City Council Meeting Date: October 7, 2025
To: Mayor and City Council
City Administrator
From: Brenda Angelstad, Finance Director
Justin Wagner, Utilities Manager
David Bennett, Public Works Director and City Engineer
Title
Consider Resolution Adopting Water Utility Rates for 2026.
Body
Action Requested:
The Northfield City Council approves the attached Resolution Adopting the Water - Utility Fee Schedule for 2026.
Summary Report:
Attached are two (2) resolutions for proposed water utility rates for 2026. In 2025, the City conducted a Utility Rate Study with Baker Tilly, Inc., a public sector financial advisor. The study included updated assumptions regarding budget revenue and expense projections and 10-year Capital Equipment and Capital Improvement Plans.
The report was presented by Springsted, Inc., at the September 16, 2025, City Council Work Session. The proposed rate adjustments are following the report recommendations and the adjustments for the 2026 Water Utility Rates:
Water
Option A (staff recommendation) - 9% increase for 2026. This option includes beginning to save for a future water treatment plant or other water projects. Building reserve in the water fund will help the City see less dramatic water rates increase when a new water treatment plant is constructed in the future. Northfield still will have water rates well below peer communities. The increase is needed to maintain positive operating income as well as to pay for anticipated operating expenses, capital outlay and debt service.
Option B - 4% increase for 2026. The increase is needed to maintain positive operating income as well as to pay for anticipated operating expenses, capital outlay and debt service.
Below is a graph of comparable cities water rates based on the different options.
Future projects that are planned in the water fund include:
- Construction of a northwest water tower that will provide economic development opportunities for the City which received $3,945,000 in a federal grant
- Upgrades to the booster station to provide sufficient water for the northwest water tower
- Replacement of water meters in the system
- Generator and controls upgrades at two wells
- Replacement of all known remaining lead water service lines
- Painting of water towers
NCRC Water Machine
Staff is working with contractors to begin the construction of the water fill station that will have treated water for free. Staff will provide updates when the water fill station is complete for residents to obtain treated water that is below the health risk limit for manganese making it safe for infants to consume.
Home Water Testing
Staff does not recommend home water testing due to variability in water tests. Staff has tested multiple sites over months and saw levels both above and below the health risk limit for manganese. Staff does not want to test water and provide the false belief that water is safe for infants to consume since the water does have manganese above the health risk limit.
Alternative Options:
Two options were provided; staff recommends a 9% increase to plan for the future water treatment plant. The other option is a 4% increase that does not provide fund building to plan for the future water treatment plant.
Financial Impacts:
The proposed rate increases allow us to maintain our facilities. An average residential customer who uses 589 cubic feet of water monthly would see their water bills adjusted based on the table below. The difference in the two options is $1.30 per month for the average user. Wastewater, stormwater and garbage rates were approved at the September 23 City Council meeting.
|
|
Monthly Water Bill |
Total Monthly Utility Bill |
|
2025 |
$25.97 |
$91.67 |
|
Option A (9%) |
$28.31 |
$96.58 |
|
Option B (4%) |
$27.01 |
$95.28 |
Total of all
Tentative Timelines:
New rates would take effect January 1, 2026.