Chanhassen City Hall

Chanhassen City Hall, located at 7700 Market Boulevard.

In line with Mayor Elise Ryan’s inaugural address two weeks ago, which emphasized plans for new growth, much of the Chanhassen City Council meeting Monday focused on funding for capital improvements and new developments.

Due to new growth and road improvement projects, some utility rates will be increasing more than anticipated in order to fund these projects and build the cash reserves necessary for upcoming years, the council decided.

A utility rate study done in 2020 recommended that water and sewer rates and the stormwater management fee should each increase between 5% and 6% over the following years, but these rates did not account for upcoming improvements in 2023 and beyond.

The city had Ehlers conduct a new study in light of the increase in the cost of upcoming capital improvements, namely road projects. The study found that an increase in some utility rates was necessary in order to fund the improvements. Water and sewer infrastructure will have to be replaced in the course of the road projects, and the maintenance and replacement of such infrastructure is calculated into the yearly utility rates.

Some of the incurred costs will be offset by hook-up fees and new incoming revenue associated with the Avienda development, the study showed, lessening the burden of rate increases for current residents and businesses. Increased hook-up fees follow the “growth pays for growth” philosophy that the council tends to follow, said Jessica Cook, an advisor from Ehlers, at Monday’s meeting.

Given the changes since 2020, the council voted to accept the recommendations provided by Ehlers’ new study at Monday’s meeting. They will maintain a 5% annual increase for water rates, increase sewer rates by 8.5% annually, and increase the stormwater management fee by 15%. The stormwater rate will be scaled back after 2025.

The stormwater rate increase translates to about a dollar more a month. Unlike water and sewer, the Avienda development provides no mitigating factor to the stormwater rate.

Stormwater infrastructure has gone somewhat neglected in the past, according to Charles Howley, the city’s director of public works. Moreover, the requirements for maintaining and managing stormwater are increasing every year with new regulations and increasingly extreme rain events, explained Cook. Cities across the county and state are having to reassess their stormwater rates.

For 2023, these rates will result in an increased cost of about $14 per quarter for residents using 26,000 gallons of water and 12,000 gallons of sewer services.

Sales tax plan

In addition to utility rates, the council further discussed a local option sales tax of 0.5% that would help to fund Avienda developments, passing a resolution that is the first step in implementing such a tax.

The measure would allow the city to hold a referendum on the sales tax, but it must be submitted and approved by the Legislature before it can move forward. If approved, the referendum will need to receive a passing vote in order to be enacted.

Interim member appointed

Josh Kimber was sworn in Monday to the council seat left vacant when former councilwoman Lucy Rehm was elected to the Legislature in November. Kimber was appointed Jan. 18.

“I hope over the next two years, I earn the trust of not only the citizens, but also those on the council,” said Kimber, thanking the council for his appointment.