A focal point of the meeting was the wastewater rate study, presented by Doug Green, which outlined the critical financial state of Willmar’s wastewater treatment facility. The study was conducted to ensure that the facility’s rates adequately cover operating expenses, capital requirements, and debt service obligations. Green emphasized the necessity of maintaining a revenue coverage of 105% to comply with state mandates due to past bond issues. This requirement is particularly crucial as the city prepares for substantial upcoming debt service payments.

The study revealed a worrying trend of escalating operating expenditures without a corresponding rise in revenues. From 2015 to 2023, personnel and service charges increased, resulting in a consistent deficit in operating income. These financial challenges underscore the need for immediate rate adjustments to ensure the facility’s financial health and compliance with legal obligations.

Further analysis of the outstanding debt service highlighted a substantial increase in obligations due in the coming years, primarily driven by balloon payments from previous loans associated with the wastewater treatment plant project. Green explained that the city must strategically address both short-term challenges and long-term sustainability by adjusting financial strategies to accommodate the increased debt payments.

The council engaged in discussions about the implications of the rate study findings, expressing concerns over the mounting financial pressures on the wastewater treatment facility. The necessity of timely action to maintain compliance and fiscal responsibility was a recurring theme, as the city faces significant upcoming debt service payments and must ensure adequate revenue streams to meet these obligations.

Attention also turned to the city’s broader financial management, particularly concerning annual supply costs and the Capital Improvement Plan (CIP). The council’s budgeting approach was described as conservative, with an anticipated increase in supply costs of around 7.5% following recent averages. The council discussed a $375,000 transfer from the general fund to the Public Works Reserve fund, intended for street maintenance and repairs. Clarifications were made regarding the distinction between staffing costs and operational expenses within departments, emphasizing the need for precise financial planning.

The CIP discussion highlighted the funding of street projects through cash reserves and the inclusion of sewer portions in the annual street bond due to anticipated higher debt service challenges. The projected expenses for lift station projects and nitrogen removal were noted, with a significant biological nutrient removal project estimated at one million dollars next year. The uncertainty surrounding future nitrogen mandates and their financial implications was discussed.

Graphs illustrating the outstanding and projected debt service payments showed an increase from $4.8 million to $8.6 million by 2029, with a sharp decline expected in 2030. Operating expenses were forecasted to rise over the planning period, necessitating revenue increases of 12.5% in 2025, 10% in 2026, and 5% in 2027 and 2028. The council acknowledged that consistent annual rate increases since 2017 would have placed the city in a more favorable financial position.

The meeting also addressed user fees, with proposed increases scheduled for upcoming years to align with operating costs. A motion was made to call for a public hearing to amend the sanitary sewer rates, resulting in unanimous approval from the council. This step is seen as critical in ensuring the city’s financial stability and compliance with state requirements.

In addition to financial matters, the council discussed an amendment to the 2022 Engineering Services contract with Bolton and Mink. The amendment allocated an additional $35,000 for a project extending from South 24 to Civic Center Drive, now reaching the 10th Street entrance of Robins Island. This adjustment aimed to keep the project under one contract rather than splitting it between different budgets. A traffic study was proposed to assess pedestrian safety along North 71, a concern highlighted by council members.

The council also reviewed the allocation of American Rescue Plan Act (ARPA) funds, with approximately $250,000 remaining to be assigned before a December 31, 2024, deadline. Potential expenses included ongoing software costs and housing initiatives, with a call for a clearer understanding of how these funds would be utilized.