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HomeMy WebLinkAbout2015-07-07 WSAGENDA • CITY COUNCILWORK SESSION CITY OF EDINA, MINNESOTA COMMUNITY ROOM TUESDAY, JULY 7, 2015 5:00 P.M. CALL TO ORDER II. ROLL CALL III. SIDEWALK AND STREET MAINTENANCE IV. UTILITY RATE STUDY V. WHITE OAKS IMPROVEMENT ASSOCIATION VI. ADJOURNMENT The City of Edina wants all residents to be comfortable being part of the public process. If you need assistance in the way of hearing amplification, an interpreter, large -print documents or something else, please call 952- 927-8861 72 hours in advance of the meeting. I1 SCHEDULE OF UPCOMING MEETINGS/DATES/EVENTS 11 Tues July 7 Work Session — Sidewalk & Street Maintenance 5:00 P.M. COMMUNITY ROOM Utility Rate Study 5:45 P.M. COMMUNITY ROOM White Oaks Improvement Association 6:30 P.M. COMMUNITY ROOM Tues July 7 Regular Meeting 7:00 P.M. COUNCIL CHAMBERS Tues July 21 Work Session — Business Meeting 5:00 P.M. COMMUNITY ROOM 2016-2017 Proposed Budget 5:15 P.M. COMMUNITY ROOM Park & Recreation Strategic Master Plan 6:00 P.M. COMMUNITY ROOM Tues July 21 Regular Meeting 7:00 P.M. COUNCIL CHAMBERS Tues Aug 4 Night To Unite Wed Aug 5 Work Session — France Avenue Working Group Update 5:00 P.M COMMUNITY ROOM Grandview Update 6:00 P.M. COMMUNITY ROOM Wed Aug 5 Regular Meeting 7:00 P.M. COUNCIL CHAMBERS Tues Aug 18 Work Session — Promenade Phase 5 5:30 P.M. COMMUNITY ROOM Tues Aug 18 LABOR DAY HOLIDAY OBSERVED — City Hall Closed Tues Sep 8 Work Session — Heritage Preservation Board 5:00 P.M. COMMUNITY ROOM Human Rights & Relations Commission 6:00 P.M. COMMUNITY ROOM Tues Sep 8 Regular Meeting 7:00 P.M. COUNCIL CHAMBERS Wed Sep 16 Work Session — Arts & Culture Commission 6:00 P.M. COMMUNITY ROOM Wed Sep 16 Regular Meeting 7:00 P.M. COUNCIL CHAMBERS Tues Oct 6 Work Session — Boards & Commission Annual Work Plans 5:00 P.M. COMMUNITY ROOM Oct 6 Regular Meeting 7:00 P.M. COUNCIL CHAMBERS .Tues Tues Oct 20 Work Session — Business Meeting 5:30 P.M. COMMUNITY ROOM Tues Oct 20 Regular Meeting 7:00 P.M. COUNCIL CHAMBERS Key Findings • Utility funds are in good financial health • Contribute to AAA/Aaa bond ratings • Minor adjustments recommended for water • Revised CIP puts pressure on sanitary and storm sewer rates • Discussion of development related connection fees qllok -_ - EHLERS It♦DFRS x RRPi C ��xxxC! 7/7/2015 1 History • First rate study completed in 2009 to address $8M Country Club street reconstruction • Added conservation rates for water • Updated every 1-3 years • 2015 update prompted by revised CIP for street reconstruction • No change to rate structure considered in this analysis fiLEADERS EHLERS N PUBLIC FINANCE Street Reconstruction Policy • Street reconstruction provides an opportunity to strategically address our utility infrastructure needs. • Impacts average annual CIP costs related to streets Water $2.3 million $2.0 million -13% Sanitary $1.4 million $2.5 million 80% Sewer Storm Sewer $2.4 million $3.2 million 33% • Revised CIP puts pressure on sanitary and storm sewer funds EHLERS LFnD[NS x PUBLiL FiNaxCE 7/7/2015 2 Water • Capital costs increasing due to — Road reconstruction — $9 million water treatment plant in 2017-2018 $12.000.000 $10.000.000 .. $8.000.000 $6.000.000 $4.000.000 - $2.000.000 $0 2015 2016 2017 2018 2019 2020 2021 2022 2023 ©Ileb� a M CePi.1 Casts �opei:eng t xVen.n ---Ope'a0rg Revenue Water Rates • No changes needed to rate structure • Recommend 4.75% annual