Utility rates are reviewed and set annually by the City Council based upon the operating costs, debt service requirements, and capital needs of the water, sewer, and storm water enterprise funds.
In the past few years the city has made major investments in its water and sewer infrastructure to upgrade the systems and provide additional capacity for future growth. Over $9.7 Million was invested in the new water treatment plant and approximately $10.3 Million is being expended on the joint wastewater treatment plant with the City of Brainerd that is nearing completion.
Of the $20.0 Million in water and sewer projects, local option sales tax proceeds will pay $11.9 Million of the debt service principal with the remaining amount paid by water and sewer user charges on the monthly utility bill and water and sewer availability charges (WAC and SAC fees). WAC and SAC fees are charged when a business or residence connects to the city’s utility system and is based upon the estimated impact the new service will have on the system. With the economic slowdown, the number of WAC and SAC units from new construction has fallen significantly from 151 units in 2007 to 49.5 units in 2010, reducing the WAC and SAC revenues available for the repayment of the debt service. Water and sewer rates are being adjusted to help the city repay its debt obligations related to the new water and sewer plants and to assist in maintaining a certain level of cash available for debt service (debt service coverage ratio) per the requirements of the bonds.
Listed below are the current utility rates.