On Tuesday, July 16, the Northfield City Council kicked off its 2025 budget and levy preparation process with a high-level overview of the budget and specific focus on utility rates, as they will be adopted in September, well ahead of the rest of the budget.
Even though the city received just under $4 million in federal funding to cover the cost of the new water treatment plant, and is hopeful that it will receive an additional $29.5 million, a 28% increase in water rates is still expected to hit city residents this coming year.
If that much larger sum is never approved by the federal government, Northfield residents can expect increases of 28% over the next four years. Even if it is approved, residents can expect to face significant but much less hefty increases of 10%-12%.
City Utilities Manager Justin Wagner said the extra revenue is needed to fund a water treatment plant that has gotten much more expensive than initial estimates indicated. Estimated to cost $33.45 just two years ago, the plant is now projected to cost $58.8 million.
A substantial increase in inflation is a major factor behind the price increase. Current plans also include a larger office and garage and an extra booster station to ensure that the plant is built to serve expected expansion in the southeast part of town.
Wagner said that one big mistake with the original estimate was in underestimating the cost of a reverse osmosis system. Given the weight of a large reverse osmosis system, Wagner said it is now understood that a separate space will be needed to accommodate that, increasing the cost.
Even with the cost of building a water treatment plant that will be much more expensive than initially anticipated, Wagner and City Administrator Ben Martig highlighted that Northfield’s water rates could be lower than other comparable communities, at least with federal funding.
Using the communities of Mankato, St. Peter, Fairmont, Robbinsdale, Marshall and Eden Prairie as a peer group of similar cities that already soften their water, the city projects that with the federal grant, Northfield would have substantially lower water rates in 2020 than all of them.
Without the federal grant, Northfield’s water rates would climb to levels that are almost precisely average within the peer group — above Mankato and Eden Prairie, well below Fairmont, and in line with Robbinsdale, Marshall and St. Peter.
Furthermore, the city argues that building a water treatment plant that includes a water softening component could actually save money for most residents by allowing them to leave behind the expenses associated with home softening.
The most important reason the city feels compelled to move forward with a new treatment plant is to reduce the levels of manganese in Northfield’s water, which are well in excess of the levels recommended by both the Minnesota Department of Health and the EPA.
While manganese is naturally occuring, excessive exposure to the chemical has been linked to issues with memory, attention and motor skills. In particular, the EPA recommends that infants under the age of 1 not drink water with as much manganese as Northfield’s has.
The new water treatment plant would remove not only manganese but also other harmful chemicals and enable the city to quickly respond to and remove any harmful chemicals that may be detected in Northfield’s water in the future.
Right now, the biggest water safety concern for many communities is the presence of PFAS, or forever chemicals. Wagner said that a number of Minnesota cities are currently moving to build water treatment plants primarily to remove harmful PFAS chemicals from their drinking water.
Wagner said that all five of Northfield’s wells have been found to contain at least trace amounts of PFAS. While far below the levels found to be a concern by the federal government, those trace elements of PFAS will be removed by the new water plant’s reverse osmosis system.
By softening its water, the city can reduce the amount of mineral build-up inside water pipes, and ensure that residents of buildings that don’t currently have in-home water softening can enjoy water that doesn’t dry the skin as much and is better for washing dishes and clothes.
Levy increase
Beyond the water treatment plant, the council got a very early look at the budget, which is likely to come with a significant levy increase projected around 15%, which could push even higher if the city wants to push ahead with the Bridge Square streets and park project.
The city had originally hoped to secure bonding dollars to move ahead with the project this year, but those hopes died when legislators were unable to move ahead with a proposed bonding bill of around $1 billion and couldn’t even pass a much smaller cash bonding bill.
With around $7 billion in bonding requests from across the state, the Bridge Square streets and park project was competing with project requests from cities across the street, so securing that help from the state wouldn’t have been easy — and it won’t be if the city wants to keep trying.
By delaying the Bridge Square streets and park project to 2026, the city can reduce its levy increase by about 2% while keeping the door open to getting additional help from the state. However, other increases to the levy appear harder to negotiate down.
Of that 15% in projected levy increase, about 5.5% will come from previously bonded projects which the city has committed to moving forward with. Capital maintenance fund levies are expected to rise by 1.5% to keep up with existing maintenance needs.
The levy increase for the general fund is expected to come in at around 7%, primarily to cover the increased costs of wages and benefits for city personnel. Martig said that it is important for the city to stay competitive in a tight labor market, with private and public sector employers increasing compensation.
Before his tenure in Northfield, Martig recalled that a pair of pay studies had found that the city had allowed its compensation to fall well below comparable cities. He said the city’s current philosophy of staying “in the middle” is sound, allowing the city to get good value while enabling it to attract and retain talent.
“We’re in the middle of our peer groups comparatively; we’re not market leaders; we’re not market lag on pay. We’re staying in the middle to attract and retain talent in Northfield,” Martig said.
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