increase 2016-2025 • Rate increases apply to: — Fixed charge — All tiers — Morningside rates • Less than 2013's recommended 5.25% rate increase — New meters accurately measure consumption — Operating expenses have declined since 2013 — Growth will generate future revenue 4 0 EHLERS 7/7/2015 3 Revenues from Growth Help Offset Costs • Assumed new multifamily housing 2016-2018 240 units per year 2019 and beyond 30 units per year • Proposed connection fees will generate almost $2.2 Million over next 10 years • Within 5 years, new users will be paying $100,000/yr. • Without growth, annual rate increases would be 5.00% per year vs. 4.75% -- EHLERS Sample Water Bill: Cubic Feet to Gallons Winter Quarter Bill $62.41 $62. (30 Units/22,500 Gallons) Summer Quarter Bill (50 Units/37,500 Gallons) $100.31 $100. --- EHLERS - -' -1.1 11.— 7/7/2015 al Consistent, Affordable Water Rates Proposed Rates for Tier 1 Water $3.00—._.._.._.._.__.___...�._......._.__._._____._____ i $2.80.,—._._.._—_..._.___. $2.60 $2.40 $2.20 — $2.00 $1.80 __- $1.60 $1.40 :;Next Rate Study 2015 Rate Study $120 t7 —2013 Rate Study X2011 Rate S[udy 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 EHLER$ Sanitary Sewer • MCES disposal charge is biggest expense in sewer • Expected to increase 5% annually 12,000,000 10,000,000 8,000,000 -- - -- ■ Collection Systems 6,000,000 III Operations ■ MCES Charges 4,000,000 2,000,000 0 2012 2013T 2014 2015 x2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 ,0 EHLERS =,a �aat�� na,anr 7/7/2015 5 Sanitary Sewer Rates • Recommend 4.5% rate increase 2016-2025 • Higher than 3.25% recommendation in 2013 study — MCES charges increased 12% between 2013 and 2014 — Average annual capital costs increased $1.1 million since last study • Sewer fund financially stable EHLERS L[AOERS Ix PUBLIC IINANCL Water and Sewer Fund Stable Combined Sewer and Water Cash Balance 12,000,000 T- 10,000,000 = - --- — �, k 8,000,000-- 6,000,000 �-- 4,000,000 2,000,000 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 ■Target Cash Balance ■Unrestricted Cash Balance • About 45% of sewer projects will be financed with bonds • About 70% of water projects will be financed with bonds -- E_HLERS L A[ 0[RS N PUPLiC Llxnxtf 7/7/2015 M ANA Proposed SAC and WAC Fees • Significant increase in 2016 • 7% annual increase thereafter • Fees remain competitive MMMMMM SAC $400 $500 $625 $1,000 $1,070 WAC 800 $1,000 $1,250 2 000 $2,140 Total $1,200 $1,500 $1,875 $3,000 $3,210 EHLERS LEADERS IN PUBLIC fIXRNC[ City Connection Fees are Competitive $9,000 $8,000 $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 Eden Prairie Edina 2015 Edina Chanhassen Minnetonka St. Louis 2015 Proposed 2015 2015 Park 2016 Bloomington, Hopkins, and Richfield do not have connection fees „ I EHLERS ILIDCRS IN PUBLIC EIXRXCE 7/7/2015 7 Storm Sewer • Capital needs increasing for road reconstruction and water quality projects $7.000.000 $6.000.000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1.000,000 $0 2015 2016 2017 2016 2019 2020 2021 2022 2023 2024 2025 Debt service and Capital t111111111111110perating Expenses (excluding Depreciation) —Operating Revenues SM EHLERS E[AXENS �P�a���­,­ Storm Sewer — Option #1 • Recommended rate increase is 6.75 % per year (vs. 6% in 2013 study) Storm Sewer Fund Cash Balance 5.000,000 4.500,000 ■Target Cash Balance 4,000,000 3.500,000 •EndingCash-Unrestricted 3.000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 �w'L rtO.,A �E�b '�E�h �,�6 ti�1^ �,�0 'Lo,�9 ryO,10 `LO�� ryoryry 'Lo,1'! ryOtib 'Lo,1h 16 EHLERS L[AOCXS H PUBLIC CIXAXLE 7/7/2015 • Storm Sewer Rates — Option #2 • $100,000/yr. in storm water operating costs now paid from General Fund • Can move the costs to the Storm Sewer Fund • Fee Impact — 10% increase in 2016 (vs. 6.75%) — 6.75% annual increase in 2017 and beyond • Pros: — Tax exempt property would pay its full share of storm water costs — Could reduce levy or provide more capacity in general fund • Cons: — Increases storm sewer rates „ EHLERS Residential Storm Sewer Bill Option #1 $24.26 $25.90 $27.64 $29.51 Option #2 $24.26 $26.68 $28.49 $30.41 • Decision can be made in context of general fund budget discussions 18 EHLERS tf p[RS i' WFtit finxGf 7/7/2015 9 Sample Utility Bills ;:3018 Winter months - 30 units water and sewer Sewer 102.34 106.95 111.76 116.79 Water 61.19 64.10 67.14 70.33 Storm Water 24_26 25_90 27_64 29_51 Total $ 187.79 $ 196.94 $ 206.54 $ 216.63 Combined Fee Increase $ 7.61 $ 9.15 $ 9.61 $ 10.08 Percent Increase 4.23% 4.87% 4.88% 4.88°k Summer months - 50 units water and 30 units sewer Sewer 102.34 106.95 111.76 116.79 Water 97.39 102.02 106.86 111.94 Storm Water 24_26 25_90 27_64 29.51 Total $ 223.99 $ 234.86 $ 246.27 $ 258.24 Combined Fee Increase $ 9.45 $ 10.87_ 5 _11.41 _S_ 11.97 Percent Increase 4.40% 4.85°° 4.86°° 4.869a • Assumes Option #1 for Storm Sewer (6.75% annual increase) - EH LEADERS ,LERS Utility Bill Comparison $175.00 $150.00 $125.00 $100.00 $75.00 $50.00 $25.00 $0.00 City of Edina City of Edina City of City of Eden City of City of City of City of St. Proposed 2015 Bloomington Prairie Hopkins Minnetonka Richfield Louis Park 2016 er) Water ®Sewer OStormWater EHLERS LE�D[NS iN PUBI�t nNNxtE 7/7/2015 10 Comparison of Utility Bills For Single Family Customer (Using 27,000 gal water and 13,000 gal sewer per quart ;:3018 Winter months - 30 units water and sewer Sewer 102.34 106.95 111.76 116.79 Water 61.19 64.10 67.14 70.33 Storm Water 24_26 25_90 27_64 29_51 Total $ 187.79 $ 196.94 $ 206.54 $ 216.63 Combined Fee Increase $ 7.61 $ 9.15 $ 9.61 $ 10.08 Percent Increase 4.23% 4.87% 4.88% 4.88°k Summer months - 50 units water and 30 units sewer Sewer 102.34 106.95 111.76 116.79 Water 97.39 102.02 106.86 111.94 Storm Water 24_26 25_90 27_64 29.51 Total $ 223.99 $ 234.86 $ 246.27 $ 258.24 Combined Fee Increase $ 9.45 $ 10.87_ 5 _11.41 _S_ 11.97 Percent Increase 4.40% 4.85°° 4.86°° 4.869a Utility Bill Comparison $175.00 $150.00 $125.00 $100.00 $75.00 $50.00 $25.00 $0.00 City of Edina City of Edina City of City of Eden City of City of City of City of St. Proposed 2015 Bloomington Prairie Hopkins Minnetonka Richfield Louis Park 2016 er) Water ®Sewer OStormWater EHLERS LE�D[NS iN PUBI�t nNNxtE 7/7/2015 10 Comparison of Utility Bills For Single Family Customer (Using 27,000 gal water and 13,000 gal sewer per quart Summary of Recommendations • Water rate increase 4.75% • Convert bills from cubic feet to gallons • Sewer rate increase 4.5% • Storm water rate increase 6.75% • Adopt rates for three to five years at a time • Increase SAC and WAC fees to defray cost of growth • Future considerations: — Fully fund storm water costs with utility fund? — Review additional water conservation measures 21 EHLERS LEBEERS IN PUBLIC FINANCE Nick Anhut Financial Advisor 651-697-8507 nanhut@ehlers-inc.com W EHLERS LEADERS IN PUBLIC FINANCE Jessica Cook Financial Specialist 651-697-8546 jcook@ehlers-inc.com 7/7/2015 11