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New sewer rates to go into effect

WILLMAR -- New wastewater treatment rates have been approved by the Willmar City Council. The council voted June 17 to approve an ordinance that increases rates for residential, commercial and industrial customers beginning in 2013.

The rates became effective after publication of the ordinance June 21. City Finance Director Steve Okins says the increases will probably show up in customers' August billings.

Average monthly residential bills will increase from $41.90 in 2012 to $45.18 in 2013. Future average monthly residential increases scheduled are $49.10 in 2014, $51.66 in 2015, $54.46 in 2016, and $56.63 in 2017.

During the following three years, smaller monthly residential increases are projected from $56.72 in 2018 to $56.90 in 2020.

The average monthly industrial bill is projected to increase from $130,629 in 2012 to $234,540 in 2020.

The $83 million wastewater facility began operation in the fall of 2010.

The city has been studying the rate increase issue since earlier this year when the city engaged financial consultant Springsted Inc. to review the financial performance of the wastewater utility and to make recommendations on rate changes needed to meet the wastewater utility's required cash flow needs.

According to Springsted, these financial needs consist primarily of operational expenses, capital replacement and maintenance, debt service and cash reserve requirements.

Springsted President Kathy Aho says the council has held a number of work sessions, and the rate discussion had been before the Finance Committee and council.

"It's never easy to do that,'' she said of raising rates. "There are a couple of reasons why rates have to increase. The wastewater fund, or sewer fund, has been operating at a loss for several years. While you can sustain this for some period of time, you can't continue to sustain that. Without increases in rates, the fund will run out of money.''

Aho says the city's major bondholder, the Minnesota Public Facilities Authority, has provided very low-cost financing to the city and requires the city to maintain a well-operating system and a healthy reserve fund.

Springsted recommends reserves are needed to cover 3 months of operating expenditures and 12 months of debt service payments.

Aho said stable operations rely on rates that support operations, debt payments and reserves.

David Little
David Little covers the Willmar City Council, Willmar Municipal Utilities and other city news.
(320) 235-1150