City staff outline options to fund $22 million water‑treatment plant; town hall planned

City finance and utility staff told the Minnetrista City Council at a work session April 7 they are evaluating options to pay for a proposed water‑treatment plant estimated at about $22 million and will present scenarios at a town hall scheduled for next week.

"As you can see in the staff report, we're talking about building a plant that's about $22,000,000," Finance Director Brian Hebert told the council while outlining likely bond costs and revenue options.

Hebert estimated a 20‑year bond at roughly 4 percent interest would create about $1.62 million in annual debt service the city would need to cover from water revenues. Staff presented four principal approaches: create a dedicated water‑treatment fee (a flat charge billed to all accounts), raise usage rates and revise tier thresholds, assess property owners (a one‑time special assessment), or use a blended approach combining fees and rate changes. He noted assessments lock costs to current property owners and said some neighboring cities use a separate treatment charge; Minnetonka Beach was cited as having a quarterly treatment charge in the hundreds of dollars for a smaller customer base.

Council members and staff discussed details and tradeoffs: raising base and tiered usage charges provides variable revenue that depends on weather and conservation; a dedicated treatment fee produces steadier, guaranteed revenue; connection and area charges can be adjusted to capture some growth funding; and monthly billing or budget‑billing options can smooth customer impacts. Hebert said the water fund’s current balance is roughly $1 million and urged caution because the project cost has grown since earlier estimates.

Staff and council agreed not to make final decisions at the work session. Instead, the council asked staff to return to the town hall with spreadsheets and bill‑impact calculators showing sample residential and apartment bills under different scenarios, to include connection and development charges in those comparisons, and to explain timing options (mid‑year adjustments, phased increases, or start dates tied to the bond timetable). The council also discussed shifting to monthly billing and offering budget billing as customer relief measures.

Hebert and other staff warned that, if the city does not build treatment capacity, it may need to notify customers about health‑based standards for contaminants (manganese was discussed) if blending or sources leave some customers out of compliance. Council members asked staff to model impacts by user class and to present clear examples at the town hall so residents can see what changes would mean on a monthly or quarterly bill.

Next steps: staff will finalize materials and present the funding options and bill‑impact examples at a town hall meeting next week; council will take formal budget and rate decisions through the budget process if and when the city proceeds to bid and award a contract.