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Staff outlines 2026 capital plan and recommends utility-rate increases: sewer 5% for 2026, water and storm changes also proposed
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Summary
City consultants and staff presented a 2026 capital improvement plan and recommended a 5% sewer-rate increase for 2026 (with further increases in later years), a 5% water-rate increase, a $1 stormwater fee increase and several refuse/landfill rate adjustments; the committee voted to forward the CIP and rate proposals to the full council.
City staff and consultants presented the 2026 capital improvement plan (CIP), outlined funding sources for major projects, and recommended a set of utility-rate changes to maintain fund health while advancing capital work.
Bill Sonmore summarized 2026 projects and their funding; examples included Cavour Avenue (about $3,105,000 total project cost with an illustrative bond portion of ~$786,034), Cleveland (about $2,990,000 with a bond portion near $704,500), Douglas Avenue (bond portion ~$452,000), alleyway projects, Day Lagoon Park Road (grant of roughly $210,000 and a bond share of about $449,000), Highway 210 bridge replacement and Pebble Lake Road. Staff said project costs feed into enterprise fund analyses for water, sewer and storm and noted use of Minnesota Statute 429 procedures for special assessments on street portions.
Staff reviewed debt-service math and showed an illustrative 2026 bond par amount near $2,670,000 amortized over 15 years at a working interest rate of 4.25%, producing an estimated first‑year debt service of about $244,000. Using that illustration, staff said the net effect could be roughly a 2.89% levy increase in 2027, though that figure depends on which projects proceed and whether bonding or cash is used.
On rates, staff recommended a 5% sewer‑fund rate increase for 2026 (to be implemented in April when sewer rates are reset), with scenario planning that shows additional increases (around 8%) in future years if projects are paid from cash. For the water fund staff recommended a 5% increase for 2026 with possible bonding in 2027–28. For stormwater, staff proposed increasing the flat fee from $10 to $11 (a $1 increase, about 10%) and to consider bonding for large storm projects. Staff also recommended refuse/landfill adjustments to cover rising disposal costs: residential/commercial garbage charges around 4%, recycling up by $0.50, roll-off rents/fees increased (up to 16% on some charges), and landfill MSW tipping fee adjustments (illustrative increase toward $30 per ton from earlier levels) to reflect regional disposal changes.
Staff proposed implementing many changes in February (with sewer billing adjustments in April) and said landfill rates could change immediately upon council approval. Councilors asked about alternative financing (bonding vs. using cash on hand) and a reimbursement resolution that allows the city to incur costs now and bond later; staff said those are allowable and that each project will be reviewed for appropriate financing.
A councilor moved and the committee approved forwarding the CIP and proposed rate changes to the full council for consideration at the next meeting.
