The Hastings City Council has established the upper limit for the city’s 2027 property tax levy, approving a preliminary budget that calls for an 8.77% increase in the levy while city officials continue working through several financial unknowns before final numbers are adopted in December.
The council unanimously approved the preliminary levy and budget at its Tuesday, Sept. 8 meeting. Council members also received an update following a closed-session discussion with attorneys over the ongoing lawsuit involving the former Carbone’s Pizza property.
The preliminary 2027 city property tax levy was set at $23,526,930, with a preliminary city budget of $70,370,530. The city will hold its Truth in Taxation public hearing at 7 p.m. Monday, Dec. 7 at Hastings City Hall. A continuation date, if necessary, is scheduled for Dec. 21.
City Administrator Dan Wietecha told the council the proposed budget is balanced but relies on an 8.77% property tax levy increase. According to the city’s calculations, that would mean an estimated $159 annual increase in city property taxes on a median-value residence.
The September action does not establish the final levy. Instead, it sets the maximum amount the city can collect. The council can reduce the levy before adopting the final budget in December, but it cannot increase it above the preliminary amount certified this fall.
Wietecha said the preliminary budget is the product of several months of work involving city departments, the council’s Finance Committee and the full council.
Among the budget assumptions is a recommended 3.5% cost-of-living adjustment for employees. The spending plan also prioritizes capital improvement and capital equipment requests and incorporates projects tied to the city’s recently adopted strategic plan. The city also plans to use Municipal State Aid funds on eligible street projects, freeing other city cash for parks projects.
Several significant variables remain unresolved.
Those include additional funding for the city’s massive PFAS water-treatment program, labor negotiations, implementation of the city’s compensation study, health insurance expenses and other insurance premiums. City officials expect at least some of those numbers to become clearer before the final budget is adopted.
Council members acknowledged the proposed tax increase will be more difficult for some residents and businesses than others, particularly those already dealing with tight household or business budgets. At the same time, council discussion emphasized the months of work that went into determining priorities and the need to maintain city infrastructure rather than postpone expenses that could become more costly later.
Council members characterized the approach as one of asset management and avoiding “kicking any cans down the road.” They also pointed to maintaining city services and making Hastings an attractive community in which to live as considerations in developing the budget.
One priority specifically highlighted during the discussion was the city’s planned inclusive park, which council members described as an important investment and opportunity for Hastings.
Councilmember DawnMarie Vihrachoff made the motion to approve the preliminary levy and budget, seconded by Councilmember Dave Pemble. It passed 7-0.
The city’s resolution notes that Hastings is required under Minnesota Truth in Taxation law to certify its proposed property tax levy and budget to the Dakota County auditor by Sept. 30.
One portion of the levy that must increase is debt service. According to the resolution, the debt levy will increase by $64,268 because of payment schedules previously approved as part of the 2026 budget. The city plans to use cash on hand to reduce the total levy required for debt service.
The council also unanimously approved the proposed 2027 special tax levy for the Hastings Economic Development and Redevelopment Authority/Housing and Redevelopment Authority.
Under state law, HEDRA is permitted to levy a special benefit tax of up to .0185% of taxable market value on taxable property within Hastings. The council authorized the levy at that statutory limit.
Carbone’s lawsuit continues
Another significant issue before the council Tuesday was one that largely took place outside public view.
Before addressing the matter during the regular meeting, the council met in closed session with legal counsel to discuss strategy in the lawsuit brought against the city by the former operator of Carbone’s Pizza in Hastings.
The litigation stems from the city’s acquisition of property at 1292 North Frontage Road for construction of its Central Water Treatment Plant, one of three treatment facilities planned as part of Hastings’ response to PFAS contamination in the municipal water supply.
The city closed on the property in April 2025. Carbone’s Pizza and Stacy’s Stars were tenants at the location and were required to vacate as the city prepared the site for construction.
The businesses were provided relocation assistance under federal relocation requirements. Stacy’s Stars subsequently relocated within Hastings, while Carbone’s was reported by the city in February 2026 as having re-established operations in Prior Lake.
On Oct. 29, 2025, the city received notice that Pizza on 50th & France, doing business as Carbone’s Pizza in Hastings, was suing Hastings over the city’s purchase of the property and what Carbone’s alleges was the loss of its lease and income.
The city disputes the claims.
The League of Minnesota Cities Insurance Trust is defending Hastings in the lawsuit, with Hoff Barry, PA assigned to handle the case. The city has also continued working with Carbone’s regarding relocation benefits.
Both sides previously sought summary judgment, essentially asking the court to resolve the dispute in their favor without proceeding through a full trial. Those motions were argued April 16.
Mediation was also held April 30 but did not produce a settlement. In mid-July, the judge denied both Carbone’s and the city’s requests for summary judgment, leaving the litigation unresolved.
The council met with its attorneys behind closed doors Sept. 8 to discuss legal strategy.
When the council returned to the issue during the public portion of the meeting, Wietecha reported that the closed session had occurred. No formal council action followed.
The council clarified that the notation of “no action” did not mean the city was ending or otherwise abandoning the case. Rather, the lawsuit will continue along its existing course.
PFAS work progresses
The council also received its regular PFAS update, including progress on the central water treatment plant that is being constructed on the former Carbone’s property.
During August, Magney Construction installed the plant’s roof support structure, began work on the roofing system, poured another interior concrete floor slab, installed exterior masonry and metal framing and continued plumbing and electrical rough-ins.
Upcoming work includes completion of the standing-seam metal roof, additional concrete floor work, stone masonry and installation of utilities beneath the driveway. A new emergency generator will also be installed to serve both the existing ion-exchange treatment facility and the new building.
The central plant remains one piece of what has become one of the largest infrastructure projects in Hastings history. The city estimates construction of its three PFAS treatment plants at approximately $70.3 million, with annual operating and maintenance costs potentially exceeding $1 million. Hastings has secured or been approved for tens of millions of dollars in outside assistance as it attempts to limit the amount ultimately borne by local water customers.
There was also movement toward construction of the eastern water treatment plant. The Public Facilities Authority indicated in August that Emerging Contaminants Grant funding could potentially be accessed first, allowing construction to begin while the remainder of the project financing through state bonding proceeds is finalized.
The eastern plant has been approved for a $5 million Emerging Contaminants Grant, while the 2026 state bonding bill provided $17.5 million for the project. Together, those sources are expected to fully fund construction of the eastern facility.
Rice Lake Construction Group was the apparent low bidder when bids for the eastern plant were opened in July.
The council’s next regular meeting is scheduled for Monday, Sept. 21 at 7 p.m. at Hastings City Hall.