1. Proposals to Change Water and Sewer Rates & Rate Structure Presented to: Avon Lake Board of Municipal Utilities Presented by: Todd Danielson December 23, 2010

2. Outline Current Rates and Structure Current Revenues and Expenses Additional CIP Needs Water Structure & Rate Changes Sewer Rate Changes Anticipated Additional Revenues Average Bills 2

3. Current Rates and Structure 5 Tier Declining Block Water Rate, last changed 1/1/08 – Tier 1First 20,000 gal$1.19 / 1,000 gal – Tier 2Next 30,000 gal$1.10 / 1,000 gal – Tier 3Next 200,000 gal$1.02 / 1,000 gal – Tier 4Next 250,000 gal$0.93 / 1,000 gal – Tier 5Over 500,000 gal$0.84 / 1,000 gal Sewer Rate, last changed 4/1/08 – $8.25 /qtr + $2.18 / 1,000 gal 3

4. Current Annual Revenues and Costs Water Wastewater 2010 Antic. 20092008Average Costs $7,600,000$8,300,000$7,400,000$7,750,000 Revenues $7,800,000$7,600,000$7,800,000$7,750,000 Add’nl CIP $1,000,000 2010 Antic. 20092008Average Costs $3,100,000$3,600,000$4,000,000$3,600,000 Revenues $3,500,000$3,300,000$3,700,000$3,500,000 Add’nl CIP $2,500,000 4

5. Additional CIP Needs Water – WTP Sludge Treatment Improvements (~$3M) – WTP Capacity Improvements (~$2.5M) – Main Replacements (~$6M in 5 yrs) – Water Tank(s) (~$2.5M) Wastewater – WPCC Upgrades (~$12M) – Sewer Rehabilitations (~$2M) – Combined Sewer Separations (~$15M in 8 yrs) 5

6. Water Structure & Rate Changes Collapse existing 5 tier system to 3 tier system and phase in rate changes Phase I – tier collapse & initial change7/1/11 – Tier 1:First 50,000 gal$1.37 / 1,000 gal – Tier 2:Next 200,000 gal$1.15 / 1,000 gal – Tier 3:Over 250,000 gal$0.95 / 1,000 gal Tier 1 – Recovers all expenses Tier 2 – Recovers all, except 10% of salaries & benes Tier 3 – Recovers all, except 20% of salaries & benes 6

7. Water Structure & Rate Changes – cont’d Phase II – rate change7/1/12 – Tier 1:First 50,000 gal$1.55 / 1,000 gal – Tier 2:Next 200,000 gal$1.28 / 1,000 gal – Tier 3:Over 250,000 gal$1.06 / 1,000 gal 7

8. Sewer Rate Changes Phase I 7/1/11 – Administrative fee$8.25 / bill – Rate$2.51 / 1,000 gal Phase II 7/1/12 – Administrative fee$ 8.25 / bill – Rate$2.84 / 1,000 gal Phase III 7/1/13 – Administrative fee$ 8.25 / bill – Rate$3.17 / 1,000 gal 8

9. Anticipated Additional Revenue (over current revenue) WaterSewer Year 1$435,000$340,000 Year 2$1,325,000$680,000 Year 3$1,325,000$1,025,000 9

10. Average Annual Water Bills 10 CurrentPhase IIncreasePhase IIIncrease Residential $ 96.72 $ 111.34 $ 14.62 $ 125.83 $ 14.49 Commercial $ 222.18 $ 267.38 $ 45.19 $ 302.18 $ 34.80 Industrial $ 473.71 $ 551.20 $ 77.49 $ 617.89 $ 66.69 Ind - Monthly $ 13,648.86 $ 15,163.89 $ 1,515.03 $ 16,916.52 $ 1,752.63 Bulk Contracts $ 578,612.94 $ 653,838.32 $ 75,225.37 $ 729,301.29 $ 75,462.97 Schools $ 482.17 $ 560.73 $ 78.56 $ 628.49 $ 67.76 Apartments $ 1,774.13 $ 1,938.81 $ 164.67 $ 2,163.42 $ 224.61 Apts - Monthly $ 1,166.83 $ 1,367.24 $ 200.41 $ 1,535.26 $ 168.01 Condos $ 176.33 $ 210.35 $ 34.02 $ 237.73 $ 27.38 Condos - Monthly $ 802.64 $ 957.15 $ 154.51 $ 1,079.26 $ 122.11 City $ 4,305.84 $ 4,867.62 $ 561.78 $ 5,429.40 $ 561.78

