Council Work Session

Council Work Session Agenda Monday, July 14, 2025 at 6:00 PM Council Chambers Page 1. CALL TO ORDER 2. ROLL CALL 3. PLEDGE OF ALLEGIANCE 4. ADOPTION OF AGENDA 5. NEW BUSINESS 5.1. Storm Water Utility Rate Study 2 - 13 Storm Water Utility Rate Study - Presentation Slides 6. COMMUNICATIONS AND MISCELLANEOUS 7. ADJOURNMENT Page 1 of 13  MEMO Prepared for: Mayor Zajkowski & City Council Staff Contact: Noah Wiedenfeld, Rae Ann Ailts Meeting: Council Work Session - 14 Jul 2025 Subject: Storm Water Utility Rate Study BACKGROUND INFORMATION: In June 2024, the City Council approved a contract with MSA Professional Services to evaluate the current stormwater utility rates, analyze the rate structure, and recommend a new rate structure that will adequately support both operational and capital needs. Notably, an updated comprehensive rate study has not been conducted since the establishment of the stormwater utility in 2005. In October 2024, MSA presented their initial findings to the Council, which included their methodology and a comparison of the existing rate structure with a proposed Equivalent Residential Unit (ERU) fee structure. Since then, staff have been collaborating with MSA to further examine the data. On Monday evening, staff will present essential information regarding the Stormwater Utility, including rate analysis, recommendations, and the next steps for implementation. ATTACHMENTS: SWU Rates PPT Final Page 2 of 13  Page 2 of 12 Stormwater Utility Rate Study City Council Work Session July 14, 2025 Page 3 of 13  What is stormwater? Page 3 of 12  Stormwater refers to water that does not soak into the ground or evaporate.  Think about a heavy rainstorm. Rain that falls on a rooftop, concrete, asphalt parking lot, etc. must go somewhere so that the property or local street doesn’t flood. Water flows into storm drains and ditches that ultimately empty into our local waterways. What goes in here… Flows out here… Page 4 of 13  Why is stormwater management important? Page 4 of 12  Stormwater picks up pollutants:  Salt, Leaves, Trash, Fertilizers, Pesticides, Oil  Pollutants in stormwater can negatively impact the local watershed  Overwhelmed or poorly designed systems can result in localized flooding and property damage when there is heavy rain and/or rapid snowmelt  System benefits the entire community Page 5 of 13  What is a stormwater utility? Page 5 of 12  System by which property managers pay a fee to fund stormwater management facilities and operational costs  More equitable way to fund stormwater management compared to general property taxes  Example: Entities that don’t pay property taxes still pay a stormwater utility fee, as they impact and benefit from the City’s stormwater management system  New Richmond’s stormwater utility was established in 2005  City contracted with consultant MSA Professional services in 2024 to review stormwater rates, methodology, and ordinance Page 6 of 13  What do rates support? Page 6 of 12  Operational costs  Salaries and benefits, supplies, fuel  Repairs and maintenance of the system  Ponds  Catch basins  Curb and gutter  Debt service costs (capital projects)  Reserve for future replacements and unforeseen expenses Page 7 of 13  Current Environment  Rates Page 7 of 12  Last rate study 15+ years  Residential = $3.51  Commercial & Institutional = $27.92 per acre  Industrial = $23.26 per acre  Annual Revenue is ~ $350,000  What is impacting rates?  Costs to maintain existing infrastructure  Debt service coverage  Future capital needs  Regulations and compliance with MS4 Page 8 of 13  Rate Analysis Page 8 of 12  Current Environment 2024 Actual 2025 Budget Annual Revenues $350,000 $355,000 O&M Expenses ($230,000) ($215,000) Debt Service ($166,500) ($202,250) Gain (Loss) ($46,500) ($62,250) Reserves on Hand $357,613 $295,363 # Months Cash on Hand 10.9 8.6 (Best Practice 3-4 months) Capital Expenses and debt proceeds not reflected in above Page 9 of 13  Rate Analysis Page 9 of 12  Proposed Rate  Evaluated $4.00, $4.50 and $4.75 per ERU  Forecasted over 5-year horizon Current $4.00 $4.50 $4.75 Revenues $350K $425K $478K $505K Net Position -$40-50K $45K $100K $125K Debt Service Reserves Page 10 of 13  Proposed Rate Page 10 of 12  $4.75 per ERU  Effective January 1, 2026  No credit structure  $0.25 per ERU increase per year in 2027 and 2028  Rates evaluated annually $4.75/ERU 2026 2027 2028 2029 2030 Revenues $505,168 $531,756 $558,344 $584,932 $611,520 O&M 200,803 191,254 196,423 201,736 207,197 Debt Service 179,071 180,768 223,208 274,925 315,221 Gain/(Loss) 125,294 159,735 138,713 108,270 89,102 Page 11 of 13  Customer Impact Customer Current Proposed Monthly Annual (Monthly) (Monthly) Difference Difference Page 11 of 12 Residential $3.51 $4.75 $1.24 $14.88 Institutional $ 1,643 $ 2,380 $ 737 $ 8,842 Manufacturing $ 547 $ 1,121 $ 574 $ 6,891 Retail $ 279 $ 931 $ 652 $ 7,829 Institutional $ 757 $ 738 $ (19) $ (228) Manufacturing $ 151 $ 537 $ 385 $ 4,625 Institutional $ 204 $ 535 $ 331 $ 3,974 Institutional $ 549 $ 502 $ (47) $ (562) Retail $ 113 $ 444 $ 331 $ 3,967 Retail $ 297 $ 437 $ 141 $ 1,687 Page 12 of 13 Retail $ 169 $ 416 $ 247 $ 2,965  Customer Communication Page 12 of 12  Bill messaging, social media & website news  Direct mail & conversation with customer’s experiencing a significant rate changes (+20% or $100 monthly) August- September- July January September December Ordinance Updated Council Direct outreach to Bill message Rates approves customers with effective change to significant change Website January 1, Stormwater Bill message (all) news 2026 Utility rates Website news (all) Page 13 of 13