We’re aggressively pursuing outside funding to cover those, so we don’t want to take that into planning for rates if we didn’t need to.”

City Administrator Dan Wietecha

The city has estimated that work to battle PFAS would cost $69 million.

Hastings utility customers can expect annual rate increases on their utility bills over the next nine years.

That was the recommendation of a utility rate study presented to the Hastings City Council at its meeting Monday, Sept. 18 by Jessica Green of Northland Public Finance. The council took no action on the study, which calls for rate increases starting in 2024 of 3.5 percent for water rates, 4.5 percent for sanitary sewer rates and 4 percent for storm water rates.

The gradual increases would bring the total combined quarterly utility bill from around $160 in 2022 to about $240 in 2032, based on a customer using 18,000 gallons of water.

“We are first looking to provide the city with information so that you can take a look at the recommendations that we’re coming up with and evaluate whether or not those work for the city in terms of those increases that are being proposed,” said Green.

She said the firm studied projects planned for city utilities, growth projections, city budgets and audits and customer data to come up with the study results.

“We’ve also worked with staff on what some of the development assumptions are going forward,” said Green, who noted that the study will give recommendations on what can be paid for by cash or reserves or if bonding is necessary.

She projected that quarterly charges will go up just $1.98 per quarter or $7.93 annually for residential customers.

The study recommends an increase in fees to new residential developments of $837, from $3,500 to about $4,387.

“For dollar perspective, Hastings, even with those proposed increases, would still be kind of at the low end of what’s being charged for development fees,” Green said. A comparison she showed shows Hastings’ planned charges slightly higher than Cottage Grove and Apple Valley but significantly lower than Rosemount, Farmington, Lakeville and Lake Elmo, which has a development fee of over $25,000 per residential unit.

The study states that at year-end, each utility fund should have enough cash on hand for three months of operations, as well as enough cash to cover the following year’s debt service to pay for any planned capital projects.

She said the utility funds are currently on sound financing footing.

“Ultimately, the utility funds are in good shape. Again, we do have some recommendations here for increases, but they’re in good shape,” she said.

The study takes into consideration a full-time employee being added in 2025. Costs for that position will be shared by the three utility funds.

From a development standpoint, the study findings are based on 50 new residential units a year.

Overall, Green said Hastings’ rates are right in the middle of neighboring municipalities, with combined monthly charges of about $54, compared to Farmington on the low end at about $38 and Lake Elmo on the high end at about $85.

“Even with these changes that were proposed, we do feel that they’re pretty moderate compared to some increases that we’ve seen for other cities,” Green said. “We imagine you’ll be right there in the middle going forward.”

Councilmember Tina Folch asked if the study takes into consideration the city’s fight against PFAS forever chemicals in the water supply. The city has estimated that work to battle PFAS would cost $69 million.

City Administrator Dan Wietecha said the city is seeking funding outside of the utility budgets to fight PFAS.

“We’re aggressively pursuing outside funding to cover those, so we don’t want to take that into planning for rates if we didn’t need to,” he said.

If the city has to pay for the PFAS cleanup internally, rates would need to jump about 26 percent the first five years and 15 percent thereafter.

“It’s just a budget buster, and that’s why Public Works Director (Ryan) Stempski and I are hammering so hard. We’ve had a few workshops with the council on not just the health impacts of PFAS and planning for how we handle the infrastructure but really pushing for the financial side of it also.”