3.8 Modifying Water and Sanitary Sewer Utility Rates 2024
Request for
City Council Action
DEPARTMENT INFORMATION
ORIGINATING DEPARTMENT REQUESTOR: MEETING DATE:
Administration City Administrator/Finance Director Flaherty February 26, 2024
PRESENTER(s) REVIEWED BY: ITEM #:
Consent 3.8 – Utility Billing Rates
STRATEGIC VISION
MEETS: THE CITY OF OTSEGO:
X Is a strong organization that is committed to leading the community through innovative communication.
Has proactively expanded infrastructure to responsibly provide core services.
Is committed to delivery of quality emergency service responsive to community needs and expectations in a
cost-effective manner.
Is a social community with diverse housing, service options, and employment opportunities.
Is a distinctive, connected community known for its beauty and natural surroundings.
AGENDA ITEM DETAILS
RECOMMENDATION:
City staff is recommending that the City Council adopt a resolution modifying water & sanitary sewer utility rates.
ARE YOU SEEKING APPROVAL OF A CONTRACT? IS A PUBLIC HEARING REQUIRED?
No No
BACKGROUND/JUSTIFICATION:
The City has a public utility system with Water and Sanitary Sewer operations. The current system is comprised of 5,350
customers who include both residential and commercial accounts. Those customers receive monthly utility bills for usage
of the water and sanitary sewer utility system. The monthly charges include both a base fee, and a consumption fee
which is calculated on their actual usage of the system.
The utility rates for the water and sanitary sewer systems are analyzed by the Finance Director on an annual basis. This
analysis includes reviews of budget-to-actuals, preparation of the operating budget, preparation of the capital
improvement plan, and future projections.
In addition to analysis by City staff, the City Council commissioned a Utility Rate Study with Ehlers during 2023, which
evaluated: funding capital projects, managing revenue volatility, reviewed billing structure, competitiveness of rates and
adequacy of connection fees. The recommendations for utility rates in 2024 are consistent with the forecasted increases
in the 2023 Utility Rate Study and were factored into the 2024 Water and Sanitary Sewer Operating budgets.
The Administrative Subcommittee and Public Works Subcommittee were presented with this information at their
February 14, 2024, and February 21, 2024, meetings and provided direction for City Council consideration of approval.
SUPPORTING DOCUMENTS ATTACHED:
• Rate Summary Comparisons
• Monthly Bill Illustrations
• Resolution 2024-24
POSSIBLE MOTION
PLEASE WORD MOTION AS YOU WOULD LIKE IT TO APPEAR IN THE MINUTES:
Motion to adopt Resolution 2024-24, Modifying Water and Sanitary Sewer Utility Rates for 2024.
BUDGET INFORMATION
FUNDING: BUDGETED:
Fund 601 – Water Utility
Fund 602 – Sanitary Sewer Utility
Yes
City of OtsegoPublic Utility ChargesWater Rate Comparison2024Actual Increases 3.00% 6.00% 6.00% 6.00%Proposed2020 2021 2022 2023 2024 ChangeBase Rate5/8" Meter 9.61$ 4.00$ 4.24$ 4.49$ 4.80$ 6.90%3/4" Meter 9.61$ 4.00$ 4.24$ 4.49$ 4.80$ 6.90%1.00" Meter 29.28$ 10.00$ 10.60$ 11.24$ 12.03$ 7.03%1.50" Meter 58.55$ 20.00$ 21.20$ 22.47$ 24.04$ 6.99%2.00" Meter 87.82$ 32.00$ 33.92$ 35.96$ 38.48$ 7.01%3.00" Meter 175.65$ 70.00$ 74.20$ 78.65$ 84.16$ 7.01%4.00" Meter 439.13$ 120.00$ 127.20$ 134.83$ 144.27$ 7.00%Residential & City Owned Consumption (per 1k)0 - 10,000 Gallons 1.80$ 10,000 + Gallons 1.92$ 0 - 5,000 Gallons 2.22$ 2.35$ 2.49$ 2.66$ 6.83%5,000 - 15,000 Gallons 2.78$ 2.95$ 3.13$ 3.35$ 7.03%15,000 + Gallons 3.48$ 3.69$ 3.91$ 4.18$ 6.91%Commercial, Industrial & Institutional Consumption (per 1k)0 - 50,000 Gallons 1.80$ 2.22$ 2.35$ 2.49$ 2.66$ 6.83%50,000 + Gallons 1.92$ 2.78$ 2.95$ 3.13$ 3.35$ 7.03%Irrigation & Bulk WaterConsumption (per 1k)All Usage 1.92$ 3.48$ 3.69$ 3.91$ 4.18$ 6.91%
