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Metropolitan Council

Metropolitan Council. Environmental Services. SAC Revenue Update. Presented to the Environment Committee. December 9, 2008. Jason Willett MCES Finance Director. A Clean Water Agency. Historical SAC Rates. Year. SAC Rate. Increase. % Change. 1999 2000 2001 2002 2003 2004 2005

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Metropolitan Council

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  1. Metropolitan Council Environmental Services SAC Revenue Update Presented to the Environment Committee December 9, 2008 Jason Willett MCES Finance Director A Clean Water Agency

  2. Historical SAC Rates Year SAC Rate Increase % Change 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 $1,050 $1,100 $1,150 $1,200 $1,275 $1,350 $1,450 $1,550 $1,675 $1,825 $2,000 $50 $50 $50 $50 $75 $75 $100 $100 $125 $150 $175 5.0 4.8 4.5 4.3 6.2 5.9 7.4 6.9 8.1 9.0 9.6

  3. Service Availability Charge • SAC units in 2008 (through Sept.) are at a record low. • September year-to-date SAC units: • 2008: 7,385 • 2007: 10,522 • 2006: 12,149 • 2005: 13,807 • 2004: 14,999

  4. Service Availability Charge • Total 2008 SAC units are projected to be 11,500. • SAC units: • 2008: 11,500 (projected) • 2007: 15,194 • 2006: 17,052 • 2005: 19,334 • 2004: 20,542 • 2008 will likely be the lowest since program’s inception in 1973. Previous lows: • 1982: 13,400 • 1975: 13,300

  5. Service Availability Charge • History of SAC units (11,500 projected for 2008):

  6. SAC Units by Category • SAC units paid by category (net of credits): Residential* 16,553 15,611 13,856 8,050 5,808 4,550 Commercial 4,061 4,571 4,629 7,659 8,371 6,660 Industry 536 360 849 1,343 1,015 290 TOTAL 21,150 20,542 19,334 17,052 15,194 11,500 2003 2004 2005 2006 2007 2008** *Includes houses, town homes, duplexes, condos and apartments.**Estimated

  7. Service Availability Charge • The economic decline will likely cause the SAC reserve to drop below the established minimum balance in the next couple of years. • Council Policy 3-2-5: The calculated minimum balance is 20% of the sum of the following five years SAC transfers.

  8. Service Availability Charge • To keep the SAC fund above the minimum balance, the minimum SAC units needed are*: • *Assuming annual $175 SAC rate increases • *Based on 11,500 SAC units in 2008 • 2009: 16,000 • 2010: 18,000 • 2011: 19,000 • 2012: 20,000 (and each following year)

  9. Service Availability Charge • A more realistic—albeit slightly optimistic—recovery might look like this: • 2009: 13,000 • 2010: 16,000 • 2011: 18,000 • 2012: 20,000 (and each following year) • These numbers of SAC units will cause the reserve to drop below the minimum balance.

  10. Use of Reserve Fund • Council Policy 3-2-5: Use of the minimum reserve shall be allowed only in an economic downturn or natural disaster and as approved by the Council. • Reserve balance on 12/31/07 was $72.2 million • Minimum balance on 12/31/07 was $35.2 million • Projected balance for 12/31/08 was $62 million;now $54 million

  11. Reserve balance over or (under) the minimum in $ millions. Both cases are based on $175 annual SAC rate increase. Quick Recovery 11,500 $12.0 16,000 $3.6 18,000 $0.7 19,000 $1.0 20,000 $3.1 Recovery Impact on Fund Realistic Recovery 11,500 13,000 ($1.0) 16,000 ($9.3) 18,000 ($12.4) 20,000 ($10.9) 2008 2009 2010 2011 2012

  12. Questions, Concerns

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