HomeMy WebLinkAboutX-E-01 PFAS Update
City Council Memorandum
To: Mayor Fasbender & City Councilmembers
From: City Administrator Dan Wietecha
Date: January 6, 2025
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 central WTP is expected to
bid in May 2025, start construction in August 2025, and substantial completion in December
2026. The eastern WTP would bid in January 2026, and substantial completion October 2027.
Finally, the western WTP would bid January 2027, and substantial completion October 2028.
These dates are approximate, but the point is that one WTP per year leaves little room for
compliance with the EPA deadline of April 2029.
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
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and introduced SF 3161 and HF 3115. The legislative session ended May 20, 2024, without
passage of a bonding bill.
In October 2024, we met with Senator Pappas, Chair of the Senate Capital Investment
Committee, to provide an update on our project and funding needs. The City Council approved a
resolution of support on the December 2, 2024, a new state application has been submitted, and
new bills will be needed once the new legislative session opens January 14, 2025.
Clean and safe drinking water was identified as the City Council’s number one legislative
priority during its workshop on November 16, 2024. With recent approval of a $3M Emerging
Contaminants Grant, we have been able to reduce the amount of this bonding request to $16.6M
for the eastern WTP. We plan to include the interconnect of the Minnesota Veterans Home with
this phase of the project.
Congressionally Directed Spending / Community Project Funding: In April 2024, 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 they hope that by March 14, 2025, Congress
will have agreed to a full-year budget for FY25 that includes CDS projects. Awards are not final
until Congress passes and the President signs a full-year budget.
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 June 2024. Although the Drinking Water Revolving Fund is not our preferred
funding source, its application is the venue for the Emerging Contaminants Grant.
The Public Facilities Authority has listed the eastern WTP is ranked 2nd and central WTP appears
ranked tied at 13th on the PPL and both projects are in the “fundable – emerging contaminants”
category. Both projects are scheduled to receive $3M Emerging Contaminants Grant ($6M total).
Water Rates: With budget planning for 2025 (including workshops on June 3, June 17, and
September 3, 2024), 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, 2024, 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%
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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. City Council approved the January increase on December 16, 2024.
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.
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.
To date, 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.
In October 2024, the Co-Trustees 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 2024, we submitted our first application for
Settlement funds to cover the cost of land purchase and business relocation necessary for the
central WTP. The grant agreement for these funds is presently under review and will be on an
upcoming City Council agenda.
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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, 2024, 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, 2024, 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
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 early in 2025. After the 3M Settlement grant agreement is approved, SRF Consulting
will assist with business relocation analysis for the two businesses currently at this location.
We have begun 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 May 2025.
Financial Impact:
Not applicable
Committee Discussion:
Not applicable
Attachments:
Not applicable
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