City of OtsegoPublic Utility ChargesSanitary Sewer Rate Comparison2024Actual Increases 8.00% 10.00% 10.00% 10.00%Proposed2020 2021 2022 2023 2024 ChangeBase Rate5/8" Meter 11.06$ 3/4" Meter 11.06$ 1.00" Meter 22.13$ 1.50" Meter 55.32$ 2.00" Meter 110.66$ 3.00" Meter 221.29$ 4.00" Meter 553.23$ Base Fee 14.11$ 15.52$ 17.07$ 17.41$ 1.99%Flat Fee 51.61$ 55.95$ 54.72$ 57.83$ 5.68%ConsumptionPer 1,000 Gallons of Water Usage 6.86$ 7.50$ 8.25$ 9.08$ 9.26$ 1.98%
City of OtsegoPublic Utility ChargesMonthly Bill Estimations2024Proposed2023 2024 ChangeResidential (Winter = 4,365 Gallons)Base Fee 4.49$ 4.80$ Consumption: 0-5K Gallons 10.87$ 11.61$ Subtotal - Water Charges 15.36$ 16.41$ 6.85%Base Fee 17.07$ 17.41$ Consumption 39.63$ 40.42$ Subtotal - Sanitary Sewer Charges 56.70$ 57.83$ 1.99%Total Monthly Estimated Bill 72.06$ 74.24$ 3.02%Residential (Summer = 21,698 Gallons)Base Fee 4.49$ 4.80$ Consumption: 0-5K Gallons 12.45$ 13.30$ Consumption: 5-15K Gallons 31.30$ 33.50$ Consumption: 15K + Gallons 26.19$ 28.00$ Subtotal - Water Charges 74.43$ 79.60$ 6.94%Base Fee 17.07$ 17.41$ Consumption (4.365K Gallons) 39.63$ 40.42$ Subtotal - Sanitary Sewer Charges 56.70$ 57.83$ 1.99%Total Monthly Estimated Bill 131.13$ 137.43$ 4.80%
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CITY OF OTSEGO
COUNTY OF WRIGHT
STATE OF MINNESOTA
RESOLUTION NO: 2024-24
MODIFYING WATER & SANITARY SEWER
UTILITY RATES FOR 2024
WHEREAS, Otsego City Code Chapter 7; Section 2 outlines that in order to pay for the costs associated with Water and Sanitary
Sewer utility systems, that a just and equitable charge will be imposed upon users of those systems; and
WHEREAS, the Otsego City Council has identified and reviewed the operating, capital and debt service requirements of the
Water and Sanitary Sewer utility systems.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF OTSEGO, MINNESOTA:
1. That the following rates, fees and charged be imposed on users of the Water utility system:
a. Base Charge (Monthly for All Users)
b. Usage Rates (Monthly Per 1,000 Gallons of Consumption)
Meter Size
2024 Base
Charge
5/8"4.80$
3/4"4.80$
1.00"12.03$
1.50"24.04$
2.00"38.48$
3.00"84.16$
4.00"144.27$
Customer Type Consumption
2024
Rate
Residential 0 - 5,000 Gallons 2.66$
Residential 5,000 - 15,000 Gallons 3.35$
Residential 15,000+ Gallons 4.18$
Commercial, Industrial & Institutional 0 - 50,000 Gallons 2.66$
Commercial, Industrial & Institutional 50,000+ Gallons 3.35$
Irrigation & Bulk Water All 4.18$
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c. Bulk Water
In order to access bulk water from the system, a meter rental from the City is required. There is a $200.00
deposit required for that meter. The rental fee for that meter is a minimum of $50.00, which includes the
first month, with each additional month being charged at $50.00.
The consumption tracked by the meter will be billed at the rates identified in paragraph 1(b) of this
resolution. The local sales tax rate of 7.375% will also apply to the entire bulk water rental and
consumption charge incurred.
2. That the following rates, fees and charged be imposed on users of the Sanitary Sewer utility system:
a. Base Charge
b. Usage Rates (Per 1,000 Gallons of Average December-February Water Usage)
c. Usage Rates (Per 1,000 Gallons of Actual Sewer Usage)
d. Minimum Charges
These charges come into effect for new accounts where there is less than three months of usage history
to base the average from. This minimum monthly charge is $57.83.
3. That the rates, fees, and charges outlined in this resolution shall be effective for all billings issued on or after March 1,
2024.
Customer Type Frequency
2024
Rate
All Otsego Users Monthly 17.41$
Introductory Flat Fee (New Accounts)Monthly 57.83$
All Wholesale Users Quarterly 58.95$
Customer Type Frequency
2024
Rate
All Otsego Users Monthly 9.26$
Customer Type Frequency
2024
Rate
All Wholesale Users Quarterly 3.25$
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ADOPTED by the Otsego City Council this 26th day of February, 2024.
MOTION BY:
SECONDED BY:
IN FAVOR:
OPPOSED:
CITY OF OTSEGO
__________________________________
Jessica L. Stockamp, Mayor
ATTEST:
__________________________________
Audra Etzel, City Clerk