jordet presented the summary of impacts, noting a minimum charge would be established. ADJOURNMENT Councilmember Lasman moved and Councilmember Ryan seconded to close the Study Session at 6:58 p.m. Motion passed unanimously. 10/25/10 -4- r 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. Couneilmember /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- City of Brooklyn Center Sanitary Sewer Rate Based on Winter Quarter Water Consumption November 2012 Background Information • Residential only — C/I is already consumption based • 3 Models — 2 Classes analyzed — Residential Single Family — Senior Rate Qualifiers • Models/Classes incorporate all 8,056 accounts — Actual information for Winter Quarter 2011 — Actual consumption based calculation for each individual account — Using 2011 to 2011 to generate equivalent revenue City of Brooklyn Center Sewer Billing Data used for projections Winter Quarter Based Consumption # of Meters/ -A,of Pun-ent Consumption Based Accounts Units Bing i per Rate Single Family Residential 6,199 6,199 65.79 unit Base Fee per unit + consumption Duplex/Bun abw si b meter 8 7 65 79 unit Base Fee 9 .9 _ _ per Unit + consumption Townhouse 26 100 65.79 unit Base Fee per Unit + corksumptbn Senbr Sewer Rate 1,651 1,660 36.18 unit Base Fee_ per Unit + consumption Apartments __ 172 3,537 46.05 unit Base Fee per unit + account consumption __ 'Total Customer Accounts 8,056 Total Residential Units 11,503 Quarterly Income $ 637,348 Basis for Projections: Base __ Commodity _ Fee Change Low Base Fee 2006 Stud Fee (2006 y) $ 10.00 $ 3.17 per 1,000 gallons metered Mad-Range Base Fee $ 20.00 $ 2.48 per 1,000 gallons metered Hgh Base Fee $ 30.00 $ 1.79 per 1,000 gallons metered I REVIEW GRAPHS AND DIAGRAM INFORMATION 3 How to Proceed ? • Are there additional questions to be answered ? — Different basis or assumptions for the models? — Different data drawn from the existing models? • Software implementation concerns • Is there clear direction on how to proceed? — Implement $10.00, $ 20.00 or $ 30.00 base fee scenario either as presented or with modifications — Stay with a flat rate — Adjust the flat rate between classes — Develop a hybrid flat rate, if the current software will support one 4