Met Council poised to relieve exurban city over pipe built for ambitious growth

A small city on the outskirts of the metro area will win financial relief from the Metropolitan Council over a sewer pipe built for growth that never arrived.

The Met Council's environment committee signed off Tuesday on a plan to cap Elko New Market's mounting obligations for a $16 million wastewater pipe, which otherwise threatened to ruin the city's finances. It still requires full council approval.

The project, which the city requested, was one of two facilities built under a Met Council policy change 15 years ago that aimed to rein in sprawl by offering wastewater services to rural mini-cities.

But the idea that the projects could pay for themselves largely through fees on booming new development proved overly optimistic. Elko New Market, at the metro area's southern fringe, has so far seen about 20 percent of the projected hookup charges. The story was similar in East Bethel, which won a reprieve from the Met Council last year.

Some of Elko New Market's burden will instead be absorbed by the region's broader wastewater system, particularly connection charges paid by developers and businesses. The amount depends on how much growth the city experiences, but council staff said it would be about $7 million over 10 years under current forecasts.

Instead of the city's obligations to the Met Council climbing to $10.7 million by 2030, as a consultant projected, it will be capped at $1.2 million.

The situation in the two rural cities is unique, since wastewater service came with extra requirements that they repay the council.

"Even in the recovery, there's a recent trend toward increased urbanization and development in the core areas of the Twin Cities," Smith said. "So that growth is happening, it's just not happening in Elko New Market."

When the pipe was initially envisioned, Elko New Market's rapid growth was straining a wastewater system that drained into the Vermilion River. It was once forecast to have 13,000 people by 2020, but about 4,500 live there now. The pipe went online in 2011.

Met Council members expressed interest in examining how future investments of this nature will be reviewed.

The lone "no" vote was cast by Council Member Cara Letofsky, who raised concerns about setting a poor precedent and the cost for the region. Council staff said fees paid by development elsewhere in the region, enough to build reserves, are sufficient to cover at least the near-term costs of the deal.

"So we are going to be able to pay the bills, but we're paying it with growth that is happening in other parts of the region," Letofsky said.