14 - Amending Sewer Rates - Laserfiche WebLink

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Item No. 14 TO: Mayor & City Council Grayson Path, City Manager FROM: Gene Anderson, Finance Director SUBJECT: SEWER RATE INCREASE DATE: February 8, 2021 BACKGROUND: The City has been working and planning towards building a new Wastewater Treatment Facility for several years. The new plant will be a combination of new plant and the use of existing plant facilities where possible. This approach holds down the project cost. The new plant will have the same geographic footprint as the existing plant which is a cost savings to the City since we will not have to acquire additional property. This project nevertheless will require long term financing which will need to be supported by the Wastewater Utility Rate. City Staff, Garver Engineering (project engineers), and NewGen Strategies & Solutions (City's rate consultant) have considered various options for easing into the required rate increase. Our goal was to phase in the needed rate increase and thus help our community acclimate to the necessarily higher sewer rates while at the same time raising sufficient revenue to make the debt service payments. STATUS OF ISSUE: On January 25, 2021 the City Council was presented three rate increase options that would be capable of funding the debt that will be issued to cover Phase 1 and Phase 2 costs of design and construction of the new wastewater plant. After consideration, the City Council voiced their approval of the semi-annual rate adjustment option to finance the forthcoming Certificates of Obligation (CO). The Council will consider adopting an ordinance that increases sewer rates over time to fund the proposed debt issue. BUDGET: The proposed ordinance goes into effect April 1, 2021 and will increase the wastewater revenue stream. A new construction fund and a new Interest & Sinking Fund will be established to handle the expenditure of the CO proceeds and to make the required debt payments. OPTIONS: 1. Approve the proposed sewer rate ordinance. 2. Reject the proposed sewer rate ordinance and give city staff further directions. RECOMMENDATION: Motion to approve the proposed sewer rate ordinance.