4.4. SR 11-08-1999
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Item #4.4.
River
MEMORANDUM
TO:
Mayor & City Council
FROM:
Pat Klaers, City Administrator
DATE:
November 8, 1999
SUBJECT: Enterprise Funds
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The City Council has three enterprise funds under its management. These
enterprise funds are the garbage collection program, the municipal liquor
store, and the wastewater treatment system (WWTS). Attached for your
review and consideration are the details for these three budgets. Also
attached for your consideration is a memo from Debbie Long regarding
proposed new refuse prices and services for our residential customers and a
proposed resolution that will increase the WWTS user fees by 1.5 percent in
each of the next two years.
The Garbage Collection Program began in November 1990. In 1993 the
billing and collection responsibilities for this program shifted to the Elk River
Municipal Utilities. Approximately 96 percent of this entire budget goes for
fees that are paid to the three garbage collection firms that are under
contract with the city to provide services and for expenses associated with the
disposal of waste at the Refuse Derived Fuel (RDF) Plant. Disposal of the
collected solid waste at the RDF plant is required in the city contracts with
the haulers. In 2000, the city will offer four different garbage collection
options to the residents and will also offer recycling on a weekly basis.
In October 1999, the city and the garbage haulers negotiated a five-year
contract. This contract keeps the city fees paid to the haulers steady and also
adds a new container option and weekly (rather than bi-weekly) recycling for
the customers. The contract does allow for a review of the hauler fees should
the CPI exceed 3 percent in any given year.
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New in the 2000 garbage collection budget, is a county payment to the city of
$20 per household. The City of Elk River is receiving this payment because it
has an organized garbage and recycling collection program. The county is
encouraging all cities to institute an organized collection and recycling
13065 Orono Parkway · P.O. Box 490 · Elk River, MN 55330 · TDD & Phone: (612) 441-7420 · Fax: (612) 441-7425
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program in order to encourage recycling and reduce the waste stream.
Additionally, if cities do have organized collection systems, the county desires
to have the waste disposed of at the RDF Plant. This new revenue is
incorporated into the 2000 budget and this paYment by the county combined
with the new contracts will allow the city to slightly reduce its customer rates
for 2000. Please see the attached memo from Debbie Long for the details on
the proposed new rates.
The new Municipal Liquor Store at the corner of Highway 169 and 193rd
Avenue opened in October 1997. It is difficult to call 1998 a true reflection of
operating expenses and revenues at Northbound as there were still unusual
expenses in 1998 associated with the new store and customers were still
finding us at our new location. Accordingly, it is expected that year-end 1999
figures will offer a truer reflection of annual operating revenues and
expenditures than what we saw in 1998. The attached 2000 budget is based
on a combination of 1999 year end projections and 1998 actual figures.
Initially the customer count at the new liquor store was down about 1 percent
and operating expenses, especially personal services, were up from what was
experienced at the old facility. Lately, the customer count has been slightly
increasing and the operating expenses have been held steady. Neither of
these statistics comes as a surprise and over time it is expected that the net
profit will increase. The gross profit has steadily increased over the last few
years, while the net profit has fluctuated, but is now beginning to slowly
Increase.
Northbound still has over 50 percent of its revenues generated from selling
beer, and beer has the lowest profit margin of all the products sold at the
liquor store. Wine has the highest margin of profit and is steadily becoming
a bigger seller at the new store. The wine market is increasing and this is
expected to help boost profits in the future.
It should be noted that the transfers out have increased by $10,000 for 2000.
The total transfers out is projected in the amount of$151,550, of which
$110,000 goes directly into the general fund and the balance, $41,250 goes for
the city hall debt service.
Whether or not the WWTS budget needs to use reserves to balance the
budget depends entirely on the amount of sewer connection charges that are
received. The city has experienced a few good years in the recent past with
the collection of SAC fees, and these high revenue years are needed to offset
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any slowdown in the building industry and, consequently, the collection of
connection fees. Some of the connection revenues were built into the debt
retirement plan for the treatment plant expansion that was completed in
1998. Additionally, the city recently undertook another $200,000 in debt
associated with the east Elk River project. Accordingly, having projected
revenues exceed proposed expenditures in the 2000 budget is good news to
help cover us in case of a few "bad years" in the future and to pay for the east
Elk River debt.
