12/13/2013 9:52:00 AM CF raises sewer rates 10%;
water rates to go up 4%
by Ken Haggerty
The Cannon Falls city council approved rate hikes of ten percent for sewer and four percent for water for 2014 at its December 3 meeting.
The rate hikes were recommended by the city's financial advisor, Ehlers and Associates, after a review of current and future budgets of the sewer and water enterprises.
The sewer fund has seen similar increases in recent years as the city continues to play catch-up with costs after its treatment plant was upgraded around 2001, according to city administrator Aaron Reeves. Reeves said the city is paying off the debt of the new plant through 2021-22. Reeves said anticipated growth in the city that would have helped spread the sewer fund costs out among more users has been slow in coming, but has been better the last year or so.
Reeves said previous city councils also kept sewer rates flat or at lower than needed increases, which has compounded the problem in recent years. Reeves said there had been little effort to build up a reserve account for the sewer fund either, which has also necessitated the higher rates lately. The current city council is attempting to get and keep the sewer fund reserve at 50% of the next year's budget.
Council member LeRoy McCusker argued for a lower reserve target and a lower hike in rates as he thinks expansions by Gemini, Hancock, Lorentz, Casey's, Olmsted, and Mayo and the residential homes being added to the city system across from the school and some new homes being built will mean better usage in 2014 and beyond. McCusker said even a four percent hike is a lot for a big commercial account. He was the lone no vote on the hikes.
For now, 10 percent sewer rate hikes are recommended through 2016, with hikes dropping to 5 percent in 2017.
Current residential minimum charge for sewer is $22.17 a month, so that will go up to $24.38. That base rate is for 0 to 400 cubic feet per month. For over that, the sewer consumption rate is now $7.74 per 100 cubic feet. That rate will go to $8.51.
The sewer rate hike is expected to raise an additional $120,000 in revenue.
On the water side, a four percent hike is expected to raise an additional $20,200 in revenue. An average residential account using 800 cubic feet per month would see about $1 more per month on their bill,
Water usage has been better than previously expected, especially summer watering, so previously budgeted 10 percent rate hikes have been reduced. Ehlers says annual expenses go up and must be covered, future capital needs have to be budgeted for, and current debt has to be paid in figuring fair rates.
The city has also had some steady street, sewer and water projects underway in recent years and has paid for the non-assessed sewer and water portions of those through the sewer and water funds. More are planned in 2015 and 2017.