06.a2 Draft minutes 01 05 22 Work Session
January 5, 2022
A work session meeting of the Scandia City Council was held on the above date with
modifications. Due to the health advisory issued by the State regarding the COVID-19 outbreak,
to avoid public gatherings and limit social contact, the meeting was conducted over an electronic
platform. All council members and staff who joined the meeting remotely could hear each other
and contribute to discussions. City Administrator Cammilleri and Treasurer Firkus were present
at City Hall. Cammilleri was the presenter and displayed the meeting materials for participants to
view on their remote screens.
Mayor Christine Maefsky called the meeting to order at 6:34 p.m. The following were
participants to the meeting: Council members Heather Benson, Jerry Cusick, Steve Kronmiller,
Patti Ray and Mayor Christine Maefsky. Staff participating: City Administrator Ken Cammilleri,
Public Works Director Charles Fischer, City Engineer Ryan Goodman, and City Treasurer
Colleen Firkus.
DISCUSSION ON UTILITIES BUDGET AND CAPITAL IMPROVEMENT PLAN
Administrator Cammilleri led a review of the Uptown Sewer Utility Budget 12-15-21. Future
issues facing Uptown are the need to increase capacity by adding another drainfield on city
owned property. A Facility Study is recommended before proceeding with capital investments.
For all sewer systems, Big Marine (Bliss & AE) and Uptown the estimated cost of a Facility
Study is $25,000. To raise funds for the study and any capacity expansion, new rates proposed
for 2022 are a 15% increase for the base and a 5% increase for volume.
Administrator Cammilleri continued with a review of the Big Marine Sewer Utility Budget
Report 1-5-22. As part of the MPCA license renewal the City is required to correct nitrate issues
found in one of 8 test wells by digging a new test well and by installing a Nitrate Treatment
system at an estimated cost of $1 million. In addition, Lift Station #2 needs replacing. The
projects were combined in a state funding request of $1.4 million. New flow meters that measure
the amount of inflow into the system are required as well. There are 80 households on the Bliss
system designed for 89 households. The system is designed for 19,800 gallons per day and
flowing 7,000 gals per day in the winter and 11,000 gals per day in summer months. If the
system becomes overloaded, the drainfields will no longer function and need replacement.
Recent ordinances passed should help to stay within existing gallons per day. Under the MPCA
requirements, the work would start in 2023 and be completed by 2024. The budget is proposing
half of costs from state bonding, and the balance to be paid by ARPA funds and a bond issue.
There are limited funds available in the Sewer Fund.
Ray questioned when the City would know about the state bonding request. Cammilleri indicated
not before late May, but there is general support in the Governor’s budget. Ray asked about
funding through Public Facilities Authority (PFA). Cammilleri stated that the City is not on the
Project Priority List (PPL) but has requested to be on the list. That is why the City requested
directly to the state for funding as not sure we will get the PFA funding in time to meet MPCA
deadline. Timing is the issue. Benson suggested shifting the timeframe for replacement of the
Lift Station #2 if the City does not get state funding. Benson asked why the rates chart lumps AE
& Bliss together, but the Nitrate problem only applies to the Bliss portion. Cammilleri responded
that the Big Marine Sewer is considered one sewer utility with two components, and in order to
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Scandia City Council Work Session
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have fair and equitable rates for the same class of customers, it would be difficult to justify a
separate rate system. AE is in just as much need for financial assistance to deal with capacity
issues and would not be able to fund it with only 34 users. The systems need to be kept together
to get more manageable rates and fund needed investments for both Bliss & AE.
The question of the ability to assess the users for project costs was raised. Technically the City
could assess but may find it difficult to defend challenges to the assessment by proving a cost of
an improvement would not exceed the benefit to the property owners. Challenges would have to
be defended and legal costs are not covered by insurance, and properties would have to be
appraised with an estimate to the impact on market value. Ray indicated she would like to
explore this further when the City Attorney is present, as an assessment would spread the
payments over 20 years instead of high rates for 10 years. Council would like to see the cost of a
20-year assessment for residents.
