By Starrla Cray
DELANO, MN The average Delano resident can expect to pay about $14 more than anticipated in monthly sewer charges for 2010, following the city council’s recent decision to help reverse Delano’s rapidly shrinking sewer fund.
The change was effective Jan. 1, and the increase will start with the bill sent out in February.
The city had been depending on new development to keep the fund strong, but lately, the push for housing has gone from feast to famine.
“The rate is being raised to accommodate for slow growth,” Delano City Administrator Phil Kern said.
In 2009, residents paid a sewer rate $8.69 per 1,000 gallons, with no base fee. Initially, the council had planned to increase the rate by 5 percent, up to $9.12 per 1,000 gallons.
Instead, it was decided that a base rate of $8 will be implemented, as well as a charge of $10.12 per 1,000 gallons. For the average resident, this will mean a monthly payment of about $69.
By being proactive, the city hopes to keep the sewer fund from suffering too much of a loss.
“I think the council took a responsible step to stay ahead of a possible problem,” Kern said.
The city also understands the need to keep rates as low as possible, he added.
“Everybody who’s involved pays this,” Kern said. “No one wants to see it go up to an unaffordable rate.”
If rates had stayed at the 2009 amount, the fund would have lost $643,000 this year.
According to the council’s request for action memo, the sanitary sewer fund in Delano has been “very healthy” for most of the past decade. In 2006, the fund had a surplus of more than $5 million. In light of this, the city lowered its user fees, so that residents didn’t have to pay as much each month.
Before the housing collapse, new hookups were projected to bring in nearly $1 million each year, and Delano expanded its wastewater treatment plant to allow for new growth.
As the housing market dropped, however, the city’s revenue stream from new sanitary sewer hookups virtually dried up.
“We went about 15 months in 2008-09 without a single new construction permit,” Kern said.
It’s been better recently, but growth isn’t anywhere near what it had been.
“We’ve had five building permits in the last seven months,” Kern said.
With no growth in Delano, and if the city hadn’t increased user fees, the fund was projected to be at zero by 2013.
The city is hoping for a “steady return of growth” to help keep the fund from being depleted.
“Growth will drive what happens,” Kern said. “If development gets back to a pace that the sewer fund budget depends on, it is possible the rates could go back down.”
A steady growth rate would mean 50 new units this year, 60 next year, 70 in 2012, 80 in 2013, and so on.
“Given what we know today, I wouldn’t expect to get 50 permits,” Kern said, but added that he doesn’t expect 2010 to be as bad as the past couple years, either.
“With our improvements on Highway 12, we are in as good of a position as any metro area city to grow,” he said.
Even with the increase in user fees, Kern said he doesn’t think people will be deterred from moving to Delano.
“When people move in, they look at the whole package,” he said. “Our sewer rates may be a little higher than the market average, but we continue to have the third lowest tax rate in Wright County.”
The amount of money it takes to run the sewer system can’t easily be reduced, Kern said.
“Unfortunately, it’s pretty much fixed,” he said.
Funding is made up of three parts: operations, capital improvements, and payments for debt issuance.
“Much of the debt extends to 2015,” Kern said.
As for capital improvements, Kern said there aren’t any significant upgrades planned. In 2011, the city does plan to replace or repair defective sanitary sewer lines, in conjunction with scheduled street repair. That project is already in the budget, Kern said.
“Every year, we need to review this, so that it doesn’t put the city in a tight situation,” Kern said.
The average sewer bill in Delano is projected to be about $69 per month. Here’s what other nearby cities charged in 2009:
• Maple Plain: $87
• Howard Lake: $71
• Waverly: $69
• Medina: $46
• Waconia: $34
• Buffalo: $34
• Cokato: $25
• Rockford: $25
• Winsted: $32
• Watertown: $30
Source: Delano City Council PowerPoint presentation from the Dec. 15 meeting