Cambridge utility rates proposed to increase 5 percent

By Rachel Kytonen

Following a presentation on the city’s wastewater department that treats 313,900,000 gallons of water annually and has treated 1,811,372,000 gallons since 2006, the Cambridge City Council discussed its proposed utility rates for 2012.

During the council meeting Monday, Nov. 21, Cambridge Finance Director Caroline Moe explained the utility rate proposal for 2012 includes a 5 percent increase or $3.75 per month on a single family home using 7,000 gallons of water per month.

Moe explained in reviewing the city’s rates in 2011 with 10 other peer cities, Cambridge had the eighth highest rate.

“We believe a lot of cities that were lower than us are going to begin catching up with us,” Moe explained. “We are always watching our peer cities to see what they’re doing. A lot of cities are struggling with their utility rates, and we are not alone.”

Proposed utility rates for 2012 include a water base rate of $11.40 per unit, sewer base rate of $21 per unit and storm base rate of $4.36 per unit.

Moe explained debt load continues to be heavy for all utility funds since the city is paying for the debt for all of the reconstruction projects that have occurred between 2001-2011, and the debt related to major new infrastructure such as the $8 million water treatment plant (unfunded mandate) and the $2 million water tower by Target.

Moe noted the city did refinance some of its debt in 2011 helping to reduce costs. She also added sewer operating costs are driving the cost increases in the sewer fund. Major costs include costs associated with chemicals and power.

Moe said water base units increasing by 100 this year—3,973 compared to 3,865 from last year—helped keep the city’s water base rate from increasing.

However, water gallons sold declined 16 million gallons—from 245 million last year to 229 million this year. Moe noted since June was a very wet month, less residential homes had used sprinklers, and that made a difference in the decline of gallons that were sold. Moe said assuming similar sales for next year, the water flow rates must go up to generate the same amount of revenue.

“If we want to keep our water funds in the fiscal responsible state they are in, these are the increases we need to maintain,” Moe said.

Cambridge Mayor Marlys Palmer said the city doesn’t want to raise its rates, but doesn’t have a choice.

“We do have a lot of expenses with this, and these rates pay for a lot,” Palmer said. “We hate to see the rates go up, but it’s one of the few ways we have to pay for this.”

About the water department

During a presentation by Utilities Director Todd Schwab, he explained the different components of the city’s water distribution system.

The city has one water treatment plant, two water towers, 45 miles of underground water mains/valves, 676 hydrants, 5 wells and 3,362 water meters.

The city’s first water treatment plant was constructed and put on line in January 2008. It was built to address changes in federal drinking water requirements to remove radium, iron and manganese.

In 2011, 228 million gallons of water were sold and 245 million were sold in 2010. Since 2008, 1,228,167,0000 gallons of water have been treated.

Schwab added the water department has 3.5 employees, and a staff person is always on call for emergencies.

2012 street improvements

City Engineer Todd Blank presented the feasibility report and MnDOT design standard variance for the proposed 2012 street improvement project.

The project consists of improving the streets and some underground utilities located on S. Dellwood St. from 1st Ave. East to 11th Ave. SE, 11th Ave. South from East Rum River Drive to Carriage Hills Drive, East Rum River Drive from 11th Ave. SW to 18th Ave. SW, 18th Ave. SW from East Rum River Drive to South Main Street, Scidmore Parkway from 18th Ave. SW to approximately 800 feet south, 13th Ave. SW from South Dellwood Street to South Main Street, Horseshoe Drive west of South main Street, Old South Main Street from 11th Ave. SE to 16th Ave. SE, South Adams Street from 11th Ave. SE to 16th Ave. SE, 14th Ave. SE from Old South Main Street to South Adams Street, and Carriage Hills Drive from 11th Ave. SE to South Adams Street.

Total estimated project costs are $5.8 million. The proposed project funding consists of various city funds (approximately 84 percent) and special assessments (approximately 16 percent) to the adjacent properties that benefit from the improvements.

Following discussion, the council approved the street project feasibility report and design standard variance.

The council will hold a public hearing and assessment hearing on the project at its Dec. 19 regular city council meeting. The hearing will give council and staff the opportunity to know if there are any assessment objections prior to awarding a construction contract.

The assessments will be due for payment by Oct. 15, 2012 and if not paid by then, they will be certified to Isanti County to be included with property tax payments beginning in 2013.

Blank said the project assessor is still looking at assessments relating to Allina Hospitals & Clinics, who own the most parcels relating to the street project. Proposed assessments for Allina are at $146,000.

Other government-related parcels include the DNR, with a proposed assessment of $58,500; Isanti County Government Center, $58,500 and School District 911 Bus Garage, $52,650.

If the project keeps moving forward, with action still required by the council in December, March and April, construction would begin in May, with substantial completion by September.

Assessment rates for single family residential: reconstruction, 5,850 per lot; payment replacement, $2,400 per lot and mill and overlay, $1,600 per lot.

Assessment rates for multi-family residential: 8-plex, $14,625 (2.5 units) and 12-plex, $17,550 (3 units).

Assessment rates for commercial and industrial properties are individually determined