The WWTS budget is very straightforward with no surprises for 2000. Please
see the attached budget pages for details.
Attached for your consideration is a resolution that increases sewer rates by
1.5 percent in 2000 and 1.5 percent in 2001. These modest increases are
requested in order for the revenues to keep pace with inflationary expenses
associated with WWTS supplies and services and cost of living increases for
employees. The most recent council resolution that approved a rate increase
was for a 2 percent per year increase in both 1998 and 1999. No rate
increase took place in 1997.
Recommendation
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It is recommended that the City Council adopt a motion approving the three
attached enterprise fund budgets.
It is recommended that the City Council adopt the new refuse prices as
outlined in the memo from Debbie Long.
It is recommended that the City Council adopt Resolution 99-_ Setting the
Sanitary Sewer User Fees for 2000 and 2001.
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MEMORANDUM
TO:
Mayor and City Council
FROM:
Debbie Long
DATE:
November 8, 1999
SUBJECT: New Refuse Prices and Services
The option of a 60 gallon refuse container will be offered beginning January
1, 2000. With this service option, we can eliminate the problem of customers
abusing the system by overstuffing their 32-gallon container. This option will
also offer the 90-gallon container customers a chance to change to a smaller
container if they are good at recycling and don't need such a large container.
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Additionally, effective January 1, 2000, recycling pick-up will change from a
biweekly to a weekly service. With the weekly service, customers will no
longer have to try to remember which week they should set their recycling
bin out and their recyclables will not pile up. This convenience should
encourage more people to recycle.
Staff recommends reduced customer charges for refuse collection effective
January 1, 2000. Due to an existing fund surplus, the new county payment
of $20.00 per household to the city (for providing an organized refuse and
recycling program and for requiring waste disposal at the RDF plant), and
the new wages in the hauler contracts, we are able to lower the prices. After
surveying surrounding communities, we found that adding a 60 gallon
container option, weekly recycling, and the new lower customer prices for
garbage service will make our services and pricing equivalent to households
throughout the school district and county.
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13065 Orono Parkway · P.O. Box 490 · Elk River, MN 55330 · TDD & Phone: (612) 441-7420 · Fax: (612) 441-7425
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New Refuse Collection Prices and Services
Current
Biweekly Recycling
Effective January 1. 2000
Weekly Recycling
60-Gallon Container Option
32-Gallon Biweekly - $9.60
32 Gallon Biweekly - $9.60
32 Gallon Weekly - $12.75
32 Gallon Weekly - $11.25
60 Gallon Weekly - $12.75
90 Gallon Weekly - $16.50
90 Gallon Weekly - $14.25
2 -90 Gallon Weekly - $27.98
2 - 90 Gallon Weekly - $24.25
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Recommendation
Staff recommends approval of the reduced refuse service prices.
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RESOLUTION 99 -
A RESOLUTION FOR THE CITY OF ELK RIVER
SETTING THE SANITARY SEWER USER FEES
FOR 2000 AND 2001
WHEREAS, the costs for providing sanitary sewer services are to be funded
through a user charge; and,
WHEREAS, the user charge is to cover ongoing operating expenses and
replacement and expansion expenses; and,
WHEREAS, sewer rates need to be adjusted to cover increases in operating
expenses due to inflation that is expected in 2000 and 2001.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of
Elk River that sanitary sewer user fees be set as follows:
4/1/00
4/1/01
Charge per 1,000 gallons
Minimum Charge
Apartment Unit Charge
House Unit Flat Charge
$ 2.98
6.91
11.89
15.84
$ 3.02
7.01
12.07
16.08
Passed and adopted by the City Council of the City of Elk River this _ day of
November, 1999.
Stephanie Klinzing, Mayor
ATTEST:
Sandra A. Peine, City Clerk
\ \ elkriver\ sys \ shrdoc \ document \resoluti \sewOOO1.doc
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GARBAGE COLLECTION PROGRAM
This budget includes expenditures for service contracts with haulers
for the collection of the city garbage and recycling material, payments
for disposal of waste at the Refuse Derived Fuel (RDF) plant, and for
the overall administration of the program, including coordination with
the Elk River Municipal Utilities for customer billing.
