Sanitary sewer rates are expected to increase by 2017 due to increasing costs of operations and projects at Austin’s Waste Water Treatment Plant.

Public Works Director Steve Lang said last week that the projects are identified in the city’s capital improvement plan, which also shows how those projects are going to be funded.

“In 2015, our user fees generated about $5.4 million dollars and maintenance and operation accounts for $4 million of that, so we are only able to put away about $1.4 million per year,” Lang said.

Last week, he recommended an increase to the City Council with the lateral development charge from $11,375 to $14,200; the grinder system will increase from $12,925 to $16,700; and the gravity system with a lift station would increase to $14,200.

The City Council approved the change in a work session, sending it to the next City Council meeting agenda.

Austin has a connection fee of $7.98 for every parcel throughout the community. They charge $2.04 per unit and each home typically uses about eight units per month. An upper Midwest survey of a five-state area was completed and it showed how Austin compared with other communities throughout Minnesota and the Midwest. Austin was the lowest in that comparison with $24.30.

In 2017, that rate will increase to $27.98, which would move Austin to the middle of that path, but on the lower side of it, Lang said.

Two different funding sources are utilized to pay for operations, maintenance and capital projects, Lang said. One is the sewer user rate, which is based on a set fee connection charge and for the amount of water you use. The second is the sewer access charge fee, which was recently adopted in the last few years

“Every project at the waste water treatment plant is large,” Lang said. “It seems like you can’t do any project today without the cost being a million dollars.”

The two most recent projects were $3 million each. Lang said it takes quite some time to earn up $6 million worth of capital, especially if only $1.4 million is put away each year.

With the new rates, $1.4 million would increase to $2.1 million saved each year.

“It would increase our ability to save money,” Lang said. “It allows us to hold a budget for some of those larger capital improvements that are identified by the CIP [capital improvement plan].”

One project this year is extending the sanitary sewer as part of the Fourth Drive Southwest project and a larger project coming up includes a $5 million improvement project for high rate filters. Some of the projects in the CIP are improvements to existing infrastructure and new improvements to meet new and current standards.

“We have an old plant,” Lang said. “Parts of our plant age back into the 1930s. It’s in constant need of repair and upgrade. We’re continually looking at projects both to upgrade our existing facility but also to incorporate new permit standards as well.”

The Minnesota Pollution Control Agency (MPCA) has initiation periods to give cities time to incorporate new standards, which are generally five years out, Lang said.

“Right now, these rate increases would likely not be enough to cover those projects that are five, six, seven years out for burning those phosphorous things,” Lang said. “This rate increase is really just to identify or fund the projects identified in the CIP.”

Director of Administrative Services Tom Dankert said he anticipates coming back in the next couple of years with another proposed rate increase.

“Not only does the fixed cost increase, but you’ve got increases on the operation side that go up continually too,” Dankert said.

How Austin ranks compared to other cities’ sewer rates

Total utility bill: 9 out of 31 cities

Water, Sanitary sewer and storm sewer: 9 out of 31

Sanitary sewer only: 7 out of 31

Five state area: 20 out of 76

“We are on the low end when compared to other communities around us for our utility bills,” Public Works Director Steve Lang said.