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<br />.e <br /> <br />Operations, and C, Capital Projects. Indirect charges to the General Fund for <br />the local utility were about 12 percent or $600,000 per year. Mr. Whitlow <br />said indirect charges included services specific to the sewer utility. <br /> <br />Ms. Ehrman asked about the $35,000 per year proposed for the annexation <br />program. Ms. Andersen said the program was being handled through the Planning <br />Department, with General Fund support in addition to support from the Sewer <br />Fund. Mr. Whitlow said the complete annexation program would cost the City <br />about $110,000 or $115,000 per year, and the Sewer Utility portion was about <br />one-third of that. <br /> <br />Responding to Mr. Rutan's question, staff said the fund received no grants or <br />subsidies, and figures shown were gross. <br /> <br />Mr. Jessie reviewed the third factor in the proposed rate change, inflation, <br />showing scenarios for a second-year inflation rate of 4.5 percent, 3 percent, <br />and 0 percent of the total budget. <br /> <br />Mr. Jessie compared Eugene1s current combination rate with that of three other <br />areas, Portland, Salem, and the agency serving the Beaverton-Tigard area. He <br />noted that other areas subsidized commercial rates and might not be subject to <br />the same Environmental Protection Agency constraints as Eugene. <br /> <br />e <br /> <br />Mr. Rutan asked what was included in the rates. Mr. Jessie said he did not <br />think storm drainage charges were included in the rates of Portland or Salem. <br />Mr. Rutan asked whether any economies of scale occurred at different sizes. <br />Mr. Jessie said some were possible. He said levels of service differed in <br />terms of amounts treated, but he thought the comparison shown was fair. <br /> <br />Ms. Ehrman asked for more information about the inaccurate projections. Mr. <br />Jessie said the consultant who performed the rate analysis two years ago had <br />used water consumption data from EWEB to project sewer flows. He said that <br />assumption was wrong because much water was used for irrigation or other <br />purposes, did not flow into the sewer system and therefore was not included in <br />sewer bills. <br /> <br />Mr. Miller asked whether funds were used for front-end costs of new lines, in <br />addition to maintenance of existing lines. Staff said they were, adding that <br />sanitary costs for FY88 were expected to be $360,000 and that other new <br />projects were expected to cost about $200,000 over the next two years. Mr. <br />Miller asked how the funds recaptured by rates would be used. Ms. Andersen <br />said they would become part of the ongoing budget. Mr. Jessie added that some <br />charges for annexation would be put back into the fund. <br /> <br />Mr. Holmer asked about the possiblity of deferring the increase or making it <br />an annual, rather than biennial, adjustment. Mr. Jessie said the revenue <br />requirements for the first year would result in an increase of 7 or 8 percent, <br />and in the second year they would mean an increase of about 4.5 percent. Ms. <br />Andersen said the first year's increase was larger because of the error in <br />projections, which would not be a factor in subsequent years. <br /> <br />e <br /> <br />MINUTES--Eugene City Council Dinner/Work Session <br /> <br />May 11, 1987 Page 4 <br />