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Home My WebLink AboutX-E-01 PFAS Update City Council Memorandum To: Mayor Fasbender & City Councilmembers From: City Administrator Dan Wietecha Date: December 2, 2024 Item: PFAS Update Council Action Requested: Informational memo, no action requested at this time. Background Information Hastings has PFAS contamination in all six of our municipal wells (specifically PFOA in all six wells and PFOS in two wells). We’ve also now found PFOA levels over the EPA’s limit in the future Well No. 9 site. 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 general plan is to build one WTP per year for three years. 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. Key Updates State Capital Budget: The City submitted PFAS Treatment & Raw Water Lines for consideration in the State’s 2024 Capital Budget due to the budget-busting expense, the fact that the treatment is to remove contamination/pollution caused by others, and the suddenness of new regulations preventing financial planning. Sen. Seeberger and Rep. Hudella indicated support and introduced SF 3161 and HF 3115. The legislative session ended May 20 without passage of a bonding bill. In October, we met with Senator Pappas, Chair of the Senate Capital Investment Committee, to provide an update on our project and funding needs. A new state application as well as new bills will be needed; a City Council resolution of support is on the December 2 agenda. Clean and safe drinking water was identified as the City Council’s number one legislative priority during its workshop on November 16. X-E-01 Congressionally Directed Spending / Community Project Funding: In April, we submitted requests of Senator Klobuchar, Senator Smith, and Representative Craig for $10.3M (50%) of the first phase of the project. This amount is higher than typically funded. All three advanced our request to their respective Appropriations Committees; however, it was not approved through the Senate Appropriations Committee. As it worked through “mark up” by the Appropriations Committees, it is now proposed at a little over $1M. This is a first step and not a final decision. Senator Smith’s office said that approval would not occur until November at the earliest and potentially into 2025. PPL/IUP: In 2023, the City submitted the project for the State’s Drinking Water Revolving Fund Project Priority List (PPL). On May 1, 2024, we re-submitted to correct errors and to recognize new EPA regulations of MCLs for PFAS, which will result in our ranking at or near the top of the list. Additionally, we submitted the first two phases of the project for the Intended Use Plan (IUP) in early June. Although the Drinking Water Revolving Fund is not our preferred funding source, it has the possibility of a $3M Emerging Contaminants Grant for each phase. According to the Public Facilities Authority’s draft listing, WTP 1 is ranked 2nd and WTP 2 appears ranked tied at 13th on the PPL and both projects are in the “fundable – emerging contaminants” category. The final IUP list is expected in the next couple weeks. Water Rates: With budget planning for 2025 (including workshops on June 3, June 17, and September 3), we discussed potential water rate increases, phasing, and timing. During the preliminary budget planning, we anticipated a 37.3% increase in water rates for 2025. During our October 21 meeting, following Co-Trustee approval of 3M Settlement Funds for Well #5, the City Council supported 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. On an average residence using 15,000 gallons per quarter, the January increase would be about $4 per quarter. First reading of the Fee Schedule ordinance is on the December 2 agenda, and second reading is scheduled for December 16. Additional increases are expected to coincide with construction of each of the three WTPs. In total, rates would double in three years and triple in five years without financial assistance. 3M Settlement: The 2018 Settlement Agreement provides grant money for drinking water projects “in the East Metropolitan Area.” It is not limited to any specifically named cities or townships and does not require a direction connection to one of the 3M disposal sites. Similarly, Minnesota’s Conceptual Drinking Water Supply Plan does not require a direct connection to one of the disposal sites. However, the State’s Co-Trustees (MPCA and DNR) have stated that a direct connection should be required and has previously excluded Hastings from funding under the Settlement Agreement. X-E-01 Although we disagree with the Co-Trustees’ interpretation, we value our relationship with them and have endeavored to not have this disagreement come between our mutual efforts. The MPCA has been helpful in conducting Phase I and II environmental site assessments, requesting 3M to conduct additional investigation of its disposal site and hydraulic modeling in the Hastings area, and has awarded a planning and design grant for Hastings to begin design engineering for the treatment plants. Additionally, the 2007 Consent Order does require a direct connection to one of the East Metro disposal sites. This is extra important since the Co-Trustees have acknowledged that the Settlement Funds will run out as they cover currently proposed East Metro projects, so they will be transitioning to the Consent Order in the next couple years. We believe the environmental studies have resulted in several lines of evidence of a connection of Well #5 to the 3M Cottage Grove site, specifically: updated Minnesota Geological Survey mapping of a fault in the bedrock, presence of HQ115/TFSI in Well #5, and additional water composition and PFOA chemical analyses. We met with the Co-Trustees and Attorney General’s Office in late July, and they agreed that there is a connection between Well #5 and 3M. In October, they 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. We estimate the costs associated with Well #5 to be $14.5M, but that amount has not yet been reviewed or approved by the Co-Trustees. In November, we submitted our first application for Settlement funds to cover the cost of land purchase and business relocation necessary for the central WTP. In the meantime, the environmental investigations will continue as planned by the MPCA to determine connection and eligibility for the City’s other wells. Central Water Treatment Plant: During our October 21 meeting, the City Council agreed to flip 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. 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. At our November 18 meeting, the City Council approved a purchase agreement for 1292 North Frontage Road as the site for the central WTP. This location is in a non-residential area, is located next door to the existing nitrates treatment facility and ground storage reservoir, and has X-E-01 lower incremental costs than other sites. Additionally, timing and ability to proceed without delay were important considerations. Pending environmental review, we hope to close on the purchase by the end of the year; otherwise, early in 2025. Will be contracting with SRF Consulting to assist with business relocation analysis for the two businesses currently at this location. We intend to move forward with Geotechnical Investigation and Topographic Survey to design the new site location for the central WTP with the WSB team that conducted the work on eastern WTP site already. WSB has been cost effective and efficient with the work due to their expertise, understanding of scope, close coordination with the City, flexibility on direction, and responsiveness to listen and meet the City’s needs. Continuing with the team that has developed the water system modeling, WTP Siting Study, and treatment plant design specific to Hastings eliminates re-work and a learning curve that would add more expense and time to the project. At present, we anticipate final design could be completed and ready to bid by late spring / early summer 2025. Financial Impact: Not applicable Committee Discussion: Not applicable Attachments: Not applicable X-E-01