City Engineer Goodman said his experience is that other communities with larger resources are
able to subsidize costs by rate increases or area charges in development fees. They would usually
obtain a bond spread out over 10 to 15 years for replacement of a lift station, or 25 to 30 years
for a drainfield, and increase rates to pay for bonds. Goodman has not seen an assessment
process for sewer and water improvements. If funds are not available, you could walk away from
a road project, but not a sewer project. Goodman suggested it is too risky to assess sewer
projects. The City has been talking about the same infrastructure since Goodman has been
working for Scandia. It is better to be proactive in dealing with late 1980’s infrastructure rather
than reactive which will cost more. The Nitrate problem has been known since 2014. Goodman
said another funding tool he has seen is to add a fee to an enterprise fund and then stop the fee
when the project is done, or renew for another project. Councilmember Kronmiller said when the
County turned the system over to the city in 2012, no maintenance funding came with it and the
City did not set aside funds for future maintenance to keep user rates low.
Benson sees a benefit to an assessment spread out over a long period of time in addition to some
debt financing, and asked why the Rate charts only go to 2031. Cammilleri indicated the reason
it was structured this way was the timing of projects on deferred maintenance. A 15-year
estimate was used on the bond, coordinated with the timing of capital improvement projects to
achieve a fair and equitable rate structure maintaining the capacity to pay back loans and do the
other maintenance projects. Assessments could only be done on components that directly affect
the properties like tanks. Benson asked why not structure a loan over 20 years? Cammilleri stated
we would still be paying for this project while needing more funds for future projects in that
period of time. It is necessary to balance making rates manageable to users and the need to
maximize use of funding while avoid putting on more debt.
Ray asked how long does a nitrate treatment system last. It is a permanent part of the operation
and components would need to be replaced periodically. Goodman stated it will last as long as
we maintain it. Goodman has scheduled in a Capital Improvement Plan, construction in 2023,
then $5,000 in 2028, and $10,000 in 2032, then re-evaluate it to see how efficient it is working.
At 2042 there will need to be a plan for major repairs but still have the main structure.
Ray asked what is a reasonable rate for a sewer system for a year as experienced in surrounding
communities. Goodman does not deal with rates, but they are system specific. The Big Marine
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system is much different than other community systems. Cammilleri indicated there is no clear
guidance from the state on what is fair and reasonable. Justifiable reasons take into account
timing of maintenance projects. The city needs grants and to maximum everything we can get
into the system and the ARPA money is unprecedented.
Since no previous Councils have ever applied for a grant since taking over the system in 2012,
Ray would like to see city applying for grants every year. Cammilleri said PPL is where that
happens. Kronmiller suggested other sources of grants should be investigated. Goodman,
annually the Wastewater Committee has talked about PFA projects, but it is a low interest loan
from the state, and the project would have to score well on the priority list. There is also the cost
of extra administration that comes with the money and Scandia does not have the staffing.
Goodman said cities have been trying to get the attention of the legislatures to apply more money
to these types of projects built in the 1980’s. Forgivable loans are increasing, but more pressure
on legislature is needed to avoid negative environmental impacts. Cammilleri also pointed out
that the amount of bonds a City has will affect its bond rates.
Benson asked why only a 10% rate increase this year if we are so far behind. Cammilleri
indicated without ARPA funds we would still keep it at 10%. Rates have been raised the past
three years on an increasing basis; 5%, then 7%, and this year 10%.
DISCUSSION ON ALLOCATION OF AMERICAN RESCUE PLAN ACT FUNDS
Mayor Maefsky said she had a request for additional sirens to have more coverage. Cammilleri
reviewed the allowed uses of ARPA funds. The money can be used for broadband, but no
contract/project can overlap with Federal Rural Digital Opportunity Fund (RDOF) areas. The
County has a program to use their ARPA funds for broadband, but need a project to request those
funds. The position of Councilmembers Ray and Benson is that ARPA funds should be spread
out to benefit as many as people as possible, and that levied Broadband funds could be
reallocated to the General Fund to help more people by using some for a warning siren, and
improve bond ratings with an increased fund balance. Ray suggested the greatest need is
broadband expansion as the City has 500+ households that don’t have high speed internet in the
middle of a pandemic where people are learning and working from home. Kronmiller’s position
is that the funds should be applied to the greatest unfunded need, which is sewer maintenance
and protection of Big Marine Lake. Kronmiller also pointed out Midco won’t expand beyond
200 to 250 homes per year and broadband expansion won’t go faster by throwing more money at
it, and that all the projects and funding are planned out for broadband.
Mayor Maefsky asked Goodman if our situation is similar to other systems happening around the
state. Goodman said other entities are pursuing the same pathways as Scandia - raise rates, PPL,
but there may not be enough money. It looks better to funnel more money into the project when
requesting state money. We can’t compare with larger cities with more avenues to raise funds.
