HomeMy WebLinkAbout2012-12-05 PACKET 09.A.REQUEST OF CITY COUNCIL ACTION COUNCIL AGENDA
MEETING ITEM #
DATE 12/5/2012 s
PREPARED BY
Administration
Ryan Schroeder
DEPARTMENT HEAD
ORIGINATING DEPARTMENT
COUNCIL ACTION REQUEST
Receive response to previously raised Council comments and requests regarding fuel pricing
in Cottage Grove.
STAFF RECOMMENDATION
Receive response.
SUPPORTING DOCUMENTS
® MEMO /LETTER: Memo from Ryan Schroeder.
❑ RESOLUTION:
❑ ORDINANCE:
❑ ENGINEERING RECOMMENDATION:
❑ LEGAL RECOMMENDATION:
® OTHER: Attachment.
ADMINISTRATORS COMMENTS
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COUNCIL ACTION TAKEN: ❑ APPROVED ❑ DENIED ❑ OTHER
HAnbelscamper \Templates \City CouncilWction Form.doc
City of
Cotta Grove
J Minnesota
To: Honorable Mayor and City Council Members
From: Ryan R. Schroeder, City Administrator
Date: November 29, 2012
Subject: Council Request regarding fuel pricing
At the most recent meeting of the City Council there was the suggestion by a member of
Council that the City should consider doing something about the high fuel prices within the
community. My assumption is the intent of the suggestion was to push for increased market
competition.
Data from some quick internet research might help in identifying the scope of the issue:
1. 12,500 is approximately the average per vehicle miles driven per year nationally
2. 2.28 vehicles per household is the national average
3. 23 miles per gallon is the average efficiency of short wheelbase vehicles on the road
today
4. Average July 2012 fuel cost is $3.50 /gallon (which I'll use as a proxy for annual pricing)
The result of the above is that an average household across the country as defined above
would spend $4,337 for non business related fuel. If one assumes that fuel costs in Cottage
Grove are a nickel higher per gallon than the generalized market that annual cost would
increase $61 to $4,398.
Enclosed are some exhibits that attempt to address the scope of that expenditure relative to
total income and other household expenditures. At a median household income in Cottage
Grove of $86,344 the after tax income would be approximately $64,800. Expenditures for fuel
at the mean represents 6.69% of that net income. If all fuel expenditures within a Cottage
Grove household were purchased within Cottage Grove the apportioned share upon the nickel
assumption would increase to 6.79% of income (total annual transportation spending may be
in the 15% to 19% of income range). Actual spending would be somewhere in between these
metrics as fuel would be purchased ordinarily throughout the broader marketplace.
In the past I have spoken with a representative of Marathon Petroleum regarding this same
topic. The advice I received at that time is that there is very limited competition within the
immediate Cottage Grove market. As a result, the retailers are able to demand more for their
product within this marketplace than would occur with increased competition. Further, that if a
discount retailer entered the market we would see pricing strategies applied differently. Similar
economic dynamics would be anticipated within the various other household expenditure
categories as differing retailers enter or leave the localized market.
It is anticipated that additional market competition could occur within the CottageView and
Upper Ravine commercial districts.
Cottage Grove Median Household Income
2000
www.myareaguide.com : $65,825 MN: $47,111
www.zipareacode.net : $65,314
2005
www.money.cnn.com : $71,508
Date?
www.reaIestate.com : $75,399
2009
www.city - data.com $77,390 MN: $55,616
2006 -2010
www.guickfacts.census.gov : $80,830 MN: $57,243
2010
www.areavibes.com : $87,547 MN: $60,402
Current
www.muninetquide.com $86,344
Comparison of Household Income, Poverty and Home Ownership
Between 42 Largest Twin Cities Metro Communities; 2011
2006 -2009 Data
City
Lino Lakes
Andover
Ramsey
Lakeville
Maple Grove
Rosemount
Cottage Grove
Blaine
Chanhassen
Savage
Prior Lake
Champlin
Shoreview
Woodbury
Apple Valley
Shakopee
Oakdale
Hastings
Golden Valley
Coon Rapids
Average
Edina
Eagan
Plymouth
Crystal
Eden Prairie
Inver Grove Heights
Brooklyn Park
Maplewood
White Bear Lake
Minnetonka
Chaska
Bloomington
Burnsville
Richfield
New Brighton
Roseville
Brooklyn Center
Fridley
St. Louis Park
New Hope
St. Paul
Minneapolis
2007 -09
2007 -9
Median
Poverty
HH Income
Rate
90,456
2.3
88,326
5.2
79,945
1.4
94,212
2.8
92,210
2.8
81,558
2.5
77,706
3.3
72,713
5.5
98,913
3.8
87,477
3.4
87,174
3
78,147
2.6
74,898
2.4
88,974
3.4
78,942
5.7
77,742
4.7
64,720
7.4
60,904
5.3
80,059
4.9
62,217
7.2
80,865
6.81
77,570
3.3
78,534
4.5
85,290
2.3
58,978
9.6
94,672
5.1
65,981
5.5
61,148
9.1
55,129
11.4
54,569
7.8
80,577
4.3
64,118
7.8
59,748
10.6
63,268
8.1
50,596
10.7
57,407
10.1
51,382
8.5
50,619
14.1
49,826
9.3
59,933
8.4
50,218
10.6
45,310
22.6
46,087
22.6
2006 -08
Ownership
Rate
96.1
95.1
93.9
93.6
91.7
91.5
91.1
90.3
89.5
88.7
88.6
88.5
88.4
84.7
84.5
82.3
81.2
80.8
78.7
78.5
78.34
77.9
77
76.5
76.4
76.4
76.2
75.9
75.3
74.4
73.1
73
71.2
67.6
67.4
67.3
67
66.2
63
62.9
57.8
57.2
52.7
Cottage Grove
7th highest ownership
10th lowest poverty
19th highest income
Of 42 cities >20,000
Data Source: MNCompass.org
Typical Household Budget Percentages
And Estimated spending with household
Net Income of $50,000 after Income Taxes
Housing
33 -38%
$16,775*
Transportation
15 -19%
$
8,000
Food
13 -14%
$
6,400
Alcohol, tobacco, caffeine
0 -7%
$
2,125
Clothing
4 -5%
$
2,125
Health Care
4.5 -6%
$
2,500
Insurance /Pensions
9%
$
4,250
Entertainment
5%
$
2,350
Contributions
2.5%
$
1,200
Reading /Education
2
$
950
Personal Care
1
$
475
Misc.
2
$
950
Interest Expense
4
$
1,900
Total
$50,000
*Includes mortgage interest, property taxes, repairs etc.
In Cottage Grove the property tax portion would be about
$800 on average home or 1.6% of total household budget.
Source: www.eioba.com