Coon Rapids sewer rates proposal is in limbo

Proposed city of Coon Rapids sewer rates for 2013 are in limbo.

While the Coon Rapids City Council voted 3-2 in favor of the staff proposal Nov. 20, there were two members absent – Councilmembers Paul Johnson and Melissa Larson – and four votes, a majority of the whole council, were needed for passage.

Councilmembers Denise Klint, Bruce Sanders and Scott Schulte voted in favor, while Mayor Tim Howe and Councilmember Jerry Koch vote no.

To bring the issue back before the council will require a motion by either Howe or Koch, as they voted on what turned out to be the prevailing side.

According to Finance Director Sharon Legg, she will be seeking direction from the council as to the next step.

“I’m not sure what to do now,” Legg said.

The proposal, which was mostly a continuation of sewer rate structure conversion from a flat fee to a base fee plus consumption charge system was designed to be revenue neutral, she said.

Her proposal would have switched single-family and duplex residential users to the base fee plus consumption charge system next year; townhomes, detached townhomes and quads users were brought on board in 2012 with other user groups in prior years, Legg said.

But she said that while some users would be paying less under the new system there would be others paying more.

“The more you use, the more you pay,” Legg said.

That was the concern for Koch, who said large families could well end up paying considerably more for sewer usage.

Howe was also concerned about that, especially for some seniors on a fixed income that would be impacted adversely, but he said he had opposed the new rate structure from the start because he was not convinced that it was needed.

According to Howe, he had voted for a tiered system for water rates because they were mandated by the state.

With the failure of the council to pass the rate structure change, Schulte said that next step should be to reverse the previous action to move all the sewer rates from the base rate plus consumption charge back to the flat fee so there “is a level playing field.”

Klint said the proposed rate structure was a matter of fairness given actions by the council in previous years.

And Sanders said the proposed rate structure puts in place a user fee, which he supports, with a minimum charge to cover fixed costs.

Given the concerns raised by the council, Legg said she might propose a cap on the projected increase for some residents, but that would likely have an adverse effect on other rates.

Under Legg’s plan, the sewer charges would be based on the winter quarter water use or less, if less is used, she said.

“The winter quarter should be a more typical reflection of water that goes through the sewer system, when there is no yard sprinkling or car washing,” Legg wrote in her memo to the council.

The city is divided into three districts for utility billing, but council policy is that the Christmas/New Year holiday period be included in the quarterly billing periods of all three districts because of traditionally high usage at that time, she said.

In moving from a flat fee to a consumption-based rate structure, a base fee is still charged to cover fixed costs in the system, for example the pipes, according to Legg.

“This infrastructure needs to be maintained no matter how much water goes through the system,” Legg wrote.

“The amount paid to the Metropolitan Council is based on the prior year’s flow no matter how much goes through the system, which is about 63 percent of the operating expenses.”

Presently, the flat rate for single-family and duplex accounts is $61 a quarter, with senior citizens receiving a discounted rate of either $42.35 or $32.50 depending on when they first enrolled.

There are some 15,400 single-family/duplex accounts.

Under Legg’s proposal, a base fee of $21 for single-family homes and $16 for duplexes would be charged per quarter, plus a $2.65 per 1,000 gallons consumption charge, the same as all other residential properties.

“If a single-family home uses the average winter quarter amount of water, 15,000 gallons, their sewer bill would remain the same,” Legg wrote in her report to the council.

“Those using less than 15,000 would see a decrease and those with more would pay more.”

And the senior citizens with the current low discounted rate (373 homes) may see the biggest increase, which could be about $8.50 a quarter, according to Legg.

“These accounts have been subsidized in the past, but would pay based on usage going forward,” Legg wrote in her memo to the council.

According to Legg, 9,208 or 63 percent of single-family homes will see a rate reduction, while the remaining 5,160 single-family homes will have an increase unless they use less water than the past winter’s usage.

Legg projects that 590 of the 745 duplexes/twin homes in the city would see a rate decrease.

But those residents who don’t use the system in the winter quarter, for example, snowbirds, will still have to pay a charge under Legg’s plan.

A minimum fee for single-family and duplex properties would be $41 for single-family and $36 for duplexes, which equates to the base fee plus 7,500 gallons of usage, Legg wrote.

And in 77 cases where residents don’t have city water and are not metered, they will continue to pay the current $61 flat fee, she said.

The only rate increase proposed for the other user groups was a jump in the base rate for industrial and institution properties from $10 to $20.

“These types of properties require a greater amount of infrastructure to serve the property,” Legg wrote.

No decision has yet been made by staff on whether to recommend increases to the city’s water and storm drain rates for 2013, according to Legg.

Peter Bodley is at peter.bodley@ecm-inc.com

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