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Minnetrista leaders weigh 13% water-rate increase and higher connection fees to cover $15M plant
Summary
City staff recommended a 13% phased water-rate increase through 2028 and higher connection/area charges to fund a planned ~$15 million water treatment plant and future storage; council discussed bill impacts, alternatives and whether to raise some fees to 15%.
Mayor Lisa Whalen and Minnetrista staff spent the work session reviewing a consultant-backed utility rate study that recommends raising water rates roughly 13% phased through 2028.
Brian Grimm, the city’s finance director, said the adjustment is aimed at covering escalating operating costs and rising debt service tied to planned capital projects, including a water treatment plant estimated at about $15 million and additional ground well storage of roughly $6 million. "We have about $1.1 million in annual water fund debt now," Grimm said. "By the time improvements are done, that could be close to the low $2 million in annual debt." He added the study recommends maintaining a targeted minimum cash balance of about $1.8 million.
The council heard specific customer examples to illustrate the impact of a 13% increase: Grimm said a typical Tier 1 residential account (about 15,000 gallons per quarter) would rise from about $115 to $130 per quarter, a mid-level user about $25 per quarter, and a high-use property about $50 per quarter. Councilmembers discussed alternatives to smoothing the increases, with one member proposing a 15% adjustment for some connection charges.
Staff also asked the council to consider raising one-time charges: the current water connection fee of about $3,700 per unit would rise to about $4,200 under a 13% adjustment; area/trunk water charges were noted as increasing from roughly $11,500 to $13,000 per acre in the same scenario. David Abel, community development director, explained trunk/area charges apply when developers finalize plats and are assessed per developable acre.
Council discussion focused on pacing the increases across years versus larger hikes later, the difficulty of predicting final project costs (Grimm said the treatment plant could be $12 million–$15 million), and the city’s limited ability to subsidize rates from property tax because not all properties are on city water. "Rather than doing an 8 and later a 16, 13% over four years is more stable," Grimm said. Several council members asked staff to monitor actual project costs and connection counts annually and to bring updated projections before committing to the schedule.
Next steps: staff will refine the cash-flow and debt-service projections, include the recommendation in the capital improvement plan, and return with any recommended fee adjustments for formal action as part of the 2025 budget process.
