H-1 City Code Amendment-Chapter 4 FeesCITY OF
CNAN9ASSEN
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
7901 Park Place
Phone: 952.227.1300
Fax: 952.227.1310
Senior Center
Phone: 952.227.1125
Fax: 952.227.1110
Web Site
www.ci.chanhassen.nnn.us
H -1
MEMORANDUM
TO: Todd Gerhardt, City Manager
FROM: Greg Sticha, Finance Director G,t7
DATE: December 9, 2013
SUBJ: Adoption of Ordinance, Chapter 4, Chanhassen City Code
License, Permit and Administrative Fees for 2014
PROPOSED MOTION
"The Chanhassen City Council adopts the attached ordinance amending
Chapter 4 of the Chanhassen City Code."
City Council approval requires a simple majority vote.
BACKGROUND
The city attorney's office recommends that the fees be adopted by ordinance. These
rates will be effective January 1, 2014. Ehlers and Associates have prepared a Utility
Rate Analysis to review rates for 2014 and beyond. The summary of the study is
attached.
Chapter 4, Article II, License fees. (Section 4 -15 (f).)
The city has eliminated the rental license fees for rental properties; therefore, staff is
proposing deleting that fee schedule. On November 25, 2013, the City did approve a
massage business license and background investigation requirement. The fees
established as part of the amendment to Chapter 10, License, Permits and Business
Regulations were $50.00 for the license and $250.00 for the background
investigation.
Surface Water Management Plan (Section 4 -30 (c) 3.)
The City's Surface Water Management Plan (SWMP) was adopted in February 1994.
The SWMP recommended the City establish surface water connection fees as a
means of financing city -wide improvements recommended in the SWMP.
Connection fees are charged to subdivisions prior to final plat approval to recoup the
costs of the installation and maintenance of public stormwater infrastructure.
Chanhassen is a Community for Life . Providing for Today and Planning for Tomorrow
Todd Gerhardt
Chapter 4, 2014 Fees
December 9, 2013
Page 12
The connection charges were derived from estimating the costs of all the pipes and ponds
proposed in the SWMP. The total cost has been apportioned so developments are charged
according to the number of acres developed and the land use. The fee per acre varies by land use
as a result of the amount of impervious surface allowed within that land use category.
At that time, the rates were calculated using market values of land in the City of Chanhassen and
the construction cost index. In the SWMP, it was noted that, "the rates should be increased
annually in line with the construction price index," but, until 2002, the fees had not been updated
since adoption. For 2011, the fees were left the same as the previous year to accommodate the
downturn in the economy. In 2012, Ehlers & Associates, the City's financial advisors,
recommended the fees be increased by five percent, and for 2013 they recommended an increase
of six percent. For 2014, the utility rate analysis recommends a five and one -half percent
increase to the water quality and quantity fees.
Water Quality
Land Use
2007
2008
2009
2010
2011
2012
2013
Proposed
2014
Single-Family Residential
$1,900
$2,360
$2,360
$2,540
$2,540
$2,670
$2,830
$2,990
Duplex
$2,200
$2,640
$2,640
$2,850
$2,850
$2,990
$3,170
$3,340
Townhome
$3,700
$4,440
$4,440
$4,790
$4,790
$5,030
$5,330
$5,620
School/Church
$3,700
$4,440
$4,440
$4,790
$4,790
$5,030
$5,330
$5,620
Apartment/multi-family
$4,100
$4,920
$4,920
$5,310
$5,310
$5,580
$5,910
$6240
Industrial
$11,400
$13,680
$13,680
$14,770
$14,770
$15,510
$16,440
$17,340
Commercial
$14,500
$17,400
$17,400
$18,790
$18,790
$19,730
$20,910
$22,060
Water Quantity
Land Use
2007
2008
2009
2010
2011
2012
2013
Proposed
2014
Family /Low
Single-Family/Low
Density
$3,100
$3,410
$3,410
$3,640
$3,640
$3,820
$4,050
$4,270
Medium Density
$4,700
$4,700
$4,700
$5,020
$5,020
$5,270
$5,590
$5,900
High Densit
$6,800
$7,280
$7,280
$7,780
$7,780
$8,170
$8,660
$9,140
Commercial/Industrial/
Business
$6,800
$6,820
$6,820
$7,290
$7,290
$7,650
$8,110
$8,560
Parks/Open Space
$1,800
$1,930
$1,930
$2,060
$2,060
1 $2,160
1 $2,290
$2,420
Sewer and Water Fees (Section 4 -30 (c) 5.)
