City Council Minutes 03-12-2012 SpecialMINUTES
SPECIAL WORKSHOP /MEETING — MONTICELLO CITY COUNCIL
Monday, March 12, 2012 — 6:15 p.m.
Mississippi Room, Monticello Community Center
Present: Clint Herbst, Lloyd Hilgart, Tom Perrault, Glen Posusta, Brian Stumpf
Absent: None
Others: Staff: Tom Kelly, Jeff O'Neill, Matt Theisen
Cargill: Kurt Zwiefel, Don Roberts, Carrie Heitz, Terry Profitt
1. Call to Order
Mayor Herbst called the Special Meeting to order at 6:15 p.m.
2. Purpose of Workshop: Discussion of 2012 industrial water & sewer rates with
Cargill Kitchen Solutions
Tom Kelly summarized what he had put together for proposed rates for 2012 for water
and sewer charges.
3. Consideration of adjusting industrial water and sewer rates
Tom Kelly included calculations of 8% and 12% as well as calculations that included full
depreciation and Waste Water Treatment Facility (WWTF) loan repayments in the
agenda report. With full depreciation and loan payments, the result would be a rather
significant increase. After further calculations, he came up with a recommendation of
10% increase for water and 12% for sewer, which would cover some depreciation.
Although the percentages seem quite high, it is a relatively small dollar amount for most
users. The effect on Cargill Kitchen Solutions, however, would be a larger amount due to
their high water usage.
Clint Herbst asked Cargill to talk about the city rates in comparison to other cities where
they are located. Don Roberts commented that the other cities generally have not
increased water and sewer rates or only raise rates on rare occasions. Carrie Heitz stated
that other cities have comparable rates for water, but Monticello charges quite a bit more
for TSS and BOD. Glen Posusta asked if they have similar facilities in other cities that
would compare to Monticello. Terry Profitt said that a comparable plant would be in
Mason City, Iowa.
Tent' Profitt asked Kurt Zwiefel to talk about some handouts that he had prepared. Kurt
explained some rate structure calculations from 2007 to the 2012 proposed that he
developed. Comparisons included influent (water inflow), effluent (water used /sewage),
BOD and TSS. He also prepared some graphs showing the increases in costs compared
to the amount of influent and effluent and noted that, although Cargill has decreased the
effluent in recent years, the costs have continued to go up. Kurt Zwiefel pointed out the
costs for influent and effluent are comparable to other cities, but the costs for TSS and
BOD were quite a bit higher in Monticello.
Clint Herbst suggested that they focus on the TSS and BOD costs rather than water and
sewer rates to determine why those costs are so much higher than other cities. Clint
Special Council Meeting /Worl<shop — March 12, 2012 Page 1
Herbst explained that the City had previously looked at overall costs of the WWTF and
calculated what it would cost for users to cover the costs rather than use the tax levy to
cover those costs. Glen Posusta said he understood that some of the costs assigned to
Cargill were due to the type of product that is being dumped into the sewage facility to
cover the cost of treatment and wear and tear on the equipment. Terry Profitt and Carrie
Heitz pointed out that they have been trying to control the sewage that is dumped, but the
rates still keep climbing. Kurt explained that he had looked at the water reports on the
city's website and figured that they are using about 7% of the water and paying about
18% of the revenues. Clint Herbst pointed out that the revenues are also based on what
they are dumping into the system so that would have to be looked at too. Don Roberts
stated that their biggest concern is how they can continue to pay the large increases every
year.
Clint Herbst recommended that the City and Cargill should review the actual cost of
BOD and TSS. Cargill asked if the City had considered going out for bids on the contract
for operating the WWTF. Tom Kelly noted that the current contractor had not increased
their rates for operations in 2010 or 2011. Carrie Heitz wondered why Cargill's charges
had gone up if the cost for operating the WWTF did not increase. Jeff O'Neill explained
that the City had not been charging what they should to cover the actual costs for water
and sewer, and the recent increases have been catching up with where they should be. He
also explained the upcoming need for covering loan repayment costs for the WWTF
through the sewer fund.
Don Roberts pointed out that the costs are becoming prohibitive to the point where
Cargill may have to look at pretreatment of the sewage to reduce the need for treatment in
the WWTF. Tent' Profitt explained that they would rather not be in the treatment
business but it is getting to the point where they can't sustain the business at the high
rates.
Clint Herbst summarized that the BOD and TSS rates are probably the key component to
work on. Don Roberts offered to provide BOD and TSS rates that they are paying at
other sites if it would be useful for comparison. Kurt Zwiefel pointed out that the
proposed rates would cost $59,000 more in charges this year and the BOD alone would
account for $36,000 of that. Consensus was to recommend leaving the BOD and TSS
rates where they are for now and look at actual costs going into those rates to determine
where adjustments could possibly be made.
4. Adjournment
LLOYD HILGART MOVED TO ADJOURN THE SPECIAL MEETING AT 6:51 P.M.
TOM PERRAULT SECONDED THE MOTION. MOTION CARRIED 5 -0.
Recorder: Catherine M. Shuman DW
Approved: March 26, 2012
Attest:
Cy X inistrator
Special Council Meeting /Workshop — March 12, 2012 Page 2