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I I I Council Meeting Minutes April 23, 1996 Page 7 Council Business. continued Motion by Gunderman, seconded by Williams, to AUTHORIZE STAFF TO PROCEED WITH CONSTRUCTION OF A PATHWAY SEGMENT LINKING THE EXISTING SYSTEM TO BENT TREE HILLS DRIVE. 5 Ayes - 0 Nayes, Motion Carried. Williams asked Proper the reasons the work has not been completed. Proper said Harstad originally wanted to perform the work this past winter, but had problems fInding a source to take the spoiled material. Now, Harstad will need to pay someone to haul the material out of the park. Proper does not have leverage over Harstad to remedy the situation. Gunderman is fearful that a heavy rain could flood area homes, and the City could become responsible for damages. Benke said the project has taken too long and it is Harstad's responsibility to deal with increased costs, but prefers legal action not be taken. Williams requested Fulton and Proper meet with Harstad and relate the Council's concern and establish a deadline of when work will begin and end. Williams is not adverse to taking legal action, but it is costly and would rather see monies going into the project completion. Motion by Gunderman, seconded by Williams, to REQUEST THAT UNDER THE DIRECTION OF THE CITY MANAGER, THE CITY PURSUE FURTHER LEGAL ACTION AS APPROPRIATE SO THAT MR. HARSTAD COMPLETES WHAT THE ORIGINAL CONTRACT INDICATES, AND PRESENT TO COUNCIL THE OUTCOME OF THE SITUATION ON MAY 14, 1996. 5 Ayes - 0 Nayes, Motion Carried. Finance Director Margaret Egan presented continuation of utility rates, and thanked Kim Otis for preparing the report and Proper's supervision of utilities. The City operates three utilities: sanitary sewer, water, and stormwater. Property taxes do not fInance utilities, and annual reviews ensure adequately funded services. Customer charges fmance 86% with the remainder from the Army and late fees. Current rates will adequately fInance operation.', through 1996. Annual costs of $3.2 million are as noted: sewer/$1,587,500, water/$I,222,800, and stormwater/$226,000. A 5% annual increase is projected for 1997-2000, but could be reduced if expenses grow less than 5%. Variances in revenues and expen..<;es account for a sewer utility surplus of $50,700. The water utility $164,900 surplus was created by water usage from the City treatment plants which lowered NSP costs. The stormwater utility operated at an expected $62,300 loss. Sanitary sewer is the most expensive utility and over 45 % goes to Metropolitan Council for waste treatment. Charges will steadily increase with rates of $2.70 expected by the year 2000. Benke said a waste payment structure was adopted by Legislature, but vetoed by the Governor. Egan said included in this rate study is a positive windfall of $82,000 relating to 1994 wastewater treatment costs. The water utility receives the greatest amount of support, and rates of $1.05/1 ,000 gallons will remain in effect through 1998. An increase of 10C/l ,000 gallons is expected in 1999. The stormwater utility was established in 1995, and improvements are the majority of costs. Variances in capital needs resulted in fluctuation of annual outlay costs. This utility will be in a deficit position ($68,300) at the end of the year 2000. Samuelson asked what will happen to this detIcit. Egan said $170,000 in revenue is brought in each year, but there is much anticipated improvement activity expected. Hopefully, this utility will be in a non-deficit position in future years. Council Business Innsbruck Park Pathway Extension Report 96-093 1996 Customer Charges for Utility Charges Report 96-092 Resolution 96-027