For 2014, the Ehlers and Associates analysis recommends a three and three- quarter percent
increase to the water hook -up and connection fees and a two percent increase to the sewer hook-
up and connection fees. Hook -up fees are also known as area trunk fees.
A lateral connection charge replaces a missed assessment. When the City installs a pipe next to a
property, some owners choose not to connect. In some instances, the City may not have assessed
Todd Gerhardt
Chapter 4, 2014 Fees
December 9, 2013
Page 13
the property owner for their portion of the pipe. When those properties eventually connect, the
lateral connection charge approximately covers the cost of the omitted assessment. These
charges are only levied in rare instances. Trunk hook -up charges, on the other hand, are for core
utility infrastructure such as wells, lift stations, and trunk main oversizing. Every new lot in the
City that hooks up to the utility system pays a trunk hook -up charge.
Hook -up fees paid at the time of final residential subdivision approval increase from $651.00 to
$664.00 /unit (sewer) and $1,818.00 to $1,886.00 /unit (water). The remainder of the sewer and
water hook -up fee is collected with the building permit at the rate in effect at that time. The total
sanitary hook -up fee is increasing from $2,170 to $2,213 and the total water hook -up fee is
increasing from $6,060 to $6,287. Parcels within the Lake Ann Sewer District will also be
subject to the Lake Ann Trunk sewer fees in addition to the sewer trunk hook -up fees. The Lake
Ann Interceptor hook -up fee is increasing from $1,857 to $1,894 and the sub -trunk fee is
increasing from $1,948 to $1,987. Commercial, industrial and institutional developments pay the
total hook -up fee at the time of building permit. Trunk hook -up fees are based on the number of
sanitary access charge (SAC) units assigned by Metropolitan Council for office or
industrial /commercial buildings.
Lateral connection charges are charges for utility infrastructure which has been constructed by
the City but was not assessed to or paid for a property. Sewer lateral connection charges increase
from $7,266.00 to $7,411.00 and water lateral connection charges increase from $7,479.00 to
$7,759.00.
Sewer Access Charge
The Metropolitan Council amends their Sewer Access Charge (SAC) fee annually. For 2014, the
SAC fee has been raised from $2,435.00 to $2,485.00. Rather than having to amend our
ordinance annually to incorporate the Metropolitan Council's revised fee, the City in 2011
amended the language to reference that the fee is established by the Metropolitan Council. The
total SAC fee for 2014 is $2,560.00 per unit, which includes a $75.00 City surcharge.
Utility Rates (Section 4 -45)
In 2007, the City experienced significant water usage events that lead the City to add tiers to our
water rates and adopt the tiered rate structure in 2008. In 2011, the City added a fifth tier for
household and irrigation use that is more than 99,000 gallons per quarter. For 2014, the Ehlers
and Associates analysis recommends a three percent increase to the water utility rates for all tiers
2009
2010
2011
2012
2013
Proposed 2014
Water Hook-up
$5,087
$5,393
$5,393
$5,717
$6,060
$6,287
Sewer Hook -up
$1,893
$2,026
$2,026
$2,107
$2,170
$2,213
Water Connection
$6,280
$6,657
$6,657
$7,056
$7,479
$7,759
Sewer Connection
$6,339
$6,783
$6,783
$7,054
$7,266
$7,411
Lake Ann
Interceptor
$1,620
$1,734
$1,734
$1,803
$1,857
$1,894
Sub -trunk
$1,699
1 $1,818
$1,818
1 $1,891
$1,948
$1,987
Sewer Access Charge
The Metropolitan Council amends their Sewer Access Charge (SAC) fee annually. For 2014, the
SAC fee has been raised from $2,435.00 to $2,485.00. Rather than having to amend our
ordinance annually to incorporate the Metropolitan Council's revised fee, the City in 2011
amended the language to reference that the fee is established by the Metropolitan Council. The
total SAC fee for 2014 is $2,560.00 per unit, which includes a $75.00 City surcharge.
