The Fountain City Council considered the results of a utility rate analysis at the Wednesday, November 1 meeting and it could have some substantial changes for the city. An analysis by Minnesota Rural Water Association provided the city with four options.
Currently, properties are charged a base rate of $30 per 3,000 gallons for sewer service and an additional $20 base rate for water. Total annual city expenses for 2016 were $182,384. According to Clerk Rhonda Flattum, using the figure gives the clearest picture for usage, since the city has spent the last year working to regain state compliance at the wastewater treatment plant. The city of Fountain has 177 connections. Water usage for the year was 8,550,584 gallons, with water usage per connection of 48,308 gallons or an average of 132 gallons per day.
“At a cost per thousand gallons, that’s $21.33 and you’re charging just $30 for 3,000 gallons. I think you can see where we’re headed,” said Tim Hagemeier, representative of MN Rural Water. According to the analysis, the utility has a deficit of roughly $118,664, which was also noted at the last city audit.
All options included lowering the minimum usage from 3,000 to 1,000 gallons per month, with an additional $.04 per gallon over that limit. “You’d be charging more people for usage, but still losing money,” noted Hagemeier. Options also included continuing the annual $30 base rate or increasing the base rate to $50 or $75, nearly or more than doubling the current rate. These still leave the city in the noticeably in the red, equating to losses of $76,184 and $23,084 respectively. The last option presented was the break-even point; the point at which the city isn’t losing money operating the utility. At an annual base rate of $86 per connection, while reducing the minimum gallons to 1,000, the city would see approximately $280 per year in utility revenue.
Hagemeier is recommending the city reduce the gallon minimum to 1,000 and increase the rate, but he stopped short of suggesting which base rate the city should shoot for. “It’s a pretty substantial increase. $30 per 1,000 is pretty cheap. $86 per 1,000 is ringing that top bell,” he added. “I often get asked what other municipalities are paying. It’s irrelevant. You have expenses and you have to try and cover them the best that you can.” Approximately 70 connections currently exceed the 3,000 gallon usage. Hagemeier also suggested that once a rate is set, the city review it after one year to ensure the deficit gap is closing.
“It’s a hit and a half. We have people on fixed incomes; young people just starting out. That’s a big deal,” added Councilor Jim Schott. “I’d just assume we come in with a happy medium. We know we have to do something. We’re gonna have to double it to break even.”
Clerk Flattum reiterated comments from Tom Wente, of Smith Schaffer Associates, at the city’s last audit. “He said, ‘The numbers don’t lie. You can’t change what it is. These are the numbers,’” she recalled. ”It’s not a pretty picture.”
The council continued looking at flexing the numbers, but no clear answer was found. “We’re gonna have to do a lot for catch-up,” added Mayor Richard Kujath.
“You can play the numbers game all you want, but it’s like buying a car; you end up paying the same in the end,” said Councilor Brian Ostby. It was suggested the city hold a public hearing on the issue. “I would like to tell the public, ‘This is where we’re at. Our hands our fixed,’” added Ostby.
No official public hearing has been set, but it could happen as early as January.
In other news, the city again received favorable reports from Rick Whitney, of PeopleService, regarding the wastewater plant. Both September and October were again 100% compliance. Whitney is now looking at making some gradual adjustments to cut operational costs. These include switching brands of MicroC, which also may effect concentration and longevity. A 30-day pilot study would be done to ensure the same results. The change could save the city $8,000 per year.
Savings could be used similarly to capital projects funds, being potentially utilized for enhancements at the plant that could further alleviate problems and operating costs. Whitney was focused on keeping the plant in compliance. “If we can get the plant through the cold weather, it’ll be a year. It’s my belief we have it licked,” said Whitney.
“This year was a horrible year,” added Kujath. “It was about getting the plant dialed in.”
Another discussion item included council decision to hire for the removal of police department equipment from the former squad car to allow the car to be sold to the general public. Cost to remove the equipment is $450 and pieces could be sold directly. A motion was approved to list the car for sale on Craigslist at $16,900.
The next regularly scheduled council meeting is Wednesday, December 6, at 7:30 p.m., at city hall. The public is encouraged to attend.
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