February 2, 2026 City Council Minutes

APPROVED as presented

MOTION by Councilor Holden to approve the Consent Agenda as presented:

·         Approve/allow necessary expenses for 2026 Public Works training, as presented

Motion seconded by Councilor Buller and carried unanimously.

APPROVED first reading of contract ordinance setting water and sewer rates

Mayor Dill introduced Brian Guldan, Bolton & Menk Inc. and Tammy Omdal, Northland Securities Inc. who both worked with the finance officer and administration to set rates to cover the debt services for the water plant rehabilitation and maintenance and operation of the water and sewer departments.

Tammy Omdal explained that the original utility study from 2024 has been updated per request for a strategy of the debt services of the water plant rehabilitation.  Omdal intricately explained that the Annual Debt Service is an estimate to pay off the yearly loan amount of $850,000 with the Public Facilities Authority.  Omdal also shared that the percentages of annual base rate increase will pay for existing services, for planned capital and any debt services that are outstanding.  The debt service fee, that is new, and part of a long-term plan is to cover the updated water plant as well as having reserves, which is very important as part of a contingency plan.  Mayor Dill shared that tonight’s actions were due to the council’s approval on June 2, 2025, to contract with Rice Lake Construction as the Construction Manager at Risk (CMAR) with a guaranteed max price for the Water Treatment Plant rehabilitation project with the motion passing on a 3-2 vote.

MOTION by Councilor Wegner to approve the first reading of contract ordinance setting water and sewer rates.

Motion seconded by Councilor Kalar.  Mayor Dill noted that he was voting “nay” due to possibly receiving financial help from the state level of government.  Motion carried 4-1 with Councilors Buller, Holden, Kalar, and Wegner voting “yea” and Mayor Dill voting “nay”.

Finance Officer Rud clarified that the water and sewer operations are maintained as enterprise funds, meaning they are required to be self-sustaining and used solely for water and sewer–related purposes. Rud further explained that while transfers do occur, they are directed only to designated funds for water and sewer infrastructure and debt obligations, not for general city expenses such as streets, lighting, fire trucks, or squad cars.

Finance Officer Rud explained the following items in greater detail:

·         Transfers from the water & sewer funds go to capital improvement and water/sewer–dedicated funds (Funds 401 and 403) for infrastructure and capital outlay purposes.

·         The water and sewer funds were formally separated around 2018 to ensure proper segregation of assets and financial accountability, including creation of a separate sewer fund.

·         The annual water treatment plant debt service payment is expected to be approximately $850,000, which will be funded through a separate, transparent rate on utility bills.

·         The debt service rate includes a flat base rate for single-family residences and a tiered usage structure for commercial and multi-family properties, based on average residential usage of 2,900 gallons.

·         Rud emphasized that separating and clearly displaying the debt service charge on water and sewer bills was done intentionally to enhance transparency, rather than embedding it as a percentage within overall rates.

·         Mayor Dill noted that enterprise fund revenues cannot legally be used for non-enterprise purposes and would not pass audit review if misused.

Finance Officer Rud further explained that the two-year rate structure allows the City to pursue state bonding assistance, working with the City’s lobbyist and state representatives, and to gather additional usage data to ensure adequate funding for ongoing debt service payments.