Utility Rates (Section 4 -45)
In 2007, the City experienced significant water usage events that lead the City to add tiers to our
water rates and adopt the tiered rate structure in 2008. In 2011, the City added a fifth tier for
household and irrigation use that is more than 99,000 gallons per quarter. For 2014, the Ehlers
and Associates analysis recommends a three percent increase to the water utility rates for all tiers
Todd Gerhardt
Chapter 4, 2014 Fees
December 9, 2013
Page 14
and the bulk rate. In 2014, multi - family properties will pay a uniform rate of $2.14 per 1,000
gallons. The utility rate analysis also recommends a three percent increase to the sewer utility
rates.
Listed below is the 2009, 2010, 2011, 2012, 2013 and proposed 2014 water consumption rate
structure along with the sewer rate structure:
Water
2009
2010
2011
2012
2013
2014
Fixed Charge (minimum per quarter)
N/A
5.00
5.01
5.13
7.50
7.74
0 - 5,000 Gallons
1.90
1.00
-
-
-
-
0 - 6,000 Gallons
-
-
1.00
1.02
1.04
1.07
5,001 - 25,000 Gallons
1.90
2.00
-
-
-
-
6,001 - 24,000 Gallons
-
-
2.00
2.04
2.08
2.14
25,001- 50,000 Gallons
2.37
2.49
-
-
-
-
24,001- 48,000 Gallons
-
-
2.49
2.54
2.59
2.67
50,001+ Gallons
2.75
2.89
-
-
-
-
48,001- 99,000 Gallons
-
-
2.89
2.95
3.01
3.10
99,001+ Gallons (Irrigation and
Residential Only)
3.60
3.78
3.61
3.72
3.83
3.94
Multi- Family
-
-
-
-
2.08
2.14
Bulk sales to contractors, landscapers,
etc. at City fill stations or other
designated locations
4.75
5.00
5.00
5.10
5.20
5.36
Sewer
2009
2010
2011
2012
2013
2014
Minimum Charge (includes up to 5,000
gallons)
18.50
19.45
Minimum Charge (includes up to 6,000
gallons)
19.47
20.04
20.64
21.27
Residential - amounts over 5,000
allons (based on winter quarter usage)
3.60
3.78
-
-
-
-
Residential - amounts over 6,000
gallons (based on winter quarter usage)
_
-
3.78
3.89
4.01
4.13
Commerical - amounts over 5,000
gallons (based on actual quarterly
3.60
3.78
usage)
Commerical - amounts over 6,000
gallons (based on actual quarterly
-
-
3.78
3.89
4.01
4.13
usage)
Todd Gerhardt
Chapter 4, 2014 Fees
December 9, 2013
Page 15
Surface Water Management Fees (Section 4 -50)
The utility factor for each land use is not changing. The rates are increasing four percent for
2014. The rates for tax parcels classified 1, 2 or 3 shall increase from $9.30 to $9.66. The rates
for tax parcels classified 4 through 8 shall increase from $18.16 to $18.89.
RECOMMENDATION
Staff recommends that City Council adopt the attached ordinance amending Chapter 4 of the
Chanhassen City Code revising the fees for 2014.
ATTACHMENTS
1. Ordinance Amending Chapter 4, Chanhassen City Code (2014).
2. December 2013 Utility Rate Analysis, City of Chanhassen, Minnesota, prepared by Ehlers
and Associates.
3. Memo from Jesse Nye, Metropolitan Council, to Finance Officials, Building and Inspections
Departments dated September 16, 2013.
gAplan\city code\2013\cc memo ch 4 fees 2014.doe
CITY OF CHANHASSEN
CARVER AND HENNEPIN COUNTIES, MINNESOTA
ORDINANCE NO.
