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

SAC Revenue Update 2 Historical SAC Rates Year SAC RateIncrease% Change $1,050 $1,100 $1,150 $1,200 $1,275 $1,350 $1,450 $1,550 $1,675 $1,825 $2,000 $50 $75 $100 $125 $150 $

SAC Revenue Update 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

SAC Revenue Update 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, will likely be the lowest since program’s inception in Previous lows:  1982:13,400  1975:13,300

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

SAC Revenue Update 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, ** Commercial 4,061 4,571 4,629 7,659 8,371 6,660 Industry ,343 1, TOTAL 21,150 20,542 19,334 17,052 15,194 11,500 *Includes houses, town homes, duplexes, condos and apartments. **Estimated

SAC Revenue Update 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.

SAC Revenue Update 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)

SAC Revenue Update 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.

SAC Revenue Update 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

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

SAC Revenue Update 12 Questions, Concerns