2000 BUDGET COMPARED WITH 1999 BUDGET
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The 2000 garbage collection program budget is proposed in the amount of
$777,600. This is a $28,850 or approximately 3.9 percent increase over the
adopted 1999 budget. This increase is due to more customers receiving
garbage and recycling services as the number of single family homes in the
city increase. Over the past few years the city has added approximately 150
single-family homes each year and this results in higher hauler contract fees
and solid waste disposal expenses. The expenditures for the garbage
collection program are shown on the adjacent page. It should be noted that
these two line items, the garbage hauler payments and the waste disposal
fees, amount to approximately 96 percent of the total budget. This figure is
consistent with previous years. The city and garbage hauler contract expires
in October 2004.
All revenues for the garbage collection program are also shown on the
adjacent page. In previous years all revenues, on one form or another, came
from customer charges. In 2000, a county payment to the city is scheduled as
an incentive for the city to continue its organized garbage collection and
recycling programs. By the city having an organized system, it allows for
more and more convenient recycling to take place and ensures that the city
disposes of all of it residential waste at the RDF Plant. Another revenue
source being used in 2000 is reserves. The reserves are mainly customer
charges from previous years that are above what is needed to fund the
program. The 2000 budget plans to use $31,300 in reserves.
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The city started its organized residential garbage collection and recycling
program in November 1990. The Elk River Municipal Utilities collects the
garbage fees and remits the money to the city on a monthly basis. The city
then makes payments to the garbage collection firms and the RDF plant.
The garbage collection program deals only with residential properties of four
units or less. Currently the city has approximately 4,400 customers. The
breakdown of the program shows the collection of approximately 3,310
ninety-gallon containers, 880 thirty-two gallon containers, both of which are
picked up weekly, and 310 thirty-two gallon containers that are picked up bi-
weekly. In 2000 the city will add a new option of a 60-gallon container that
will be picked up weekly and recycling material will be picked up weekly
rather than bi-weekly.
GARBAGE COLLECTION
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INTER GOVERNMENT AL
CHARGES FOR SERVICES
OTHER REVENUE
TOTAL REVENUES
USE OF RESERVES
TOTAL SOURCES OF FUNDS
REVENUE ANALYSIS
1997
ACTUAL
$ 11,262
672,523
14,484
$ 698,269
o
$ 698,269
1998
ACTUAL
$ 9,851
708,509
15,948
$ 734,308
o
$ 734,308
1999
ADOPTED
$ 9,000
696,000
11,000
$ 716,000
32,750
$ 748,750
2000
PROPOSED
$ 94,000
646,000
11,000
$ 751,000
26,600
$ 777,600
INTERGOVERNMENTAL
County Grant
Special Assessments
CHARGES FOR SERVICES
Garbage Customer Charges
OTHER REVENUE
Customer Penalties
TOTAL REVENUES
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Use of Reserves
TOTAL$OURCEOFFUNDS
$ 88,000
6,000 $ 94,000
646,000
11,000
646,000
11,000
EXPENDITURE ANALYSIS
PERSONAL SERVICES
OTHER SERVICES AND CHARGES
TOTAL
751,000
26,600
$ 777,600
1997 1998 1999 2000
ACTUAL ACTUAL ADOPTED PROPOSED
$ 1,600 $ 1,768 $ 2,050 $ 3,700
677,139 699,981 746,700 773,900
$ 678,739 $701,749 $ 748,750 $ 777,600
PERSONAL SERVICES
Regular Salaries
Employee Pensions
Employee Insurance
OTHER SERVICES & CHARGES
Billing Services
Legal Services
Other Professional Services
Postage
Hauler Contracts
Solid Waste
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...... ..... ..... ................... $
2,850
350
500 $
24,850
2,000
750
100
507,600
238,600
3,700
773,900
$ 777,600
LIQUOR STORE FUND
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Provides for the total operation of the Elk River Municipal Liquor store
as authorized by Minnesota State Law and the Elk River City Council.