AN ORDINANCE AMENDING CHAPTER 4
CHANHASSEN CITY CODE,
LICENSE, PERMIT AND ADMINISTRATIVE FEES
THE CITY COUNCIL OF THE CITY OF CHANHASSEN, MINNESOTA ORDAINS:
Section 1. Section 4 -15 (f) of the City Code, City of Chanhassen, Minnesota, is hereby amended
to read as follows:
Massage Therapy Business license and background investigation fee:
License $ 50.00
Background investigation $250.00
Section 2. Section 4 -30 (c) 3 of the City Code, City of Chanhassen, Minnesota, is hereby
amended to read as follows:
Surface Water Management Fees (SWMP) - Water Quality and Water Quantity
Development Type
Single - Family
Duplex
School /Church
Townhome
Apartment/High Density
Medium Density
Industrial
Commercial
Parks /Open Space
Water Quality
$2,930.00 2,990.00 /Acre
$3,170.00 3,340.00 /Acre
$5,0-330.00 5,620.00 /Acre
$5, 330.00 5,620.00 /Acre
$3,910.09 6,240.00 /Acre
based on development type
$@16,4 4 0.0017,340.00 /Acre
$20,00 22,060.00 /Acre
based on development type
Water Quantity
$4,050.00 4,270.00 /Acre
based on land use designation
based on land use designation
based on land use designation
$8,660:90 9,140.00 /Acre
$5,590.0 5,900.00 /Acre
$8,110.09 8,560.00 /Acre
$8,110.00 8,560.00 /Acre
$2,20 2,420.00 /Acre
Fees are based on the developable land. Undeveloped areas (wetlands), public parks, and
existing development are exempt from the fees.
Section 3. Section 4 -30 (c) 5 of the City Code, City of Chanhassen, Minnesota, is hereby
amended to read as follows:
5. Sewer and water fees.
Residential development:
Shall pay a portion of the sewer and water hook -up fees (area trunk fees) at the time of final
subdivision approval: $651.00 664.00 /unit (sewer) and $1,818.001,886.00 /unit (water). The
remainder of the sewer and water hook -up fees shall be collected with the building permit at the
rate in effect at that time.
Parcels previously assessed trunk hook -up fees are exempt. Residential trunk hook -up fees are
based per unit.
Sanitary
$1,519.001,549.00 /unit, or $2,170.00 2,213.00 /unit if a portion of the sewer hook -up
sewer
fee was not paid at the time of final subdivision approval —(Lake Ann Interceptor -
SAC
$4,95- X001,894.00 /unit and subtrunk $-1;948-001,987.00 /unit)*
Water
$4,242.00 4,401.00 /unit, or $6,060.00 6,287.00 if a portion of the water hook -up fee
was not paid at the time of final subdivision approval
SAC
As established by the Metropolitan Council and $75.00 city SAC surcharge
-Parcels within the Lake Ann Sewer District will be subject to the Lake Ann Trunk sewer Fees in addition to the sewer trunk hook -up Fees.
Commercial, industrial and institutional development:
Sewer and water trunk hook -up fees (area trunk fees). Fee is paid at the time of building permit.
Parcels previously assessed trunk hook -up fees are exempt. Trunk hook -up fees are based on the
number of sanitary access charge (SAC) units assigned by Metropolitan Council for office or
industrial /commercial buildings.
Sanitary
sewer
$2,'z x70.00 2,213.00 /unit —(Lake Ann Interceptor - $1,857.00 1,894.00/unit and
subtrunk $948:001,987.00 /unit)*
Water
$6;060:00 6,287.00 /unit
SAC
As established by the Metropolitan Council and $75.00 city SAC surcharge
*Parcels within the Lake Ann Sewer District will be subject to the lake Ann Trunk sewer fees in addition to the sewer trunk hook -up fees.
All development:
Lateral connection charges: If the lot or tract of land, or portion thereof, to be served by a lateral
connection that has not been assessed for the cost of construction, then the applicant shall pay the
following lateral connection:
Sewer lateral connection charge $7,266.00 7,411.00
Water lateral connection charge $7;479.09 7,759.00
2
Section 4. Section 4 -45 of the City Code, City of Chanhassen, Minnesota, is hereby amended to
read as follows:
Utility rates are established for each 1,000 gallons of usage:
Water:
Fixed Charge (minimum water charge per quarter)
0 to 6,000 gallons per quarter
6,001 to 24,000 gallons per quarter
24,001 to 48,000 gallons per quarter
48,001 to 99,000 gallons per quarter
99,001+ gallons per quarter (Irrigation and Residential Only)
Multi - family properties — uniform water rate
Bulk sales to contractors, landscapers, etc. at
City fill stations or other designated locations
Sewage:
Residential based on winter quarter usage
Commercial based on actual quarterly usage
Minimum sewage charge per quarter
(for amounts up to 6,000 gallons per quarter)
$7.307.74 per quarter
$4- 041.07 per 1,000 gallons
$2$8 2.14 per 1,000 gallons
$239 2.67 per 1,000 gallons
$38f 3.10 per 1,000 gallons
$3S3 3.94 per 1,000 gallons
$2-.08 2.14 per 1,000 gallons
$3-.N 5.36 per 1,000 gallons
$4.-" 4.13 per 1,000 gallons
$4." 4.13 per 1,000 gallons
$20.64 21.27
Section 5. Section 4 -50 of the City Code, City of Chanhassen, Minnesota, is hereby amended to
read as follows:
Surface Water Management Fees.
