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09.e Wastewater Committee 02-25-26 minutes February 25, 2026 The Wastewater Community meeting was conducted in person at the Scandia Community Center on the above date. The meeting was called to order at 6:00 by City Administrator Kyle Morell. Committee members Dan Cartier, Jeff Dahlberg, Perry Rynders, Peter Nora, Council member Jerry Cusick, City Administrator Kyle Morell, Public Works Director Charles Fischer, City Treasurer Veronica Korby, Isiah Bubany of Bolton & Menk, and Jacob Humburg of Bolton & Menk, were also present. Agenda A motion was made by Cartier, seconded by Nora, to approve the agenda. Motion Carried Unanimously. Minutes The minutes of the November 17, 2025, Wastewater Committee meetings were presented. A motion was made by Cartier, seconded by Rynders, to approve the minutes of the November 17, 2025, Wastewater Committee meeting. Capital Improvement Plan Schedule Update and Bliss Wastewater Project Funding Staff presented the revised Capital Improvement Plan Schedule, which was updated during the summer of 2025. The Plan outlined all projected expenses for each sewer system from 2025 through 2040. To cover all future project expenses, all funds would have to contribute more than double the current depreciation line-item amounts. This would result in significant increases in user fees across all funds. To cover future capital costs, the Bliss fund will need to budget $80,000 annually, and the Anderson Erickson and Uptown funds will need to budget $32,000 and $36,000, respectively. The Schedule is divided by sewer system. The Bliss system includes loan annual repayments for the nitrogen system upgrade scheduled for installation in 2026. That loan repayment is forecasted to be $35,000 for the next twenty years. The City has received state funding in the form of an 80% grant and a 20% loan to cover the cost of the Bliss upgrade. That 20% will fall somewhere between $375,000 and $450,000, depending on the project's final cost and whether the City can recoup engineering costs already incurred. Final grant and loan documents will not be secured until sometime in later March or April, so the City will not know the exact loan and repayment amount until then. If the City is able to recoup engineering costs already incurred, the amount recouped will be divided 70/30 between the Bliss and Anderson Erickson funds. Once the details of the project and loan are known, staff will hold a public information meeting for the residents explaining the project and the loan's effect on future budgets. 2026 Budgets Staff presented the draft 2026 budgets. Three options were presented: one covered 100% of the required depreciation expense based on the CIP Schedule, one covered 75%, and one covered 50%. The Bliss budget includes $35,000 in Long-Term Obligations for loan repayment. The $14,400 lobbying expense was removed, since funding for the nitrogen upgrade was secured. The ultimate goal of the fund budgets should be cover the costs of all Wastewater Advisory Committee February 25, 2026 Page 2 future capital needs. However, that would require 50% increases, or greater, in 2026 across all funds. Committee member Rynders favors budgets that account for all future costs, but worries that a single-year increase would be too much. Rynders suggested a graduated increase over 3 years. 18% this year and 15% each of the next two years, and encouraged staff to present such a plan to the system users. Committee member Dahlberg expressed concerns over the doubling of rates over the last five years, encouraging staff to look for ways to reduce costs by asking the County for help or selling the system to someone else. He suggested the Council consider covering the loan cost, since they took the American Rescue Funds, initially earmarked for the Bliss Project, and redirected them to purchasing a fire truck. The Committee reviewed the fund balances of each sewer fund and discussed establishing a fund balance goal under which balances remain within a percentage of the budget unless a larger future capital expense is planned. Staff recommends the 50% increase to move forward, and can develop a plan for future increases once a fund balance policy is established. A presentation about future increases will be shared with the Committee later this spring before the Committee meets with the system users. A motion was made by Rynders, seconded by Cartier, to recommend a 50% depreciation coverage for the 2026 sewer budgets. Motion carried unanimously. Rynders asked about potential changes to the Uptown rates. He is concerned that rate increases may become too much for local businesses. Staff suggested raising the city’s base fee for the Community Center, and the funds for that rate increase would come from building rental fees. The Committee favored this. Item for Future Discussion Review the effect of the Bliss nitrogen loan on the Bliss budget. Review presentation to the public about the current state of the system's budgets and fund balance. Next meeting: The next meeting will in April or May. Adjourn The meeting was adjourned at 7 12 p.m. on a motion by Rynders, seconded by Cartier. Motion Carried Unanimously.