2000 BUDGET COMPARED WITH 1999 BUDGET
The 2000 municipal liquor store operating budget is planned in the amount of
$782,800. This is a $63,500 or 8.8 percent increase from the adopted 1999
budget. The biggest change in this 2000 budget is an increase of $32,000 in
the depreciation line item. This line item went from $52,000 in both the 1998
and 1999 budgets to a more realistic amount of $84,000 in the 2000 budget.
The new liquor store was completed in late 1997, and this depreciation figure
has been low the first two years. Removing this increase from the budget
equation, the 2000 liquor store budget goes up only $31,500 or 4.4 percent.
This $31,500 increase can be seen mainly in the $6,000 increase in the
capital outlay category, the $10,300 increase in the transfers out category,
and the $11,000 increase in the personal services category. The 2000 capital
outlay request of $12,000 is for new signage.
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The 2000 estimated income statement for the liquor store is shown below.
Gross profits are projected to increase due mainly to inflation of prices and
also due to a low estimate being used in 1999. If the customer count at the
store increases, the 2000 estimate may also be low. Regarding the debt
service expense, the city started making payments on the new liquor store in
1998. The final payment is scheduled for February 2007.
It should be noted that in 1999 the city hired Dave Potvin as its new liquor
store manager. The previous manager, Fritz Dolejs, retired after 15 years of
service to Elk River. In addition to the manager, the municipal liquor store
staff includes 4 full time and 4-7 part time employees.
1997 1998 1999 2000
ACTUAL ACTUAL ESTIMATED ESTIMATED
SALES $2,887,798 $3,074,852 $3,000,000 $3,293,000
COST OF SALES 2,212,344 2,383,340 2,308,600 2,537,600
GROSS PROFIT 675,454 691,512 691,400 755,400
OPERATING EXPENSES 352,551 455,045 426,050 473,200
OPERATING INCOME 322,903 236,467 265,350 282,200
OTHER INCOME:
INTEREST INCOME 28,692 24,751 12,000 12,000
MISCELLANEOUS 38,653 94,824 0 19,700
INCOME BEFORE TRANSFERS 390,248 356,042 277,350 313,900
TRANSFERS OUT 153,450 131,651 141,250 151,550
INCOME AFTER TRANSFERS 236,798 224,391 136,100 162,350
CAPITAL OUTLAY 6,000 12,000
DEBT SERVICE 0 170,863 146,000 146,050
BALANCE 236,798 53,528 (15,900) 4,300
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LIQUOR STORE
. 1997 1998 1999 2000
ACTUAL ACTUAL ADOPTED PROPOSED
PERSONAL SERVICES $241,102 $272,883 $284,800 $295,800
SUPPLIES 9,312 17,348 11,500 12,000
OTHER SERVICES AND CHARGES 102,136 168,513 129,750 165,400
CAPIT AL OUTLAY 6,000 12,000
DEBT SERVICE 170,863 146,000 146,050
TRANSFERS OUT 153,450 131,651 141,250 151,550
TOTAL $506,000 $761,258 $719,300 $782,800
EXPENDITURE ANALYSIS
PERSONAL SERVICES
Regular Salaries .......................................... $182,000
Overtime Salaries .......................................... 7,000
Part Time Salaries .......................................... 58,000
Employee Pensions .......................................... 27,200
Employee Insurance .......................................... 21,600 $295,800
SUPPLIES
Operating Supplies .......................................... 11,000
Uniforms .......................................... 1,000 12,000
. OTHER SERVICES & CHARGES
Audit .......................................... 2,100
Other Professional Services .......................................... 1,000
Telephone .......................................... 4,000
Postage .......................................... 100
Advertising .......................................... 13,000
Repair & Maintenance .......................................... 7,000
Rug & Laundry Services .......................................... 3,000
Utilities .......................................... 24,000
Insurance .......................................... 7,500
Conferences & Schools .......................................... 4,800
Dues & Subscriptions .......................................... 1,200
Depreciation .......................................... 84,000
Licenses & Taxes .......................................... 1,700
Bank Charges .......................................... 12,000 165,400
CAPIT AL OUTLAY
Furniture & Equipment .......................................... 12,000 12,000
DEBT SERVICE
Principal .......................................... 80,000
Interest .....................,.................... 66,050 146,050
. TRANSFERS OUT
General Fund ........................................... 110,000
City Hall Debt Service .......................................... 41,550 151,550
$782,800
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WASTE WATER TREATMENT SYSTEM
Provides for the administration, operation and maintenance of the
sanitary sewer system, laboratory and lift stations for the sanitary
treatment of household, commercial and industrial waste deposited
into the sanitary sewer system.