Classi ication
Land Use
Utility Factor
1
Single - family and Rural residential
Not Applicable
2
Agricultural
Not Applicable
3
Undeveloped
Not Applicable
4
Medium density residential
2.22
5
High density residential, Industrial, Office, Institutions
churches, schools, government buildings, hospitals)
3.30
6
Business /Commercial
4.23
7
Parks, cemeteries, golf courses, arboretum
0.46
8
Parking lots as a principal use
6.14
The surface water management fee for each tax parcel classified 1, 2 and 3 shall be $940 9.66.
The surface water management fee for each tax parcel classified 4 through 8 shall be calculated
as follows: $18.16 18.89 multiplied by the utility factor multiplied by the acreage of the parcel.
Section 6. This ordinance shall be effective January 1, 2014 after its passage and publication.
PASSED AND ADOPTED this 91h day of December, 2013, by the City Council of the
City of Chanhassen, Minnesota
Todd Gerhardt, City Manager Thomas A. Furlong, Mayor
(Published in the Chanhassen Villager on
gAplan\city code\2013\amendment ordinance chapter 4 foes 2014.doe
'0
December, 2013
Utility Rate Analysis
City of Chanhassen, Minnesota
Prepared By:
City Staff
And
Ehlers
EHLERS e
CITY OF
CHANHASSEN
1nmwehlers- inc.com
Minnesota phone 851- 897 -8500 3080 Centre Pointe Drive
Offices also in Wisconsin and IBrols fax 851- 897 -8555 Roseville, MN 55113 -1122
toll hee SM -552 -1171
_ac__IH�] Financial Planning
Key Findings
Ehlers has worked with City staff to update the annual Utility Rate Analysis. The rate recommendations
this year are consistent with or lower than last year's rate study.
1. Proposed user rate increases for 2014 are:
• Water (Tiers 1 -5) -3%
• Sanitary Sewer -3%
• Storm Water — 4%
2. The water and sewer funds are benefitting from development that is occurring and is expected to
occur over the next ten years. More development allows the City to raise hook -up fees less than
projected in the prior year's study. The proposed annual connection and platting fee increases for
2014 and beyond are:
• Water Hook -Up— 3.75%
• Sanitary Sewer Hook -Up — 2%
• Storm Water Quality — 5.5% (before credit is applied)
• Storm Water Quantity — 5.5%
3. Modest rate increases are needed in 2014. Rate increases less than those recommended above will
weaken the cash positions of the utility funds and may attract questions from Standard and
Poor's. The City currently benefits from the AAA rating it has earned from Standard and Poor's.
Rating agencies pay attention to enterprise fund activities for cities, and Standard and Poor's new
rating methodology looks at whether enterprise funds will put financial burdens on the general
fund due to structural imbalances (i.e., insufficient utility revenue).
4. The City's utility rates remain competitive with comparable KFS cities. Please see Exhibit A for
a graph of quarterly rates of comparable communities.
Methodology
The City accounts for both operations and expansion of each utility in one fund. For each utility, we have
split these functions into an "Operating Fund" and a "Trunk Fund" for the purposes of this study. The
Operating Fund includes all operating revenues (user rates and charges) and the costs to operate,
maintain, and replace the system. It also includes a portion of major capital investments as the systems
grow. The Trunk Fund receives the hook -up charges and spends them on expansion of the system,
including wells and water storage facilities.
