Water rates for all users will increase in the city of Coon Rapids, while there will be a hike in sewer rates for non-residential sewer users.
The Coon Rapids City Council has approved the new rates, effective with the May 1 billing cycle.
But the council was not unanimous in doing so.
The new water rates were approved on a 5-2 vote, with Councilmembers Scott Schulte and Denise Klint opposed.
Klint and Schulte also voted no on the new sewer rates, but so did Mayor Tim Howe, which produced a 4-3 majority.
Howe and Councilmembers Paul Johnson, Jerry Koch, Melissa Larson and Bruce Sanders voted yes to the water rate increase, while Johnson, Koch, Larson and Sanders provided the majority for the new sewer rates.
According to Sharon Legg, city finance director, the water fund is self-supporting with no tax levy to back it.
The fund has had fairly significant losses in the past two years – nearly $1 million in 2010 and $500,000 in 2011 – largely due to decreased usage, Legg said.
And in the first quarter of 2012, usage has dropped 13 percent over the same period a year ago, she said.
While operating expenses declined by $200,000 in the past year, many costs are fixed – water system capital improvement, including depreciation and debt to finance those improvements, Legg said.
In addition, the city spent some $275,000 to repair water main breaks in 2011, less than in 2010, and over $185,000 to replace valves and hydrants, she said.
And the city also assumed responsibility for turning off water at the curb to protect vacant homes and in some cases, has found the curb stop to be inoperable, requiring it to be dug up and repaired, she said.
In an effort to reduce operating costs, the city hired Progressive Consulting Engineers to do a technical study, according to Legg.
While the study has not been completed, “obvious savings are not significant,” Legg said.
The rates for residential, which are split into three tiers according to usage, and commercial/industrial sprinkling meters will increase 10 cents a quarter for each category.
The new rates are:
• Residential tier one per 1,000 gallons (first 20,000 gallons) from $1.60 to $1.70.
• Residential tier two per 1,000 gallons (20,001 to 80,000 gallons) $2 to $2.10.
• Residential tier three (80,001 and above) from $2.20 to $2.30.
• Commercial/industrial users, per 1,000 gallons, from $1.60 to $1.70.
• Sprinkling meters per 1,000 gallons from $2.20 to $2.30.
In addition, the service charge per account will go up from $8 to $10 per bill.
Legg is anticipating that the new rates will generate some $400,000 in additional revenue, she said.
“Obviously, if we have another year with many water breaks and curb stop repairs coupled with low water sales, this fund is going to again lose money,” Legg said.
According to Schulte, he did not object to the 10 cent rate increase in the various rate categories, but he opposed the service charge increase for administration.
In the past five years, water rates have increased in 2007, 2009, 2010, 2011 and now 2012.
Changes to the sewer rates to move away from billing a flat amount to a rate that includes a consumption component have been partially put in place for 2012, according to Legg.
“About two thirds of the 2012 sewer fund budget is based on flow… the other third is fixed,” Legg said.
“The fixed charges can fluctuate some due to backups, maintenance, efficiencies, power costs etc.”
Townhouses, detached townhomes and quads, as well as mobile homes, have been included in the new rate system this year, which includes a flat fee to cover the fixed costs of maintaining the sewer system – lines and lift station – plus a consumption charge based on winter quarter use, she said.
The consumption charge change this year will impact 3,900 accounts out of the 6,000 to 8,000 residential customers who are billed quarterly, not including apartments, Legg said.
“The change will impact some customers significantly,” she said.
“Low users will be happy, but larger users will call.”
But commercial, restaurant, industrial and institutional properties will see an increase in their base fee of $10 per quarter to “compensate for the fixed costs of maintaining the system,” according to Legg.
Under the approved sewer rates, there will be no increase in single-family/duplex properties at $61 per unit and $32.50 for seniors, as well as apartment/unit with sewer only at $41.50.
The new rate system for townhouses/quads and mobile homes will be $10.50 for each unit plus $2.65 per 1,000 gallons; in 2011, the rate was $45 quarter for townhomes/condos and $48 a quarter for a mobile home.
The increase in base fee for commercial/industrial and institutional brings that quarterly charge to $45, while for restaurants the base rate will now be $70 a quarter.
The consumption charge for those classifications remains at $3.05 per 1,000 gallons used.
According to Legg, the sewer system had an operating income of some $217,000 in 2011.
Howe opposed the new sewer rates because of the use of the winter quarter to measure customers’ consumption.
There are several residents who are “snowbirds,” not living in Coon Rapids over the winter and thus are not using the system, Howe said.
Schulte agreed with Howe on the consumption issue, but also objected to the additional base charge to businesses, which has risen considerably over the past two years, he said.
Because of Howe’s concerns, Legg was asked to provide a report to the council at it next meeting, May 1, proposing a minimum rate charge regardless of usage, she said.
In addition, according to Legg, she will recommend which winter months will be used to calculate the consumption rate for all three billing districts in the city.
But Legg said she will recommend that December be included in all three since Christmas time has the highest usage.
Peter Bodley is at [email protected]