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Council hears warnings on declining water and sewer revenues, staff floats minimum rate increase
Summary
Staff reported water and sewer revenues are below targets amid lower flows and commercial closures, and proposed a minimum rate increase (presented in the fee schedule) while urging further analysis of St. Cloud treatment charges and grant opportunities for a $13 million water treatment project.
City staff told the council the water and sewer enterprise funds are tracking below budget due to reduced flows, some commercial closures and seasonal variation. Staff said the sewer fund’s cash balance is running low and that the city should consider rate adjustments to avoid deeper shortages.
"We have our new software...so far for the first half of the year we've had about 78,500 gain in the in our investments," the Administrator said when reviewing revenues, and later noted enterprise revenues are "well below" target. Mark (public works/operations) told the council billed flows have been lower than the permit-based estimate: the engineer/permit estimate of 371 average was contrasted with observed flows around 230–250.
Staff presented a proposed minimum change in the utility fee structure, telling the council the "minimum would go from 6441 to 6841" as the baseline in the presented schedule and that staff proposed no change to the storm fee. The Administrator said staff used a conservative 4% escalation to estimate St. Cloud treatment and capital charges until a regional meeting provides final numbers.
Council discussed a possible future $13 million water treatment plant that staff described as a large project with a significant funding gap. The Administrator said engineers estimate a two-to-four-year timeline for the project, giving staff time to pursue grants and phased funding; a $2 million allotment is ‘‘in negotiation'' but not yet final.
Council members asked staff to return with tiered-rate options, conservation-oriented blocks, and the fiscal impact of several alternatives. Staff noted any lock-rate changes or enterprise fund rate changes would go through a public hearing later in the year.