Growth
How quickly the City grows will impact the utility fees collected, hook -up revenues, and area charges.
The City has estimated the number of new residential and commercial properties that will be constructed,
as shown in the following chart. To be conservative, the proposed apartment 155 unit apartment building
is not included in the growth estimates.
Growth Assumptions
po IMF
Number of Resid
Units
2013
133
2014
110
2015
130
2016 and beyond
170
Water System
Water Capital Improvements and Bonding
The capital improvement plans for the water operating and trunk funds are attached in Exhibit B, which
begins on page I 1 of this report. Major capital improvements include:
• Painting the Lake Lucy Water Storage Stand and Pipes
• $700,000 every other year for replacing water main under street reconstruction projects
• Well #15 in 2015
• Elevated Storage Tank and Well #16 in 2019
• Painting of the Arboretum water tower in 2019
• Well #17 in 2021
• Water Treatment Phase II in 2023
The rate study anticipates the need to bond for a portion of the improvements listed above. The need to
issue bonds depends upon many factors, and the City should annually review whether it has sufficient
cash to pay for capital improvements prior to issuing debt.
Water Rates
The 2014 increase to the water rate is 3.00 %. Future annual increases are also projected to be 3% per
year. The proposed rates, shown on the following chart, are necessary to meet future operating, capital
and debt costs.
Water Rates
% Rate Increase I 2.00% 3.00% 3.00% 3.00% 3.00%
Tier $1.04 $1.07 $1.10 $1.14 $1.17
0 -6,000 gallons
% Rate Increase 2.00% 3.00% 3.00% 3.00% 3.00%
Tier 2 $2.08 $2.14 $2.21 $2.28 $2.34
6,001- 24,000 gallons
% Rate Increase I 2.00% 3.00% 3.00% 3.00% 3.00%
Tier $2.59 $2.67 $2.75 $2.83 $2.92
24,001 -48,000 gallons
% Rate Increase I 2.00% 3.00% 3.00% 3.00% 3.00%
Tier 4 $3.01 $3.10 $3.19 $3.29 $3.38
48,001- 99,000 gallons
% Rate Increase I 3.00% 3.00% 3.00% 3.00% 3.00%
Tier 5 $3.83 $3.94 $4.06 $4.18 $4.31
Over 99.000 gallons
Different types of water customers are currently billed at different tiers:
• Single family residential customers are billed using all five tiers.
• Multifamily properties pay a flat rate per thousand gallons. The proposed multifamily rate for
2014 is $2.14 per gallon.
• Commercial customers are billed using Tiers 1 through 4 only.
• Irrigation meters are billed using all five tiers.
Based on feedback from the City Council, there is no change to the tiers proposed for 2014.
In addition to the usage charges above, the City of Chanhassen collects a fixed quarterly charge of $7.50
for the water utility. In 2014, the fixed quarterly charge is proposed to increase 3.0% to $7.74.
Target Cash Reserves for the Water Funds
The cash balance of a fund is a measure of its financial health and allows the City to respond to
unexpected events without imposing sudden rate increases. The cash reserve target for the Water
Operating Fund is equal to six months' worth of operating costs plus 15% of accumulated depreciation.
The following graph shows the projected cash balances as measured against target cash reserves.
Water Fund Operating Ending Cash Balance
9.9,000 _ —_ _... _ __
8,000,000
7,o0,oco .Total
6,000,000 - Target
Reserves
5,00,000
0.000.000
3,000,000 ■Entlng
Cash
2000.00 Balance
t.9oo.00
0
O'I o ^� Opp O ^O 0�6 0�� OHO 0�9 OHO Off^ O�� o�O O0. O�y
'L 'L ti ti ti ti ti ti ti 1 ti ti ti M1
Hook -up fees are an important source of revenue needed to expand the water system and pay for the
second treatment plant. We are recommending that water hook -up and platting fees increase 3.75% in
2014 and annually thereafter. This recommendation is less than the prior year's report. The following
graph shows the anticipated cash balance in the trunk portion of the fund.
