Belle Plaine is the latest exurban community to be hit with whopping jumps in water and sewer charges after its once rapid growth rate plunged and left residents stuck with the bill.
Annual increases in usage rates of 20 to 30 percent or more are in store unless the city’s once-robust growth resumes, officials say.
One resident called the hikes “ridiculous.”
In fact, it’s just simple math, Dawn Meyer, finance director and interim city administrator, told a public hearing last week.
“When the facilities were built, they were based on the estimated number of homes and connection fees to cover long term debt,” she said. “That growth never occurred. We’ve been using fund balances” to cover the shortfall. But eventually that money runs out.
“I feel we’re all under a hardship in this economy,” resident Kristin Werner testified. “We all have to drive out of town for a job, and we’re putting three-bucks-a-gallon gas in the tank. And then a 36 percent water increase?
“I’m going to have to stop using water. We love Belle Plaine, but eventually you’re going to drive people out of town, with everything else going up. It seems ridiculous to me.”
The irony is that those high gas prices are likely contributing to the problem.
Lots of places like Belle Plaine, which is a long commute from the Twin Cities, experienced sudden hypergrowth when gas was cheap and the housing bubble was inflating prices in suburbs closer to the cities. But Belle Plaine was also notably aggressive in planning for still more growth, state data suggests.
Hundreds of Minnesota cities borrowed money for work on or expansion of utility plants, but Belle Plaine was among only a couple of dozen borrowing $10 million or more, according to state officials. And it was among the smallest cities in that group of major borrowers.
Conversely, Belle Plaine has not felt it necessary, like some cities, to take the position that its threatened rate hikes are so steep it must declare severe financial distress and renegotiate the terms of the loan. That just adds to the bill in the end.
Nearby New Prague did take that step, having borrowed $30 million for a high-end facility.
The total water and sewer bill for an average user in Belle Plaine will rise from $43.52 per month this year to $54.13 next year, officials say.
“We don’t like to do this,” Mayor Mike Pingalore told those attending the hearing. “We want to be sure we have a very, very good, strong Belle Plaine, both financially and so that systems are in place when you live here.”
He noted that Belle Plaine isn’t the only place watching its reserves drop. “Other cities out there are struggling, other cities are hurting, and in a couple of years probably will have to do this as well, unfortunately.”
A study by an outside firm of accountants found that the city’s water fund has “decreased steadily every year,” from $6 million in 2006 to a little over $1 million by 2012.
New homebuilding peaked in Belle Plaine in 2001 and 2002, with more than 200 new units a year, the Metropolitan Council reports. By 2007, that had imploded to just seven, and one year it was as low as two — a downturn that has echoed even in much bigger suburbs closer in.
The mayor said he hopes the future won’t be as dire as it now looks in terms of growth. “It’s not fun. We don’t want to do this. We will have the opportunity to review this every year. It can level off or go down if we bring in buildings, rooftops.”
To which Meyer gently corrected: “Level off.”