B. Tiered Water Rate Discussion
CITY OF
CHANHASSEN
7700 Market Boulevard
PO Box 147
Chanhassen, MN 55317
Administration
Phone: 952,227,1100
Fax: 952,227,1110
Building Inspections
Phone: 952,227,1180
Fax: 952.227,1190
Engineering
Phone: 952.227,1160
Fax: 952.227,1170
Finance
Phone: 952.227,1140
Fax: 952,227.1110
Park & Recreation
Phone: 952,227.1120
Fax: 952,227,1110
Recreation Center
2310 Coulter Boulevard
Phone: 952,227,1400
Fax: 952,227,1404
Planning &
Natural Resources
Phone: 952,227,1130
Fax: 952.227.1110
Public Works
1591 Park Road
Phone: 952.227,1300
Fax: 952,227,1310
Senior Center
Phone: 952,227.1125
Fax: 952.227,1110
Web Site
W'INI,ci, chanhassen, mn ,us
B
-
MEMORANDUM
TO:
Mayor
City Council Members
FROM:
&. >.
O~
Greg Sticha, Finance Director
DA TE:
December 3, 2007
SUBJ:
Tiered Water Rate Discussion
BACKGROUND
On December 10th City Council will be deciding on setting all utility fees and
rates for 2008. Based on recommendations from the DNR and our financial
advisors, and to promote water conservation, staff had originally recommended
adding two tiers to the water consumption rates.
After further review of the initial proposal and receiving comment from some
affected users, staff has created some alternative proposals for discussion. The
five alternatives vary in impact on some users as well as the impact it mayor
may not have on water conservation. Staff will be presenting those ideas and
looking for direction from City Council in order to prepare the fee schedule for
2008.
A TT ACHMENTS
1. Tied Water Rate Alternatives
The City of Chanhassen · A growing community with clean lakes, quality schools, a channing downtown, thriving businesses, winding trails, and beautiful parks, A great place to live, work, and play,
Tiered Water Rate Alternatives
Proposed Alternative #1 Alternative #2 Alternative #3 Alternative #4 Alternative #5
Current Rate Tiers Rate I Inc Rate Inc Rate Inc Rate 1 Inc Rate Inc
Minimum $8.60 Minimum $9.001 4.65% $9.00 4.65% $9.00 4.65% $9.001 4.65%
Residential Residential includes irriaation includes irri( ation
0-25,000 Gallons 1.72 0-25,000 Gallons 1.75 2.00% 1.81 5.00% 1.87 9.00% 1.75 2.00% 1.81 5.00%
25,001 + 2.15 25,001 - 50,000 2.26 5.00% 2.28 6.00% 2.34 9.00% 2.26 5.00% 2.26 5.00%
Commercial 50,001 - 75,000 2.58 20.00% 2.58 20.00% 2.58 20.00% 2.62 22.00%
0-25,000 Gallons 1.72 75,001 - ++ 3.01 40.00% 3.23 50.00% 3.01 40.00% n/a n/a
25,001 + 2.15 Commercial includes irriaation
0-25,000 Gallons 1.75 2.00% 1.81 5.00% 1.87 9.00% 1.75 2.00% 1.81 5.00%
25,001 - 50,000 2.26 5.00% 2.28 6.00% 2.34 9.00% 2.26 5.00% 2.26 5.00%
50,001 - 75,000 2.58 20.00% 2.58 20.00% 2.58 20.00% 2.62 22.00%
Irrigation Credit $8.20/unltlquarter
ORIGINAL
Alternative #1 - Is similar to the original proposed tier's based on the recommendation from Ehler's. Rates have been adjusted downward to reflect a correction to the model.
Negatives -Substantial increase for Townhouse Association irrigation meters with multiple units.
- Some Commercial accounts with multiple tennants will see substantial increases in some cases
Positives - Should promote water conservation
- Future annual rate increases projected to be 5%
Alternative #2 - Is a revised tier structure in an attempt to lessen the impact on Townhouse irrigation accounts and multiple tennant
commercial accounts. In this proposal all irrigation accounts would only be billed on three tiers similar to the commercial accounts.
Negatives - Will increase the burden on the first two tiers and on the fourth tier for single family residential accounts.
- Water capital improvements in 2010 and beyond now have to be bonded for rather than cash for improvements of less than $1.5M.
- Annual rate increases at 5% in 2009-2011, and increase to 6% in 2012 after Phase II Treatment is financed.
Positives - Should promote water conservation
- Townhomes will pay more similar amount for watering as single family, depending on usage
Alternative #3 - Does not add two additional tiers but rather keeps the current tiers in place.
Negatives - Does not promote additional water conservation.
- Does not distribute cost of new wells to users most driving the need for the new wells.
- Future annual rate increases are 5% in 2009-2011, and increase to 6% in 2012 after Phase II Treatment is financed.
Alternative #4 - Is the same as alternative #1, but would give a per unit credit for every dwelling unit billed on any irrigation account based on a min usage.
Negatives - Some Commercial accounts with multiple tennants will see substantial increases in some cases
- Administratively time consuming to manually apply credit
- Future annual rate increases are 5% in 2009-2013, and increase to 6% in 2014 to maintain minimum cash balances.
Positives - Should promote water conservation
- Single family and town home users will pay similar amount for watering, depending on usage.
Alternative #5 - Three tier system (eliminates top tier of over 75,000 gallons/quarter for residential users).
Negatives - Some Commercial accounts with multiple tennants will see substantial increases in some cases
- Substantial increase for Townhouse Association irrigation meters with multiple units (although less than Alternative #1).
- Uncertain as to whether it will promote water conservation
Positives - System may be simpler to administer and understand (same tiers for residential, irrigation, and commercial users)
- Future annual rate increases projected to be 5%