City Council - 09/21/2010 - Workshop APPROVED MINUTES
CITY COUNCIL WORKSHOP & OPEN PODIUM
TUESDAY, SEPTEMBER 21, 2010 CITY CENTER
5:00—6:25 PM, HERITAGE ROOM II
6:30—7:00 PM, COUNCIL CHAMBER
CITY COUNCIL: Mayor Phil Young, Council Members Brad Aho, Ron Case, Jon Duckstad, and
Kathy Nelson
CITY STAFF: City Manager Scott Neal, Police Chief Rob Reynolds, Fire Chief George Esbensen,
Public Works Director Eugene Dietz, Community Development Director Janet Jeremiah, Parks and
Recreation Director Jay Lotthammer, Communications Manager Joyce Lorenz, City Attorney Ric
Rosow, and Recorder Lorene McWaters
Heritage Room H
Mayor Young was absent.
I. UTILITY RATE STUDY
Grant Meyer of AE2S presented a PowerPoint on the utility rate study his firm conducted
for the City of Eden Prairie. Meyer said utility revenues are used to finance the following:
• Operation, maintenance and refurbishment/replacement of 15 deep wells; lime softening;
three water towers; and approximately 260 miles of water main
• Regulatory compliance
• Meter reading and invoicing
• Customer service and administration
Meyer said a 2010 survey of north central communities with populations greater than 1,000
shows that Eden Prairie's utility rates are the second lowest of those responding, or about
$35 per month.
Meyer said the study objectives were to:
• Determine seasonal irrigation costs
• Develop a capital improvement program for utilities
• Prepare of a 10-year revenue adequacy evaluation model and develop rate adjustment
projections
The cost of service analysis (COSA) shows that regular users account for 62.32 percent of
system costs and irrigation accounts for 37.68 percent of costs. On the other hand,regular
users provide 71.7 percent of revenue, while irrigation accounts for 28.3 percent of revenue.
Meyer noted that in the past developers paid a large share of utility system costs.
Meyer reviewed a spreadsheet that analyzes annual reinvestment costs for maintenance of
the City's water utility. The calculations included an asset inventory, replacement and
COUNCIL WORKSHOP MINUTES
September 21, 2010
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rehabilitation costs, estimates of useful service life, age analysis and adjustment factors.
The estimated adjusted annual reinvestment cost is $1.7 million.
Meyer said the report contains two rate structure scenarios. The first scenario is the City's
current surcharge structure. The second scenario involves a block rate structure, which is
designed to have minimal impact on lower tier water users. If the City chooses to go with
Scenario 2, Meyer recommends the City annually evaluate how successful the rate structure
is in getting people in the higher tiers to conserve.
Meyer said the report contains the following recommendations:
• Review water COSA every five years
• Correct inequities by reducing system demand or increasing the cost of water for
irrigation
• Support the recommended CIP
• Develop independent water and sewer utilities
• Evaluate transition to monthly billing
• Review revenue adequacy annually
• Monitor near-term revenue stability
• Fund operating, debt service and capital reserves
• Adopt annual rate indexing
• Annually increase miscellaneous utility charges
• Considering transitioning to inclining block structure
• Communicate changes and increases in rate structure to the public
Public Works Director Gene Dietz said the main reason to consider transitioning to monthly
billing would be to allow people to be more cognizant of how much water they are using,
especially in the summer. City Manager Scott Neal noted that transitioning more people to
the online payment option would help reduce administrative costs.
Meyer said the utility rate study was presented to the Budget Advisory Commission (BAC).
The BAC approved motions acknowledging receipt of the report, agreeing that there is a
need to build up future reserve funds to maintain the utility system, and that a change to the
rate system should be considered. The BAC also recommended that the Conservation
Commission look into how the rate structure facilitates conservation.
The Conservation Commission reviewed the utility rate study and agreed in principle with
the block rate structure;however, they also recommended that the City look"harder at usage
levels in the different gradients to ensure the objective of conservation is achieved."
Council Member Nelson asked if there is any way to ensure utility funds will not be raided
and used for other purposes. She also asked if there is any way to structure the system so
that if usage is below a certain threshold a small rebate is given. Director of Public Works
Gene Dietz said it might be possible to expand the current rebate program for residents who
install water conserving appliances. Meyer said that in the lower tiers, small financial
savings are not that effective in promoting conservation.
COUNCIL WORKSHOP MINUTES
September 21, 2010
Page 3
Case said he would like to encourage more areas of wild grasses on both public and private
property. He would like to see the City model what we want people to do. Dietz said the
City also has a rebate program for rain gauges and water gardens. Council Member Aho
said he does not see the need to break the lower tier down even further.
Dietz said the proposed new fee structure could be incorporated in the annual fee resolution
the Council receives in December, or it can be presented to Council for consideration sooner
if they wish. Duckstad said he supports Dietz's recommendations.
Council Chamber
II. OPEN PODIUM
A. Jeff Strate—Birch Islands Woods Parking Lot
Strate said he has concerns about the City's plan to construct a parking lot in Birch
Island Woods conservation area. He said he thought the plan would go through the
Planning Commission and City Council approval processes, but he just recently
learned that is not necessary. He said the City has already started to remove trees to
make space for the parking lot. He said his concerns relate to safety and the effect of
having an internal parking lot in a conservation area. He asked the City Council to
delay construction of the parking lot until alternative solutions can be explored.
Council Member Duckstad said the parking lot project should be put on hold until
additional information is available. Council Member Nelson said she also is
concerned with having a parking lot that far off the road. Parks and Recreation
Director Jay Lotthammer said he will report back to the City Council on the history
of the project at their next meeting. Lotthammer noted that he has heard from a
number of citizens who are in favor of the parking lot.
Bill Satterness said he agrees that it is a bad idea to put a parking lot in a
conservation area.
III. ADJOURNMENT