CITY OF MINNEOTA

The City of Minneota is pursuing Phase 1 of much needed improvements to its aging infrastructure beginning in 2024.  Costs for just this Phase alone are expected to exceed $4.5 million.   Unfortunately, the City will not qualify for grants with this project, placing all of the burden on the residents and businesses of Minneota.   However, the City is pursuing long term, low interest loans from the State of Minnesota to mitigate some of the impact…yet the impact is still sizeable.   All water and sewer rates will be adjusted by 25% beginning in 2024.  Combined, this will equate to an increase of approximately $10 per month for a 5,000-gallon user.
It should be noted that an additional $7.5 million worth of improvements has also been identified for future phases in the coming years, and rates will be reevaluated at that time.   The City will continue to aggressively pursue grant funding and low interest, long-term loans for those future projects as well.  
Informational flyers regarding the nature of these improvements (prepared by the City Engineer) are available at City Hall for your review.

MESSAGE FROM THE MAYOR
The decision to increase water and sewer rates by this much was not a decision that was easily made by the council. This was a long and planned out process that took place over the past couple of years, with input and significant information from the City’s financial advisor and engineers. I want to assure all the residents that every option was considered prior to making this decision, as it is impactful to each and every one of us.
The project will provide much-needed replacement and improvement to a significant section of water and sewer infrastructure. The sections being replaced are antiquated and have been costing the City more money every year in the form of increased maintenance costs, man hours and patchwork fixes that will no longer be needed with new infrastructure. In addition, another benefit is that the new infrastructure will perform better and will also create less issues for the homeowners than it does today. Major infrastructure projects like this are not the norm as the useful life of the infrastructure can be expected to be well beyond 50 years, yet the age, condition, and useful life of the infrastructure in this project is far beyond these limits and it is a much-needed investment in the future of Minneota.
I’d also like to take a moment to address cost and funding alternatives so that you are aware of the challenges Minneota faces with obtaining funding for these projects. We’ve had this project on the radar for a few years and decided to delay it in the event that there would be future funding available to help offset the increased cost. During this time, the projected cost of the project increased significantly, so much so, that it would have likely offset any funding that would be available. It became clear to the council that given the significant project cost increases that it is in the City’s best interest to do this sooner rather than later.
So why increase water/sewer rates? The easiest and most logical answer to this is that we feel it’s the most equitable way of paying for the project. Those that use the resources the most will pay for a larger share of the project. Through the past several years of research we have been able to gauge how Minneota’s water/sewer rates compare to other cities of similar size. Minneota falls toward the bottom end of the spectrum when comparing those costs. One might see this as a good thing in that we’ve enjoyed relatively cheap water/sewer rates for quite some time when compared to other cities, but it has also hurt us in qualifying for funding. The main factor looked at when qualifying for funding for these types of projects is “affordability”. The calculation that is used compares median household income to water/sewer costs. Minneota happens to have one of the highest median household incomes in the area, and one of the lowest water/sewer rates. So, when it comes to our “affordability” score we get disqualified almost every time based on this criteria alone. To put this in perspective we would have to have our water and sewer rates almost double to be considered for most types of funding based on “affordability”. I want to be clear that this does not mean we are even considering doubling our water/sewer rates and that it has never entered into the discussion. It is simply meant to show you how much residents in other cities that are qualifying for this type of funding are paying in water/sewer rates as it compares to their household incomes.
We are seeking low interest, long-term loans to pay for this project. We would anticipate that the home and business owners directly impacted by the project will also be assessed a portion of the cost, as has always historically been done. Once final funding numbers are determined the assessment rates will be calculated and discussed. The vast majority of the project will be paid for with the increase in water and sewer rates. We have calculated as closely as we possibly can to verify what it will take to cover the payments on this project and these funding sources are the minimum that we can get by with.
As I stated prior, this was a very difficult decision for the council to make, but we felt the time is now to make this significant investment in the City of Minneota. If you have questions or want additional details about the project itself there is more detailed information available at City Hall.

Respectfully submitted,
John Rolbiecki
Mayor – City of Minneota