2000 BUDGET COMPARED WITH 1999 BUDGET
The 2000 wastewater treatment system (WWTS) budget calls for
expenditures in the amount of $1,086,850. This represents a $22,950 or 2.2%
increase from the adopted 1999 budget.
The main reason for this budget increase is the additional $26,000 in debt
payment for the 1998 treatment plant expansion project. The other budget
increase of note is in the capital outlay category, which calls for the purchase
of a lift station alarm system and for a new roof for the digester and
pretreatment buildings. This $23,000 increase in the capital outlay category
is offset by a decrease in the personal services and supplies categories.
Supplies are down approximately $14,000 because of the every other year
cycle for the purchase of ultraviolet bulbs that are part of the treatment
system at the plant. The personal services are down due to changes made
following the retirement ofWWTS Superintendent Darrell Mack.
It appears that the WWTS revenues will slightly exceed expenditures in
2000. The main question with projecting revenues is the amount of SAC
charges that will be received, and this is based on new buildings being
constructed in the urban district. If revenues do exceed expenditures in
2000, these monies will be used for part of the $200,000 commitment the
WWTS fund made towards the east Elk River public improvement project.
CHARGES FOR SERVICES
OTHER REVENUE
TOTAL REVENUES
USE OF RESERVES
TOTAL SOURCE OF FUNDS
1997
ACTUAL
$677,804
490,793
$1,168,597
o
$1,168,597
1998
ACTUAL
$730,294
521,586
$1,251,880
o
$1,251,880
1999
ADOPTED
$720,000
330,000
$1,050,000
13,900
$1,063.900
2000
PROPOSED
$790,000
330,000
$1,120,000
o
$1,120,000
REVENUE ANALYSIS
CHARGES FOR SERVICES
Customer Charges
$790,000
$790,000
OTHER REVENUE
Sewer Connection Charges
Interest Income
260,000
70,000
330,000
TOTAL REVENUES
$1,120,000
WASTE WA TER TREA TMENT SYSTEM
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PERSONAL SERVICES
SUPPLIES
OTHER SERVICES AND CHARGES
CAPITAL OUTLAY
DEBT SERVICE
TRANSFERS OUT
TOTAL
PERSONAL SERVICES
Regular Salaries
Overtime Salaries
Part Time Salaries
Employee Pensions
Employee Insurance
SUPPLIES
Office Supplies
Operating Supplies
Motor Fuels & Lubricants
Equipment Parts
.
OTHER SERVICES & CHARGES
Engineering Services
Audit
Other Professional Services
Telephone
Postage
Printing & Publishing
Other Repair & Maintenance
Insurance
Solid Waste
Utilities
Cleaning Services
Uniform Rental
Depreciation
Conferences & Schools
Dues & Subscriptions
Licenses & Taxes
CAPITAL OUTLAY
Buildings
Equipment
DEBT SERVICE
Principal
Interest
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TRANSFERS OUT
General Fund
1997
ACTUAL
$187,435
32,118
353,978
217,318
6,000
$796,849
1998
ACTUAL
$210,553
37,033
455,188
41,875
346,956
8,000
$1,099,605
EXPENDITURE ANALYSIS
1999
ADOPTED
$229,050
53,300
428,400
7,000
338,150
8,000
$1,099,650
$ 1 51 , 1 00
13,150
10,200
18,250
24,600
800
21,500
4,000
12,700
6,000
2,000
3,600
1,800
100
400
9,500
12,500
3,300
63,000
2,800
2,700
310,000
3,500
200
5,000
8,000
22,000
175,000
189,150
10,000
2000
PROPOSED
$217,300
39,000
426,400
30,000
364,150
10,000
$1,086,850
$217,300
39,000
426,400
30,000
364,150
10,000
$1,086,850