HomeMy WebLinkAboutX-E-01 PFAS UpdateCity Council Memorandum
To:Mayor Fasbender & City Councilmembers
From:City Administrator Dan Wietecha
Date:January 5, 2026
Item:PFAS Update
Council Action Requested:
Informational memo, no action requested at this time.
Key Updates
•Environmental investigations continue as planned by the MPCA to determine potential
connection and eligibility for the City’s other wells. The current round of studies are
expected to complete in late 2025. The City and MPCA are meeting in late January 2026
to review the studies.
•The 2026 budget proposal includes a phased approach of 10% each in January and July
2026 and January 2027. The phased approach would allow additional time to seek state
bonding, grants, and/or direct connection to 3M Cottage Grove; enable phasing in the
necessary rate increase; and recognizes the complexity of loan and grant paperwork with
the Public Facilities Authority.On December 15, 2025, the City Council approved the
initial 10% increase effective January 1, 2026.
•Due to concerns at an adjacent property in mid November, vibration monitoring
equipment was installed at the construction site to ensure that vibrations won’t damage
neighboring properties. We also have forensic engineers inspecting cracks in the
foundation next door –alleged to have been caused before we put up the vibration
monitors.
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 found PFOA levels over the EPA’s limit in the future
Well #9 site, scheduled to come on line in 2026. 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. Additionally, our design
would enable the interconnect of the Minnesota Veterans Home with the City water system,
avoiding the need for it to construct and maintain a WTP for its contaminated well.
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In December 2023, the City received a $3.2M Planning and Design Grant from the MPCA to
cover the expenses of designing the three WTP’s. The City contracted with WSB for the design
work. In October 2025, the grant was increased by $281K.
The general plan is to build one WTP per year for three years. The central WTP was bid in June-
July 2025, had contracts approved in August, began construction in late September 2025, and
have substantial completion in December 2026.
Under current plans, the eastern WTP would bid in 2026, and substantial completion in 2027.
Finally, the western WTP would bid 2027, and substantial completion in 2028-2029. These dates
are approximate, but the point is that one WTP per year leaves very little room for compliance
with the current EPA deadline of April 2029; though, the EPA has indicated its intent to extend
the deadline two years.
The current construction cost estimate is $70.3M, plus upwards of $1M annually for operation
and maintenance. Without any 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 approximately $23.3M assistance secured to date,
water rates would still increase around 150% between 2024 and 2028.
Updates
Environmental Protection Agency: In March 2023, the EPA announced draft maximum
contaminant levels for PFOA and PFOS. The final MCL’s were released April 10, 2024, at 4
parts per trillion for both PFOA and PFOS. This included five of the City’s six wells and the
Hastings Veterans Home being over the new MCL’s. According to the EPA, “Systems that
detect PFAS above the new standards will have five years to implement solutions that reduce
PFAS in their drinking water.”
On May 14, 2025, the EPA issued a press release indicating that it was keeping the MCL’s for
PFOA and PFOS at 4 ppt and extending the compliance deadline by two years. The actual details
are pending a proposed rule in fall 2025 which would be finalized in spring 2026.
The most notable news for Hastings is that it would extend the compliance deadline by two years
from April 2029 to 2031. This could allow us to delay portions of our project in order to pursue
additional funding and/or to phase in water rate increases over six years rather than four.
There are also reasons to maintain our existing construction schedule. Most importantly, our
residents will continue to have contaminated water until all three WTPs are built and operational.
Additionally, our current schedule would be completed only four to six months ahead of the
original deadline. This is little cushion for any potential delays due to bidding, contractor, supply
chain, weather, etc. So the extension could simply give us cushion to manage a large and
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complex project. And we have been trying to work ahead of other cities; more time could result
in more competition for grants and funding. Additionally, deliberate delay would likely mean
higher costs for inflation.
The EPA announcement also mentioned plans to rescind and reconsider regulations for four
specific PFAS. This would not impact Hastings, as the limits for PFOA and PFOS remain at 4
ppt. September 11, 2025, the EPA reconfirmed its regulation of PFOA and PFOS.
State Capital Budget –2024: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.
The House Capital Investment Committee included Hastings in its tour on November 30, 2023.
Sen. Seeberger and Rep. Hudella indicated support and introduced SF 3161 and HF 3115. The
House Capital Investment Committee held a hearing on HF 3115 on April 15, 2024. The
legislative session ended May 20, 2024, without passage of a bonding bill.
