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Council adopts ordinance adjusting 2025 utility rates and fee schedule; officials cite need to stabilize utility funds
Summary
The Lake Elmo City Council approved an ordinance to revise the 2025 utility fee schedule and surface water code, adopting a rate framework intended to move utility funds toward sustainability over a multi-year period and authorizing publication by title and summary.
The Lake Elmo City Council on March 18 adopted an ordinance revising the city’s 2025 fee schedule and amending city code chapter 5.16 regarding surface water fees. Council also adopted a resolution authorizing publication of the ordinance by title and summary.
City staff presented a condensed recap of a utility fund study conducted to evaluate water, sewer and stormwater fund sustainability. Staff said the city faces large new capital assets (including two water treatment plants) that will increase depreciation and operating costs and that the current model projects cash shortfalls if rates are not adjusted. To restore operating revenues and reduce dependence on development-driven capital contributions, staff recommended phased rate increases: for water a proposed 20% annual increase for five years, then inflationary indexing; for sewer a proposed 20% annual increase for four years, a 10% increase in year five, then inflationary indexing.
Staff emphasized that the term “profitable” in the model refers to operating revenues outpacing operating expenses over time to cover depreciation and replacement needs, not to transfer utility funds to unrelated city operations. City examples showed a low-volume residential quarterly bill (6,000 gallons) would increase roughly $18.35 per quarter (about $6 per month) under the presented 2025 change; a medium-volume property (20,000 gallons quarterly) would see a roughly $35 quarterly increase (about $11.70 per month). Staff also compared Lake Elmo’s 2025 bills with 2024 data from other cities to show Lake Elmo’s position regionally.
The council adopted Ordinance 2025-09 revising the fee schedule and approved Resolution 2025-029 to publish the ordinance by title and summary. Councilmembers and staff acknowledged the increases will be difficult for residents on fixed incomes and said staff will prepare public-facing communications explaining the rate study and available support resources.