Water Trunk Fund Cash Balances
5,000,000
4,000,000
3,000,000
2,000,000
1,000,000
0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
5
Sanitary Sewer System
Sanitary Sewer Capital Improvements
The capital improvement plans for the sanitary sewer funds are attached in Exhibit B, which begins on
page 11 of this report. Major capital improvements include:
• $300,000 every other year to replace sewer mains under street reconstruction projects
• North Part Sub - District LB -5 Trunk Lift Station in 2015
• A vactor /sewer jetting truck in 2015
• Sub - District LB -1 Trunk and Lift Station in 2018 and 2020, respectively
Sanitary Sewer Rates
The City's proposed rate increases in 2014 and beyond are 3% per year. The fixed quarterly fee of
$20.64, which includes up to 6,000 gallons of sewer discharge, is also projected to increase 3% to
$21.27.
Quarterly Sewer Rates
% Rate Increase 3.00% 3.00% 3.00% 3.00% 3.00%
Fixed Fee $20.64 $21.27 $21.90 $22.56 $23.24
% Rate Increase 3.00% 3.00% 3.00% 3.00% 3.00%
Sanitary Sewer Hook -up Fees
Hook -up and platting fees are an important source of revenue needed to expand the sanitary sewer
system. We are recommending that sanitary sewer connection and platting fees increase 2% in 2014 and
annually thereafter. This is lower than the 3% annual increase in last year's study.
Target Cash Reserves — Sanitary Sewer Funds
Adequate cash reserves are needed to accommodate cash flow needs, fund emergency repairs, and save
for larger future capital projects. The projected cash balance for the Sanitary Sewer Operating Fund is
shown in the following graph. The target cash reserve equals nine months of operating expenses.
0
Sewer Operating Fund Ending Cash Balance
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
0
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:Target Reserves (9 mos. operating
expense)
■ Ending Cash Balance
The sewer trunk fund is also expected to have adequate cash to pay for the capital costs of expanding
Chanhassen's sanitary sewer system. The graph that follows shows the projected ending trunk fund cash
balance. No additional future debt is assumed for the sewer funds.
Sewer Trunk Fund Cash Balance
$4,500,000
$4,000,000
$3,500,000
$3,000,000
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
$0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
7
Storm Water Fund
There is a 4% rate increase proposed for the quarterly storm water fee for 2014. This is consistent with
last year's rate study.
Quarterly Bill - Single Family Home
2013
2014
2015
2016
2017
Fixed quarterly fee
9.30
9.66
10.05
10.45
10.87
Annual charge
37.20
38.64
40.20
41.81
43.48
Annual Increase
3.0%
4.0%
4.0%
4.0%
4.0%
The proposed rates will be adequate to meet on -going storm water expenditures, which include pond
maintenance, street reconstruction projects, implementing the surface water management plan, and
acquiring land for future storm water retention. We expect capital needs will grow as the state develops
more regulatory requirements relating to storm water run -off.
Another important revenue source for the Storm Water Fund is the area charges collected when land is
platted. The area charges have two components: water quality and water quantity. Both of these charges
are expected to increase 5.5% per year in 2014 and thereafter. This is less than last year's expectation of a
6% increase.
The projected cash balance in the storm water fund is shown in the following graph. The target cash
reserve is a base of $1 million dollars inflated over time, in order to provide sufficient funds for future
capital needs, which are unknown at this time.
Storm Water Fund Ending Cash Balance
2,500,000
2,000,000
1,500,000
• Target Cash
Balance
1,000,000
• Ending Cash
500,000
0
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Fl
Putting It All Together: The Utility Bill
The chart below shows a utility bill for a sample of residential customers who use varying amounts of
water.
