Willmar Municipal Utilities looking to increase water rates by 20% in each of the next three years
Willmar Municipal Utilities Commission received the final water rate report at its meeting Monday, and the recommended increases will nearly double residents' water bills by 2026.
WILLMAR — Willmar residents will see their water bills nearly double by 2026 if the Willmar City Council approves the recommended rate increases presented Monday to the Willmar Municipal Utilities Commission.
The final water rate report from Dave Berg Consulting is recommending that Willmar Municipal Utilities increase its water rate by 20% each year in 2023, 2024 and 2025, and by 5% in 2026.
“Nobody enjoys large rate increases ... you’re not alone,” Berg told the Municipal Utilities Commission. “I’m seeing this a lot, particularly in water. A lot of the water studies I’ve been doing the last few years have significant increases for all the same reasons that you’re having.”
The biggest factor in the rate increase is capital improvement projects, which include water mains during the city’s street improvement projects and the new water treatment plant.
Willmar Municipal Utilities typically budgets about $750,000 per year to upgrade and repair water mains during street improvement projects, and that has increased to roughly $1.25 million in the next few years, according to Willmar Municipal Utilities General Manager John Harren.
One factor is an increase in the cost of supplies, but another is the city playing catchup on its street improvement projects, according to Harren. He noted that the city doubled its budget for street improvements this year, meaning Willmar Municipal Utilities had to double its budget for water main improvements.
“Some of that was still a bit in flux when we were talking in May,” Berg said of the budget for water main improvements. “Unfortunately, another thing that we were talking about in May was that we were potentially hopeful about getting something from the Legislature in a special session, but, as we are all aware, that special session never occurred.”
If at some point the state Legislature does award some dollars for the new water plant, that would make things better, he added.
“But relative to the recommendations we are giving today, it’s all under the assumption that we are not getting any additional dollars from the state, or, I guess, from anyone else, for that matter,” Berg said.
The bottom line for operating results with the rate increases is just “a tad worse” than what was presented in May, according to Berg. At the end of 2026, the cash and reserves is projected to be $1.3 million less than what was presented in May.
“When these rates all flow through the financials, we end up with really strong financial results,” Berg said, noting a strong bottom line is needed due to the debt load taken on by Willmar Municipal Utilities for construction of the new water treatment plant.
Cash reserves will decrease from approximately $13 million currently to $5.5 million in 2024 before they begin to start increasing again, according to Berg. This is on schedule for the next set of capital improvements planned by Willmar Municipal Utilities, he added.
Another recommendation included in the water rate report is to change the way in which multi-unit housing is billed. In the past, it was charged commercial rates.
It is recommended that multi-unit housing be charged by the number of units in the building, which will increase the amount paid by smaller multi-unit housing to a little more than the lowest residential rates. The amount paid by larger multi-unit housing will increase significantly.
This means that multi-unit housing will see more than a 20% rate increase in the first year, according to Berg.