Public Works forecasts sewer rates will increase 3 percent from 2024-2030

Sewer rates for Sioux Falls residents and businesses are set for the next five years.

And the Public Works Department is already thinking about how rates might need to be adjusted in 2024 and beyond to pay for continued investments in Sioux Falls' sewer infrastructure. 

Last week the Sioux Falls City Council established sewer rates going out to 2023, with increases said to be necessary in order to pay down loans that will be taken out to fund a $160 million expansion to the city's waste water reclamation (sewer) plant and another $100 million to beef up the network of pipes and lift stations that service the plant.

But the terms of those loans will span beyond 2023, prompting folks like Councilor Theresa Stehly to wonder what size of rate increases will be necessary further into the future.

Turns out, we might have an answer.

"We do forecast three percent rate increases in 2024 out to 2030," Public Works Director Mark Cotter told the City Council during their last meeting.

More:Council kills effort to open sales tax money for sewer projects, OKs rates hikes

Of course, that rate forecast isn't locked in until the council formally establishes it through ordinance, something that's not likely to happen until closer to 2024. But, like the rates set for 2020-2023, it's based on population projections for the city, anticipated future investments in the sewer system and inflation.

"It's a self-sustaining fund, so chemicals we have to buy, vehicles, salaries, all of those are worked into the enterprise budget," said T.J. Nelson, deputy chief of staff in the mayor's office. 

Those tentative rate increases, though, don't satisfy Stehly's concerns. Stehly has questioned the soundness of the city's population projections and still isn't convinced steeper increases won't be needed to cover the annual loan payments for the sewer plant expansion and the other infrastructure investments.

"Only time will tell the tell," she said. "We've got a $260 million project (sewer plant expansion and infrastructure investments) to fund, and nobody seems to think there's a problem. I tried."

The Public Works Department this week will ask councilors to authorize the city to apply for the first of a series of loans in relation to those investments — a $24.4 million low-interest loan from the state of South Dakota to replace and relocate a pump station in northeastern Sioux Falls.