Projected Water, Sewer and Storm Sewer Bills
Actual
Proposed
2013
2014
2015
2016
2017
Average Quarterly Residential Bill
26,000 gallons water and 26,000 gallons sewer
Water
56.38
58.02
59.81
61.61
63.45
Sewer
100.85
103.88
107.20
110.22
113.32
Storm
9.30
9.66
10.05
10.45
10.87
Total
$166.53
$171.56
$177.06
$182.27
$187.65
4.1%
3.0%
3.2%
2.9%
2.9%
Percent Increase from prior year
Amount Increase from prior year
$6.54
$5.03
$5.50
$5.21
$5.37
Sample Bill for Lower Water User
11,000 gallons water and 8,000 gallons sewer
Water
24.15
24.86
25.62
26.39
27.18
Sewer
28.67
29.54
30.44
31.33
32.25
Storm
9.30
9.66
10.051
10.45
10.87
Total
$62.11
$64.06
$66.11
$68.17
$70.30
6.5%
3.1%
3.2%
3.1%
3.1%
Percent Increase from prior year
Amount Increase from prior year
$3.81
$1.94
$2.05
$2.06
$2.13
Sample Bill for Higher Water User
255,000 gallons water and 26,000 gallons sewer
Water
864.17
889.50
916.80
944.30
972.63
Sewer
100.85
103.88
107.20
110.22
113.32
Storm
9.30
9.66
10.05
10_45
10_87
Total
$974.32
$1,003.04
$1,034.05
$1,064.97
$1,096.83
3.0%
2.9%
3.1%
3.0%
3.0%
Percent Increase from prior year
Amount Increase from prior year
$28.07
$28.72
$31.01
$30.92
$31.85
Exhibit A - Rate Comparison with Other Communities
The graph below compares the proposed 2014 utility rates with the 2013 utility rates for the communities
identified as the comparable KFS cities. It shows that the City of Chanhassen continues to offer
competitive utility rates to its residents and businesses.
The graph assumes a quarterly, residential usage of 26,000 gallons of water and 26,000 gallons of sanitary
sewer.
Total 2013 Water, Sewer, and Storm Water Charges per Quarter for Average Residentlal Users
5250.00
$225.00
5200.00. - -
5175.OJ
$15000
$78.00 -.
$100.00
$7500
$5000
$2500 M
$000. _ _
Andover Chaska Chanhassen Chanhassen Cottage Elk River Farmington Lino Lakes Prior Lake Rosemount Savage Stilhvater
(Actual (Proposed Grove
2013) 2014)
❑Storm Water Charges MewerCharges nWater Charges
10
September 16, 2013
TO: FINANCE OFFICIALS, BUILDING AND INSPECTION DEPARTMENTS
SUBJECT: SEWER AVAILABILITY CHARGE (SAC) RATE FOR 2014
The Metropolitan Council in July adopted a $50 increase in the base metropolitan SAC rate effective January 1,
2014. At and after that date, the new base metropolitan SAC rate will be $2,485 for metropolitan customer
communities connected to our system.
Pursuant to Minn. Statute 473.517 subd. 3, a metropolitan (or wholesale) SAC is paid by your community to the
Council (MCES) as users connect to the metropolitan wastewater system for the first time or as a user's maximum
demand for sewer capacity increases. Note that these fees are for the availability of capacity (not the actual use) in
the metropolitan system as demanded by development or changes in use on specific properties in your community.
Your community may have different retail SAC rates, different credits may apply and /or you may collect the fees in a
different manner than the metropolitan SAC, pursuant to Minn. Statutes sections 473.521 (3), 444.075 (3) or other
authorities.
Details of our SAC program procedures are available in hard copy (by request) or on the web at:
http: / /www. metrocou nci I. org/Wastewater -Water /Funding -Fi nance/ Rates - Charges /Sewer - Availability - Charge. aspx
As you may know, the SAC system was implemented metro -wide in 1973. The metropolitan SAC funds we collect
pay for the (unused) portion of the capital costs of the metropolitan wastewater system that is "reserved for future
users." The SAC program provides funds to support the award winning metropolitan sanitary sewer system worth
billions of dollars, and facilitates equity by imposing the costs of building reserve capacity on communities
proportionate to the new capacity demand rather than on existing users. Moreover, the regional pooling of
development risk and the SAC pay -as- you -build system has largely relieved communities of the economic risk of
building major new wastewater infrastructure.
If you have any SAC procedural questions, please feel free to contact me at (651) 602 -1378. If you have any
questions on SAC funds or other finance questions, please contact Jason Willett at (651) 602 -1196. You can also
find the SAC procedure manual on our web site as indicated above.
Please share the information in this letter with your staff as appropriate. As always, your cooperation is appreciated.
Sincerely,
),0,4d
Jessie Nye
Supervisor, ES Revenue (SAC)
cc: Jason M. Willett, Director, MCES Finance, Revenue & Energy
METROPOLITAN
C O U N C I L