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Willmar Council OKs sewer rate hike to finance wastewater project

WILLMAR -- The lack of public comment at this week's Willmar City Council hearing on double-digit sewer rates increases to finance the $86 million wastewater treatment project was somewhat surprising to City Administrator Michael Schmit.

But community members and the council have been talking for so long about the need to replace the failed, smelly plant located near homes and businesses in southeast Willmar with a new plant outside of town that people probably have a pretty good understanding of it.

"I think it's also a reflection that the community as a whole wanted the wastewater treatment plant out of town and have indicated all along that they recognize that will cost a little more,'' said Schmit.

"We had talked about moving it closer to town to save money, but that met with some resistance, and the decision was made to build it where we are building it. That's what people wanted and I guess they're willing to pay a little more to have that done,'' he said.

"Also, if you look at the cost comparisons to other cities throughout the state, we go from one of the very lowest rates to kind of the middle of the pack. When people see that, they understand that even though we're building a very expensive project here, our rates aren't exorbitant.''

A comparison of average residential rates in 2009 with 17 other communities range from a low of $20.43 per month in Owatonna to a high of $64.01 per month in Buffalo. Willmar's 2009 rate is third at $24.43.

Estimated 2012 rates, based on an average industry standard of 2.5 percent annual increase, would range from the low of $22 per month in Owatonna to a high of $68.93 per month in Buffalo, with Willmar 11th at $43.39 per month.

Schmit says Willmar's increases represent the final step in the financing plan. "It pulls it all together and locks everything in place,'' he said.

The exception may be any state and federal grants that the city might receive that would help reduce capital costs, he said.

"Whatever we get is not going to have a huge impact on the rate schedule adopted by the council. Those moneys will be used to reduce the finance balloon payment at the end of the current financing plan,'' he said.

The four-year rate schedule adopted by the council Monday night begins in 2009 and carries through 2012. The rate for a household using an average of 6,500 gallons of water per month would increase from $24.42 per month in 2009 to $43.39 per month in 2012.

The rate for a retail business using an average of 375,750 gallons of water per month would increase from $595 in 2009 to $1,240 in 2012.

For a restaurant using an average of 56,100 gallons per month, the rate would increase from $106.25 in 2009 to $214.23 in 2012.

A gas station using an average of 27,000 gallons per month would have a rate increase from $66.38 in 2009 to $129.84 in 2012.

The rate increases "get us to a point when the plant is fully up and running and that we're at a rate that will service the operational cost and debt service that will kick in at about that time frame,'' said Schmit.

He said rates have been gradually increasing by 6.35 percent each year since 2000 to avoid "sticker shock'' from one huge increase.

In other business Monday, the council voted 6-2 to approve an ordinance increasing fees for the Planning and Development Department and for city licenses. Voting yes were Doug Reese, Ron Christianson, Denis Anderson, Tim Johnson, Rick Fagerlie and Bruce DeBlieck Voting no were Steve Ahmann and Jim Dokken,

Dokken asked why fees are being increased. He said the council at the Jan. 20 work session agreed revenue enhancement through significant fee and tax increases should not play a major role in closing the budget gap.

Schmit said the fee increases were introduced before the council's work session. He did not know if the increases would be considered significant. Some fees had been in place for many years without any changes. The additional revenue was probably less than $5,000, he said.

In other business, the council:

- Appointed Denis Anderson to the Pioneerland Library System Board and Sandy Gardner to the Airport Commission.

- Accepted a donation of $1,000 from the Willmar Veterans of Foreign Wars for flags.

- Set a hearing for Feb. 17 to consider ordinances proposed by the Mayor's Housing Task Force dealing with off-street parking, exterior storage, exterior building maintenance, garbage containers for rental properties, noise violations, and snow and ice removal.

- Voted to delay authorizing preparation of preliminary plans for a proposed improvement at the intersection of North Business 71/23, County Road 24 and 23rd Street Northeast. Council members asked that the improvement proposal be part of a larger Highway 71/23 improvement to the north. A committee representing the city, Kandiyohi County and Minnesota Department of Transportation had recommended the improvement.