Public Comments -
Steve Collier, 19960 Maxwell Ave. N. here to lobby for internet, agreed with Benson’s points,
and appreciated all the scenarios provided by Cammilleri. He was not aware that the internet was
already fully funded which may cause him to rethink his position. Poor internet is a widespread
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problem as he has experienced with shaky credit card transactions in area businesses. Collier said
his tax dollars should be adequate to provide better internet and roads.
He paid for $600 for a Starlink dish and pays increased fees for internet. Paid $30,000 for a
septic system and average $30 per month for pumping. Please use a significant amount of ARPA
for internet in addition to what is allocated, or balance the free money as much as we can.
Perry Rynders – 13344 188th St. N., a member of Wastewater Committee. 4 comments. 1) Big
Marine Lake benefits the entire community. It is a great natural resource and the sewer system
protects the lake. 2) The Council requires people to join in the service area, even if they have
room to build their own. 3) The statement that everyone pays the same taxes is not quite
accurate. The City Assessor indicated every single lot on the lake will be assessed $252,000 for
land alone just for being on lake. 4) In the 10-year period not all capital improvement projects
were paid for, they were pushed out. Bonding was spread over 15 years. The rates proposed are
not to pay for everything in a short period of time.
Craig Pittman, lives in Bliss neighborhood. past member of Wastewater Committee. Have
formed a neighborhood association and city received a petition from 52 of 80 residents urging
city to use ARPA on sewer. The system exists because of the lake. The entire community
revolves around the lake. The users did not set past rates and are now being penalized as being
set too low in the past. It is a huge impact for rates to increase so dramatically. ARPA presents
the Council a rare opportunity to rectify the matter and to correct past council sins. The burden
was created by past Councils and should not be transferred to the neighborhood.
Shawn Collier, 19960 Maxwell Ave. N., was at the last council meeting and the one who had to
sit in parking lot to do her job to get high speed internet. Her college student children could not
do their work at home. It wasn’t an issue before COVID.
Benson, seconded by Ray, moved to split the Rescue funds in half; half to Bliss nitrate
project and half to internet buildout in 2022 in place of city funds allocated for broadband.
In discussion the Mayor asked clarification if funds would not speed up broadband
expansion. Midco can only expand between 200 & 250 homes per year and it has to be
spread out over multiple years. Kronmiller pointed out it’s all tax dollars – federal, state or
grants. Mayor stated we need reserve funds in the sewer funds, and the importance of the
lake requires the city to protect it as a resource for the city. The internet is important and
is being funded by all city taxpayers including those not receiving broadband. The motion
failed with Kronmiller, Cusick and Maefsky voting no. Ray and Benson voting yes.
Kronmiller, seconded by Cusick, moved to apply the entire ARPA funds to the Big Marine
Sewer Bliss Nitrate Project. The motion passed 3 to 2 with Kronmiller, Cusick and
Maefsky voting yes. Ray and Benson voting no.
POSSIBLE CONSIDERATION OF APPROVAL OF A DRAFT ORDINANCE 2022-01
TO AMEND CHAPTER 3 OF THE DEVELOPMENT CODE SUBDIVISION
REGULATIONS TO ALLOW DEDICATION OF RIGHT-OF-WAY AND ROAD IN
MINOR SUBDIVISIONS, TO ADJUST MINIMUM DESIGN STANDARDS IN
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ENVIRONMENTALLY SENSITIVE AREAS, AND TO CHANGE THE MINIMUM SIZE
OF CUL-DE-SACS IN RESIDENTIAL DEVELOPMENTS.
No action - still under review by the Planning Commission.
DISCUSSION ON COUNCIL CITY APPOINTMENTS
No changes were made to current Council City Appointments.
DISCUSSION ON APPLICATIONS FOR PLANNING COMMISSION, PARKS AND
RECREATION COMMITTEE AND THE WASTEWATER ADVISORY COMMITTEE
TO FILL EXPIRING TERMS
Council expressed the desire to interview the candidates. The size of Tourism committee can be
decided during candidate interview process.
ADDITION - DISCUSSION ON EDA WORK PLAN
This was not approved as part of the agenda and will be tabled to the next work session.
ADJOURNMENT
Ray, second by Benson, moved to adjourn the meeting. Motion carried 5-0 by roll call vote.
The meeting adjourned at 9:06 p.m.
Respectfully submitted,
Colleen Firkus
City Treasurer