Edina City Council — Agenda
Monday, October 6, 2025
Story
Edina considers major utility rate increases to fund infrastructure
Water Fund Rate Recommendations
Sanitary Sewer Fund Rate Adjustments
Stormwater Fund and Flood Risk Reduction Strategy
Capital Improvement Planning and Infrastructure Investment
Utility Enterprise Fund Financial Health and Reserve Targets
Votes (1)
Utility Rate Study Update (Agenda Item 3.1)
Dissent: No dissent recorded. This was a work session presentation for initial dialogue and feedback.
Pa Thao, Finance Director, presented Ehlers' 2025 Utility Rate Study for discussion only. The presentation covered utility systems capital planning, enterprise fund background, and detailed analysis of water, sewer, and stormwater rate structures. Key findings included: (1) Water fund tiers are functioning as designed with median users in Tier 1; (2) Sewer fund faces pressure from 7% annual MCES increases; (3) Stormwater fund requires phased rate increases to fund $46M in flood mitigation projects (2026-2033). The study analyzed 12 months of 2023 usage data and incorporated assumptions of 3% annual operating expense growth, 5% personnel growth, and 1% investment income. Financial goals include maintaining reserves covering 4 months of operating expenses plus 100% of next year's bond/debt payments. Connection fee increases were recommended: water at 3.0% annually ($12M CIP) and sewer at 9.0% annually ($16.7M CIP). Bill impact examples were provided for low-volume residential, mid-volume residential, low-volume commercial, and high-volume commercial users across 2025-2030. Council feedback was solicited on water usage tiers, connection fees, sewer rate increases, and stormwater funding alternatives including property taxes, stormwater taxing districts, and special assessments.
Notable Quotes (6)
Ehlers will provide an update to the 2025 Utility Rate Study that is designed to do the following for the 2026 - 2027 utility rates: Implement inflationary increases to utility rates; Provide changes to water and sewer rate structures
Tiers working as designed. Tier breaks reflect 'essential' use. Median user wholly within Tier 1. Only 7% of users exceeded Tier 2 use.
Water base fee provides stable funding stream for fixed costs, so operating revenues are buffered from usage fluctuations. 2025 Budgeted Fixed Costs = $3.7 million (Personnel and contractual). Base fee charges currently pay for approximately 66% of fixed costs.
Metropolitan Council sewer treatment charges – 66% of fund operating budget. Cashflow forecast assumes 7% annual MCES increases. Capital costs increase from previous studies. Recommendation: 9.25% annual increases.
Storm Sewer fund is expected to begin depleting reserves without additional rate adjustment. Rate increases anticipate large CIP needs in 2028 and 2030. Monitoring project timing and future bonding can moderate declines.
Funding the storm water CIP requires increased revenue. Phase increased as projects occur – 15% initially. Explore alternatives? Property taxes. Storm water taxing districts. Special Assessments.
Ordinances & Resolutions (5)
Comprehensive analysis by Ehlers designed to implement inflationary increases and restructure water/sewer rates for 2026-2027; includes 10-year financial forecast (2026-2035), capital improvement planning, and rate recommendations for water, sewer, and stormwater funds.
Included commitment to develop a Flood Risk Reduction Strategy
Adopted by City Council; comprehensively addresses flood risk reduction through infrastructure, regulation, outreach/engagement, and emergency services components
Incorporated the 2020 Flood Risk Reduction Strategy into the broader water resources framework
Prior rate study that informed 2022-2031 CIP estimates (Water: $62M; Sewer: $35M; Storm: $63M) and recommended general rate increases (Water: 5.0%; Sewer: 6.0%; Storm: 8.0%)