HomeMy WebLinkAboutX-E-01 PFAS UpdateCity Council Memorandum
To:Mayor Fasbender & City Councilmembers
From:City Administrator Dan Wietecha
Date:April 7, 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.Even with the assistance secured to date, water rates would still increase some 158%
between 2024 and 2028.
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 Sen.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 December 2, 2024 and a new state application has been submitted.
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. This would enable the interconnect of the Minnesota Veterans Home with
the City water system.
Both Sen. Seeberger and Rep. Dippel have indicated strong support for our project. Rep. Dippel
has prepared four bills: one seeking to designate Hastings as eligible for funding through the East
Metro’s 2018 3M Settlement and one seeking funding through the Clean Water Fund of the
Legacy Fund. The other two seek to fund the remaining $16.6M costs for the Eastern WTP, one
through the capital budget and the other as a general cash appropriation; Sen. Seeberger has
signed on to these two.
On February 27, we had a hearing with the House Capital Investment Committee on the capital
budget request (HF1192).On March 13, we met Senate Majority Leader Murphy, Senators
Seeberger and Pappas (Chair of Senate Capital Investment Committee), and staff to review water
rates, grants, East Metro 3M Settlement funds, financial aspects, and construction schedule of
our project.
It is vitally important to have support from both of our legislators and that they work together.
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 eastern WTP. 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 was proposed at a little over $1M. In the end, in mid-March,
Congress adopted a continuing resolution that funded no Community Project Funding.
We are preparing to submit a new application in the coming weeks to support the western WTP.
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
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the top of the list. Additionally, we submitted the first two phases of the project for the Intended
Use Plan (IUP) in June 2024. We are preparing to submit the western WTP in June 2025.
The Public Facilities Authority has listed the eastern WTP is ranked #2 and central WTP appears
ranked tied at #13 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).
Although this is through a state agency, the funds have originated as federal assistance. The PFA
does not believe this will pose a problem, but it does raise some uncertainty.
During our April 7 workshop, the City Council will discuss utilizing the Drinking Water
Revolving Fund to the balance (estimated at $5M to $8M) of the central WTP. Using the low-
interest DWRF will save about $1M in interest over the next 20 years.
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%
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. Even
with the assistance secured to date, water rates would still increase some 158% between 2024
and 2028.
The City Council has workshop April 7 to discuss financing the City’s portion of the central
WTP, as well as the July rate increase, and projections for future rate increases.
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
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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 in state fiscal year 2027 (calendar year 2026) as they cover
currently proposed East Metro projects, so they will be transitioning to the Consent Order in the
next couple years.
In early March, an email from the Co-Trustees indicated that 3M questions whether East Metro
projects have been “reasonable and necessary” under the Settlement Agreement, objects to
transitioning to the Consent Order, and has initiated mediation for dispute resolution.
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 City Council approved the grant agreement at its January 21 meeting.
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 in 2025
and delay the eastern WTP 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
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lower incremental costs than other sites. Additionally, timing and ability to proceed without
delay were important considerations.
In January, a Phase I environmental review was conducted and found record of a 2005 petroleum
spill at the site. In February, a Phase II environmental assessment was approved to determine the
extent of potential contamination. The Phase II did not identify impacts that require further
actions or additional investigation. A construction contingency plan will be included in the
bidding documents for the project in case previously unidentified contamination is encountered
during construction.
Closing is scheduled for April 18. The businesses at this site (Carbone’s Pizza and Stacy’s Stars)
have been given a required 90-day notice that they will need to vacate the property by June 30.
SRF Consulting has been assisting with business relocation analysis for the two businesses
currently at this location. Under state law, some costs associated with the relocation of these
businesses will be borne by the project. Both have indicated strong interest in continued
operations in Hastings.
As design reaches 60%, we continue to meet with MPCA staff to ascertain elements of the
project attributable to Well #5 and eligible for funding through the East Metro 3M Settlement.
At present, we anticipate final design could be completed and ready to bid by May 2025, with
construction commencing as early as July.
On March 25, we held a public presentation about the central WTP and raw water lines for
neighboring residents and businesses to learn about project scope and schedule. This also proved
a good opportunity for them to give feedback on the upcoming project. A copy of this
presentation, as well as other updates, are being posted on the City website to maintain public
transparency.
Financial Impact:
Not applicable
Committee Discussion:
Not applicable
Attachments:
Not applicable
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