City finance director: no immediate utility rate changes; capital plans under review

Fergus Falls City Chief Financial Officer and Director Bill Somwell briefed the council on utility-rate planning and capital projects and recommended no immediate changes to water, sewer and stormwater rates as the city reviews the capital improvement plan (CIP).

Somwell said refuse-rate changes were implemented in January because the city needed to respond to increased tipping fees, but that sewer, water and stormwater rate changes scheduled for April will be deferred while the council and staff reconsider the fast-track capital plan. “We’re not recommending making any changes at this time,” Somwell said.

Somwell told the council the current CIP includes a fast-track option that would raise spending on streets and other projects from 2025–2029. He said larger projects such as Cleveland Avenue and South Union would require funding beyond assessments in many cases because assessments likely would not reach the 20% statutory threshold. Somwell said staff will develop a five-year street reconstruction plan and update rate models to present options to the council as it develops the 2026 budget.

The finance director presented fund-balance projections showing that, without rate adjustments, cash balances for sewer, water and storm funds decline over a 10-year horizon. He recommended further committee-level review and public discussion during the budget process with potential implementation for January 2026.

Council members asked for detailed fund-balance reports and audit-year closing figures; Somwell said the 2024 audit is in preparation and that staff will present audited fund-balance levels and percentages at the council meeting in June.

No formal council action was taken on utility rates at the March 1 meeting; the presentation served as an update and a direction to return with refined CIP and rate models for the 2026 budget cycle.