State Capital Budget –2025: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 was
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 were able to reduce the amount of this bonding request to $16.6M for
the eastern WTP.
Late in the legislative session, we updated our project and financial information with Minnesota
Management and Budget (MMB) to reflect matching expenditures by the City and potentially
separating the Veterans Home interconnection from the financial calculation.
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, 2025, 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 Pappas (Chair of Senate Capital Investment Committee) and Seeberger, and staff to
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review water rates, grants, East Metro 3M Settlement funds, financial aspects, and construction
schedule of our project. On May 9, we met again with Representative Franson (Co-Chair of
House Capital Investment Committee) and Representative Dippel. During special session, the
legislature adopted a state budget and bonding bill that focused on state projects.
State Capital Budget –2026:In June, we submitted two applications to keep our options open
for consideration in the 2026 session: the eastern and western WTPs. In August-September, we
met with Sen. Seeberger and with Rep. Dippel to discuss the status of our project, impact on
water rates, and options to pursue legislative assistance. It is vitally important to have support
from both of our legislators and that they work together.
The Senate Capital Investment Committee included Hastings on its State Bonding Tour on
October 28, 2025. A similar visit by the House Capital Investment Committee occurred
November 6. Both were engaged and well received.
Clean and safe drinking water was again identified as the City Council’s number one legislative
priority during its workshop on November 3, 2025.
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 House Appropriations Committee, it was proposed at a little over $1M. In the end, in mid-
March 2025, Congress adopted a continuing resolution that funded no Community Project
Funding.
In April 2025, we submitted a new application for $10.8M (50%) the western WTP.Sen.
Klobuchar has submitted our project to the Senate Appropriations Committee for consideration
for Congressionally Directed Spending. Please note that the Congressional offices coordinate in
order to submit as many Minnesota projects as possible, so we do have support of Senator Smith
and Congresswoman Craig even though submitted by one office. In late August, the draft
legislation reported by the House Appropriations Committee includes $1.1M for the project. This
is one step in the process and does not guarantee funding.
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. In May 2025, we submitted the western WTP for the IUP.
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PPL –2025:The Public Facilities Authority has listed the eastern WTP as 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).
During our April 7, 2025,workshop, the City Council discussed utilizing the Drinking Water
Revolving Fund for the balance (estimated at $5M to $8M) of the central WTP. Application for
the PFA loan was approved by City Council on May 5; the application was submitted May 22.
The new state budget included some state funds to augment the ECG program, but the budget
language is different and doesn’t have the same formula limit as the federal funds. The PFA
financing for the central WTP was updated to reflect $3M federal-funded Emerging
Contaminants Grant, $2M state-funded Emerging Contaminants Grant, and $5M low-interest
loan (reduced from previously planned $8.4M). Using the low-interest DWRF will save about
$600K in interest over the next 20 years. The financing agreement was approved August 18,
2025. We inquired of the PFA and confirmed that we do not meet income eligibility criteria to
have all or a portion of the loan converted to a grant.
The eastern WTP has also been identified as fundable with the federal funds, and we recently
applied for the western WTP. In August we were told that the state funds will likely be available
for the eastern WTP in 2026.
PPL –2026:Additionally, in spring 2025, we submitted updates for the IUP applications for the
eastern and western WTPs to match construction schedule; this also includes an application for
the Emerging Contaminants Grant toward the western WTP. Draft rankings were released in
November. The eastern WTP is ranked #1, and the western WTP is tied at #17. Both are
reportedly in the fundable range.
Water Rates –2025: 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 approximately $23.3M assistance secured to date, water rates would still increase around
150% between 2024 and 2028.
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The City Council had workshop April 7, 2025,to discuss financing the City’s portion of the
central WTP. On May 5, the City Council approved an additional 10% water rate increase
effective July 1. This covered our projected gap as well as provided some cushion for
uncertainty. The increases were communicated to our residents and businesses through mailings,
newsletters, and social media.
Water Rates –2026: Early budget planning estimated a 37.2% water rate increase for 2026.
This can be reduced due to the federal and state Emerging Contaminants Grants for the central
WTP, construction bids for the central WTP, and holding the construction schedule for the
eastern WTP until summer 2026. The budget proposal includes a phased approach of 10% each
in January and July 2026 and January 2027. The phased approach would allow additional time to
seek state bonding, grants, and/or direct connection to 3M Cottage Grove; enable phasing in the
necessary rate increase; and recognizes the complexity of loan and grant paperwork with the
Public Facilities Authority.On December 15, 2025, the City Council approved the initial 10%
increase effective January 1, 2026.