11. Average Annual Sewer Bills 11 CurrentPhase IIncreasePhase IIIncreasePhase IIIIncrease Residential $ 174.84 $ 196.35 $ 21.51 $ 217.86 $ 21.51 $ 239.37 $ 21.51 Commercial $ 492.13 $ 561.75 $ 69.62 $ 631.37 $ 69.62 $ 700.99 $ 69.62 Industrial $ 1,757.04 $ 2,018.46 $ 261.42 $ 2,279.89 $ 261.42 $ 2,541.31 $ 261.42 Ind - Monthly $ 75,350.86 $ 86,761.57 $ 11,410.71 $ 98,172.28 $ 11,410.71 $ 109,582.99 $ 11,410.71 Bulk Contracts $ 76,614.95 $ 88,217.34 $ 11,602.39 $ 99,819.73 $ 11,602.39 $ 111,422.12 $ 11,602.39 Schools $ 1,016.03 $ 1,165.10 $ 149.06 $ 1,314.16 $ 149.06 $ 1,463.22 $ 149.06 Apartments $ 4,560.69 $ 5,247.24 $ 686.55 $ 5,933.79 $ 686.55 $ 6,620.34 $ 686.55 Apts - Monthly $ 2,564.92 $ 2,938.84 $ 373.92 $ 3,312.76 $ 373.92 $ 3,686.68 $ 373.92 Condos $ 349.11 $ 397.05 $ 47.93 $ 444.98 $ 47.93 $ 492.91 $ 47.93 Condos - Monthly $ 3,262.05 $ 3,741.68 $ 479.62 $ 4,221.30 $ 479.62 $ 4,700.93 $ 479.62 City $ 208.84 $ 235.50 $ 26.66 $ 262.17 $ 26.66 $ 288.83 $ 26.66

12. Average Total Water & Sewer Bills 12 CurrentPhase IIncr.Phase IIIncr.Phase IIIIncr. Residential $ 271.56 $ 307.69 $ 36.13 $ 343.69 $ 36.00 $ 365.20 $ 21.51 Commercial $ 714.31 $ 829.12 $ 114.81 $ 933.55 $ 104.42 $ 1,003.17 $ 69.62 Industrial $ 2,230.75 $ 2,569.67 $ 338.91 $ 2,897.78 $ 328.11 $ 3,159.20 $ 261.42 Ind - Monthly $ 88,999.72 $ 101,925.46 $ 12,925.74 $ 115,088.80 $ 13,163.34 $ 126,499.51 $ 11,410.71 Schools $ 1,498.21 $ 1,725.83 $ 227.62 $ 1,942.64 $ 216.82 $ 2,091.71 $ 149.06 Apartments $ 6,334.83 $ 7,186.05 $ 851.22 $ 8,097.21 $ 911.16 $ 8,783.76 $ 686.55 Apts - Monthly $ 3,731.75 $ 4,306.08 $ 574.33 $ 4,848.02 $ 541.93 $ 5,221.93 $ 373.92 Condos $ 525.44 $ 607.39 $ 81.95 $ 682.71 $ 75.31 $ 730.64 $ 47.93 Condos - Mnthly $ 4,064.69 $ 4,698.83 $ 634.13 $ 5,300.56 $ 601.73 $ 5,780.18 $ 479.62 City $ 4,514.68 $ 5,103.12 $ 588.44 $ 5,691.57 $ 588.44 $ 5,718.23 $ 26.66

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14. Requested Motions I move to adopt the proposed modifications to ALMU’s water rates and structure as presented, which will be implemented in two phases beginning 7/1/11. I move to adopt the proposed modifications to ALMU’s sewer rate as presented, which will be initially implemented in three phases beginning 7/1/11. 14