Administration - Alison Bong, Deputy Finance Director; Nick Fleischhacker, Deputy Public Works Director
Title
Title
Adopt 2023 Sanitary Sewer Fund Budget and 2023-2027 Capital Improvement Program (CIP)
end
Executive Summary
Staff recommends that council adopt the proposed Sanitary Sewer Fund 2023 Capital Budget and 2023-2027 Capital Improvement Program (CIP). Finance and Public Works presented the 2023-2027 Sanitary Sewer CIP and the 2023 Sanitary Sewer Budget at a workshop on November 14. The council had an opportunity to ask questions and discuss different projects within the budget.
Background
Council reviewed the proposed 2023 Sanitary Sewer Budget and 2023-2027 CIP at the November 14, 2022, workshop. Council gave guidance to proceed with the staff recommended sewer rates for 2023.
Rates
Sewer rates presented are quarterly residential; commercial rates are derived from the residential rates.
|
|
2022 |
2023 Recommended |
|
Residential |
63.00 |
70.00 |
Fund Background
The city’s Sanitary Sewer Utility Enterprise Fund collects, treats, and disposes of the wastewater of its customers. The system serves almost 21,000 accounts, 95% of which are residential. Those properties that maintain a private septic system and those not in the Metropolitan Urban Service Area (MUSA) are not required to subscribe to the city’s sewer service. Blaine provides sanitary sewer service to over 96% of city residents. The city’s sewer operation functions as a division of the Public Works with 4 FTE staff allocated to the division. The 2023 model proposes adding one Public Service Worker split evenly between the sanitary sewer and storm sewer operations.
Revenues
As with the Water Utility Fund, the Sewer Utility Fund receives most of its funding through fees charged to customers; 96-97 percent of total revenues are collected in fees. Total revenues budgeted for 2023 using the recommended rates are $8.5 million, plus a debt issuance to fund capital expenses of $8.8 million. If council decides to allocate ARP funding towards sewer capital projects, the debt issuance will be reduced.
Expenses
Budgeted operating expenses (not including depreciation) are proposed to increase by $888,940 (11.8%) from the 2022 budget.
• Personal services - increasing $83,440 (19.2%)
o Addition of 0.5 of a Public Service Worker (split with storm sewer)
o 3% general wage increase
• Contractual services - increasing $59,230 (16.3%)
o Increased electric costs from two lift stations coming online
o Additional funds budgeted for software licenses and data/reporting professional services
• Metropolitan Council Environmental Services (MCES) charges - increasing $691,940 (15.8%)
o MCES charges account for over 72% of the fund’s operating costs, excluding depreciation
o MCES collects, treats, and disposes of wastewater across the metro area
• Other category - increasing $46,830 (5.2%)
o Administrative chargebacks
o Building Maintenance internal service fund
Capital Improvement Plan
The 2023-2027 five-year plan includes $25.8 million in capital improvements, with an additional $2.5 million beyond 2027. The 2023 proposed capital budget includes $8.8 million in improvements. A summary of the plan by category can be found below, and a detailed listing of the capital improvement program is included as a supplemental attachment.
|
Project Category |
2023 Budget |
2024-27 |
Beyond 2027 |
Total |
|
Capital Equipment* |
$480,000 |
$0 |
$0 |
$480,000 |
|
Lift Station Maintenance/Repairs |
$7,805,000 |
$12,210,000 |
$1,440,000 |
$21,455,000 |
|
Sewer Asset Reloc.-Hwy 65 Project |
$0 |
$1,600,000 |
$400,000 |
$2,000,000 |
|
Sewer Costs for Transportation Projects |
$225,000 |
$900,000 |
$225,000 |
$1,350,000 |
|
Sewer Line Cleaning |
$200,000 |
$800,000 |
$200,000 |
$1,200,000 |
|
Sewer Line Reconstruction |
$0 |
$50,000 |
$250,000 |
$300,000 |
|
Sewer Manhole Maintenance |
$100,000 |
$500,000 |
$0 |
$600,000 |
|
Sewer Trunk Oversizing |
$0 |
$950,000 |
$0 |
$950,000 |
|
Grand Total |
$8,810,000 |
$17,010,000 |
$2,515,000 |
$28,335,000 |
* Capital equipment from 2024 and on has not been fully accounted for in this plan; a long-range capital equipment plan will be created during the 2024 budget cycle
5-Year Projections
Staff continues to work with Baker Tilly, and a finalized rate model with 5-year projections will be presented to the council at a workshop in the second quarter of 2023. Significant progress has been made to date that has greatly improved the city’s current rate model. Finance, Public Works, and Engineering staff have collaborated in-depth to produce a preliminary long-range capital plan.
Strategic Plan Relationship
Adoption of annual budgets contributes to the overall financial stability of the City.
Board/Commission Review
N/A
Financial Impact
The proposed budget, if adopted, would fully fund sanitary sewer operations and capital needs for 2023 as well as help to stabilize the fund’s reserves.
Public Outreach/Input
N/A
Staff Recommendation
Approve the 2023 Sanitary Sewer Utility Fund Budget and 2023-2027 Capital Improvement Plan through the adoption of the following resolution.
Attachment List
Sanitary Sewer Utility Fund Budget Summary
Sanitary Sewer Utility Fund CIP
Body
WHEREAS, the proposed Sanitary Sewer Utility Enterprise Fund Budget and 2023-2027 Capital Improvement Plan for the fiscal year commencing January 1, 2023 has been prepared by the City Manager; and
WHEREAS, the City Council has examined, studied, and reviewed said proposed Sanitary Sewer Utility Enterprise Fund Budget and 2023-2027 Capital Improvement Plan; and
WHEREAS, the City Council has, after due consideration and deliberation, made such amendments and adjustments in the proposed Sanitary Sewer Utility Enterprise Fund Budget and 2023-2027 Capital Improvement Plan they consider necessary, desirable, or expedient.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Blaine as follows:
1. That the proposed Sanitary Sewer Utility Enterprise Fund Budget and 2023-2027 Capital Improvement Plan attached hereto are approved; and
2. That the 2023 appropriations attached hereto are approved; and
3. That the 2023 funding sources and fee adjustments identified and attached hereto and reflected in the City’s fee schedule are approved.
4. That the City’s 5-Year Capital Improvement Plan be updated to reflect the approval of projects included in the proposed 2023-2027 Capital Improvement Plan; and
5. That the City Manager is authorized and directed to implement and to administer, within the budgetary funding limits and within adopted City policy and relevant State and City laws and regulations, said approved Sanitary Sewer Utility Enterprise Fund Budget and 2023-2027 Capital Improvement Plan.
PASSED by the City Council of the City of Blaine this 5th day of December 2022.