Coon Rapids council compromises on sewer rate issue

A compromise was reached by the Coon Rapids City Council Dec. 4 on a new residential sewer rate structure and charges.

Back on Nov. 20, the council voted 3-2 in favor of the staff recommendation, but 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.

It required a motion by either Howe or Koch to bring the issue back before the council Dec. 4 when a full council was present.

Following the Nov. 20 meeting, Howe met with Finance Director Sharon Legg to look at options that would reduce “sticker shock” facing some residents under the new rate structure, he said.

The proposal that Howe recommended to the council to implement the rate structure, but put a cap on quarterly bills was unanimously approved.

Legg’s plan converts single-family and duplex sewer rates from the existing flat fee each quarter to a base rate plus consumption charge system, which was put in place for 2012 for townhouses, detached townhouses and quads.

Sewer consumption charges would be based on winter quarter water use or less, if less is used, Legg said.

“The winter quarter should be a more typical reflection on water that goes into the sewer system, when there is not yard sprinkling or car washing,” she said.

Winter quarter for District 1 billing is mid-November through mid-February billed March 1; District 2, mid-December through mid-March billed April 1; and District 3, mid-October through mid-January billed Feb. 1.

All include the Christmas holiday period, Legg said.

The new rates would take effect with the Feb. 1 billing cycle, she said.

While rates proposed by Legg under the new system were designed to be revenue neutral, some users would be paying less, while others would be paying more.

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

But it also provides residential utility customers with the opportunity to control their costs, she said.

Howe and Koch were concerned that some users, particularly large families and a group of seniors that up to now had had a 50 percent discount under a policy approved by the council some 15 years ago, would be paying considerably more than the current $61 flat fee per quarter the city charges for single-family residential/duplex residents regardless of consumption.

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

Under Legg’s original 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 rate that was put in place for all other residential users.

“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.”

According to Legg, 65 percent of single-family accounts would pay the same or less, while fewer than 9 percent (1,200 customers) use more than 25,000 gallons, which would cost $87.25.

For duplex customers, the original recommendation would result in 77 percent getting a rate decrease, Legg wrote in her report to the council.

But the senior citizens with the current low discounted rate (373 homes) would see a big increase, about $8.50 a quarter, according to Legg.

In the compromise approved by the council, the base fee would be raised for single-family users from $21 to $22, but the quarterly utility bill would be capped at $90, regardless of consumption.

That would amount to 26,000 gallons of water used during the quarter, Legg said.

For duplexes, the base rate would increase from $16 to $17 with a cap of $85, the equivalent of $25,660 gallons used.

The increase for senior citizens now receiving the 50 percent discount was halved from $8.50 to $4.25, while the minimum charge for those not putting any water in the sewer system during the winter quarter would increase from $41 to $42.

According to Legg, the increase in the base rate would offset the loss of revenue from setting a cap and leave the sewer fund in good financial shape.

Koch was entirely comfortable with Howe’s proposal, he said.

Sanders, too, supported the compromise, but he was also a strong supporter of the consumption-based rate structure, he said.

“That’s the proper way to go,” Sanders said.

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

The consumption charge is designed to pay the city costs from the Metropolitan Council for the flowage through the sewer system.

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

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

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

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