Sioux Falls proposes new wastewater system capacity charge to stabilize customer rates

The Sioux Falls Regular City Council meeting held on April 1, 2025, focused on a significant ordinance aimed at revising the city's utility rates and charges, particularly concerning wastewater customers. The proposed changes, presented by Mayor Paul TenHaken and the Public Works team, include the introduction of a system capacity charge (SCC) for wastewater services.

Mark Cotter, Director of Public Works, opened the discussion by highlighting the extensive research and stakeholder engagement that informed the proposal. The ordinance seeks to modernize the way the city charges for wastewater infrastructure capacity, transitioning from a cost recovery fee system based on land area to a system capacity charge model based on the size of water meters. This change is designed to stabilize customer rates and ensure that charges reflect actual usage.

Ryan Johnson from the Public Works team elaborated on the rationale behind the proposed SCC. He explained that the current system, which collects fees early in the development process, does not adequately address the growing needs of the community. The new model would collect a one-time fee when water meters are purchased, allowing for a more equitable distribution of costs among users.

The council was informed that the transition to the SCC would occur over a ten-year period, with no immediate changes in 2025. The existing cost recovery fees will be phased out by the end of 2028. Key benefits of the new system include stabilizing utility rates, ensuring fairness in charges based on capacity, and accommodating the city's growth without burdening existing customers.

The proposal has received endorsements from the Home Builders Association and recommendations for approval from the Infrastructure Review Advisory Board and the Accessible Housing Advisory Board. The council members expressed their support for the initiative, recognizing its potential to enhance the city's wastewater management system.

In conclusion, the meeting underscored the city's commitment to providing reliable utilities while adapting to the demands of a growing population. The proposed ordinance represents a strategic shift in how Sioux Falls manages its wastewater infrastructure, aiming for a sustainable and fair approach to utility charges. Further discussions and final votes on the ordinance are anticipated in upcoming council meetings.