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 direct 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 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 2025,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.
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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. At the time, we
estimate the costs associated with Well #5 to be about $15M. 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, approximately $1.4M. In May 2025, we submitted the application for
Settlement funds to cover construction costs allocated to Well #5. The grant agreement for the
Settlement funds for the construction costs allocated to Well #5 is on the August 4 agenda,
approximately $13.7M. This agreement also includes provisions for reimbursement of costs
allocated to Wells #3 and #7 if later determined to be eligible for Settlement funds. Between the
two grant agreements, the total from the East Metro 3M Settlement Fund is approximately
$15.1M.
In the meantime, the environmental investigations will continue as planned by the MPCA to
determine potential connection and eligibility for the City’s other wells. The current round of
studies are expected to complete in late 2025. The City and MPCA are meeting in late January
2026 to review the studies.
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
lower incremental costs than other sites. Additionally, timing and ability to proceed without
delay were important considerations. Initial negotiations were with the property owner; tenants
were notified in November 2024.
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
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extent of potential contamination. The Phase II did not identify impacts that require further
actions or additional investigation. A construction contingency plan was included in the bidding
documents for the project in case previously unidentified contamination is encountered during
construction.
Closing on the property occurred April 18, 2025. The businesses at this site (Carbone’s Pizza and
Stacy’s Stars) were given a required 90-day notice that they will need to vacate the property by
June 30. On April 7, City Council approved a lease-back agreement for management of the
property during the interim. SRF Consulting has been assisting with business relocation analysis
for the two businesses. Under the Uniform Relocation and Real Property Acquisition Policies
Act, 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.
On October 29, 2025, the City received notice that Pizza on 50th & France dba Carbone’s Pizza
in Hastings is suing the City over the purchase of the property and alleged loss of lease and
income. The City disputes the substance of the claims. Our insurer League of Minnesota Cities
Insurance Trust is defending the City and has assigned Hoff Barry, PA to handle the suit. In the
meantime, the City continues working with Carbone’s Pizza to find a new home in Hastings and
relocation benefits.
As design reached 60%, we continued 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. In
May 2025, we submitted the application for Settlement funds to cover construction costs
allocated to Well #5.
The City Council approved plans and specifications, and the central WTP was bid in June 2025
as two projects: the raw water main connecting Well #7 and the WTP itself. Mobilization and
construction began in late September 2025, with substantial completion to occur in December
2026.
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, have been posted on the City website to maintain public
transparency.
During our April 7 workshop, City Council discussed several financial aspects for the central
WTP. During the workshop, City Council favored pulling the nitrates treatment from central
WTP. If we build the “footprint” to provide space in the building to later add the treatment
system, we can cut $3.1M from the project cost. The nitrate levels in these wells (3, 5, and 7) are
at levels that require monitoring, and we currently do partial treatment on wells 3 and 5, but are
not in imminent need for nitrates treatment now. On the other hand, note that the eastern WTP
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does not have the same latitude for the nitrates treatment, as those wells are much closer and
occasionally exceeding the threshold.
The grant agreement for the Settlement funds for the construction costs allocated to Well #5 was
approved on the August 4, for approximately $13.7M. The PFA loan agreement, including the
two Emerging Contaminants grants, was approved on August 18, for approximately $10M.
Bid opening for the raw water mains from Well #7 was on June 25; bids were competitive. Bid
opening for the central WTP itself was July 24; bids were very competitive. Both were approved
on August 18. A1 Excavating was hired for the raw watermain portion of the project. Magney
Construction was hired for the WTP itself. Construction began in September.
In mid November, A1 Excavating wrapped up for the season: first layer of bituminous, wedge
along curbs to protect from plow, angle joint on centerline, and seeding of damaged lawns. This
will leave the road in passable condition over the winter. Construction will resume in the spring.
Following demolition of the existing building, Magney began underground work, such as
relocating utilities. Due to concerns at an adjacent property in mid November, vibration
monitoring equipment was installed at the construction site to ensure that vibrations won’t
damage neighboring properties. There is an alarm set to notify Magney, WSB, and City staff if
vibrations approach the limit. We also have forensic engineers inspecting cracks in the
foundation next door –alleged to have been caused before we put up the vibration monitors.
Financial Impact:
Not applicable
Committee Discussion:
Not applicable
Attachments:
Not applicable
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