HomeMy WebLinkAboutX-E-01 PFAS Update
City Council Memorandum
To: Mayor Fasbender & City Councilmembers
From: City Administrator Dan Wietecha
Date: October 21, 2024
Item: PFAS Update
Council Action Requested:
Change sequencing of construction schedule and phase in water rate increases during 2025.
Background Information
Hastings has PFAS contamination in all six of our municipal wells (specifically PFOA in all six wells and
PFOS in two wells). PFAS contamination of the aquifer would also impact other potential wells,
including the future Well #9 site. Under the Clean Drinking Water Act, the City has a compliance
deadline of April 2029.
The City has completed a Feasibility Study to consider alternatives to mitigate the PFAS. The study
recommended construction of three decentralized water treatment plants for PFAS and Nitrate removal.
The current construction cost estimate is $68.9M with expectation to trend higher. Without financial
assistance, water rates would need to double in three years and triple in five years. The City has been
exploring and pursuing multiple opportunities to offset this “budget buster” expense.
In October, the State’s Co-Trustees (MPCA and DNR) agreed that there is a connection between Well #5
and the 3M Cottage Grove site and that the costs associated with Well #5 (to be treated with the central
WTP) would be eligible for funding under the 2018 Settlement Agreement.
General Work Plan Up To This Point
The general plan has been to build one WTP per year for three years, with completion around November
2028, a cushion of about 4-6 months ahead of the 2029 deadline.
Design work is well underway for the eastern WTP (WTP 1) which is located in the Industrial Park, a
commercial site on City-owned land. Anticipating this WTP being put out for bids in early 2025, the
proposed budget includes a 37.3% water rate increase effective January 1, 2025.
Construction of this plant would be followed by the central and western WTPs (WTPs 2 and 3), along
with projected water rate increases over 40% each year. Presently, the City is reviewing commercial
property appraisal and about to begin negotiating purchasing property for both of these WTPs.
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The City currently has grant applications pending for the eastern and central WTPs (WTPs 1 and 2).
Proposed New Work Plan Going Forward
In seeking various grant applications and other financial assistance, we have repeatedly said the project
would “follow the funding.” The recently approved 3M Settlement funding for Well #5 is estimated at
$14.5M and is the first significant outside money we’ve had directed towards the project.
Recommendation 1: I recommend flipping the sequence of the construction schedule: proceed with the
central WTP (WTP 2) in 2025 and delay the eastern WTP (WTP 1) until 2026.
Proceeding with the WTP that has significant outside funding has two major advantages. 1) It would
mean a smaller water rate increase for our residents and businesses (more about this below). 2) It gives us
additional time to seek state bonding, grants, and/or direct connection to 3M Cottage Grove before
proceeding with the other WTPs.
Recommendation 2: I recommend a two-step water rate increase in 2025, with a 10% increase effective
January 1, 2025, and a second increase to be determined effective July 1, 2025.
I very roughly estimate the needed increase to be around 20% to 22%, including 3.5% for base inflation
and CIP/CEP.
We estimate the costs associated with Well #5 to be $14.5M, but that amount has not been reviewed or
approved by the Co-Trustees. And, we cannot even submit the project for review and approval until the
planning and engineering are at a 60% design stage. Since this WTP was not planned until 2026, the
engineering has not yet started. It can start soon, but it will be several months before 60% design.
Delaying the second “half” of the water rate increase until mid-year would allow us a better handle on the
construction costs and the Settlement funds.
In the meantime, we will continue pursuing additional money through grants, state bonding, and the 3M
Settlement.
Upon City Council approval of these recommendations, we will immediately update the communication
materials for our residents and businesses to reflect the changes in water rates and the construction
schedule.
Financial Impact:
Not applicable
Committee Discussion:
Not applicable
Attachments:
Not applicable
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