Item 3.4 Modifying Water and Sanitary Sewer Utility Rates
Request for
City Council Action
DEPARTMENT INFORMATION
ORIGINATING DEPARTMENT REQUESTOR: MEETING DATE:
Administration City Administrator/Finance Director Flaherty February 23, 2026
PRESENTER(s) REVIEWED BY: ITEM #:
Consent 3.4 – Utility Rates
STRATEGIC VISION
MEETS: THE CITY OF OTSEGO:
X Is a strong organization that is committed to leading the community through innovative communication.
Has proactively expanded infrastructure to responsibly provide core services.
Is committed to delivery of quality emergency service responsive to community needs and expectations in a
cost-effective manner.
Is a social community with diverse housing, service options, and employment opportunities.
Is a distinctive, connected community known for its beauty and natural surroundings.
AGENDA ITEM DETAILS
RECOMMENDATION:
City staff are recommending that the City Council adopt a resolution modifying water & sanitary sewer utility rates.
ARE YOU SEEKING APPROVAL OF A CONTRACT? IS A PUBLIC HEARING REQUIRED?
No No
BACKGROUND/JUSTIFICATION:
The City has a public utility system with Water and Sanitary Sewer operations. The current system is comprised of
approximately 5,797 customers who include both residential and commercial accounts. Those customers receive
monthly utility bills for usage of the water and sanitary sewer utility system. The monthly charges include both a base
fee, and a consumption fee which is calculated on their actual usage of the system.
The utility rates for the water and sanitary sewer systems are analyzed by the Finance Director on an annual basis.
This analysis includes reviews of budget-to-actuals, preparation of the operating budget, preparation of the capital
improvement plan, and future projections.
In addition to analysis by City staff, the City Council commissioned a Utility Rate Study with Ehlers during 2023, and
again in 2025, which evaluated: funding capital projects, managing revenue volatility, reviewed billing structure,
competitiveness of rates and adequacy of connection fees. The recommendations for utility rates in 2026 are
consistent with the forecasted increases in the Utility Rate Studies and were factored into the 2026 Water and
Sanitary Sewer Operating budgets.
This information was reviewed and discussed by the Administrative Subcommittee and the Public Works
Subcommittee at their respective February 2026 meetings and provided recommendations to proceed with
consideration of approval by the City Council.
SUPPORTING DOCUMENTS ATTACHED:
• Rate Summary Comparisons
• Monthly Bill Illustrations
• Resolution 2026-11
POSSIBLE MOTION
PLEASE WORD MOTION AS YOU WOULD LIKE IT TO APPEAR IN THE MINUTES:
Motion to adopt Resolution 2026-11, Modifying Water and Sanitary Sewer Utility Rates for 2026.
BUDGET INFORMATION
FUNDING: BUDGETED:
Fund 601 – Water Utility
Fund 602 – Sanitary Sewer Utility
Yes
City of OtsegoPublic Utility ChargesWater Rate Comparison2026Actual Increases 6.00% 6.00% 6.00% 7.00% 7.00%Proposed2021 2022 2023 2024 2025 2026 ChangeBase Rate5/8" Meter 4.00$ 4.24$ 4.49$ 4.80$ 5.14$ 9.19$ 78.79%3/4" Meter 4.00$ 4.24$ 4.49$ 4.80$ 5.14$ 9.19$ 78.79%1.00" Meter 10.00$ 10.60$ 11.24$ 12.03$ 12.87$ 20.22$ 57.11%1.50" Meter 20.00$ 21.20$ 22.47$ 24.04$ 25.72$ 45.95$ 78.65%2.00" Meter 32.00$ 33.92$ 35.96$ 38.48$ 41.17$ 58.82$ 42.87%3.00" Meter 70.00$ 74.20$ 78.65$ 84.16$ 90.05$ 183.80$ 104.11%4.00" Meter 120.00$ 127.20$ 134.83$ 144.27$ 154.37$ 459.50$ 197.66%6.00" Meter134.83$ 144.27$ 154.37$ 735.20$ 376.26%Residential, Apartments, & City Owned Consumption (per 1k)0 - 5,000 Gallons 2.22$ 2.35$ 2.49$ 2.66$ 2.85$ 2.56$ -10.18%5,000 - 15,000 Gallons 2.78$ 2.95$ 3.13$ 3.35$ 3.58$ 3.20$ -10.61%15,000 - 35,000 Gallons 3.48$ 3.69$ 3.91$ 4.18$ 4.47$ 4.00$ -10.51%35,000 + Gallons5.00$ n/aCommercial, Industrial & Institutional Consumption (per 1k)0 - 50,000 Gallons 2.22$ 2.35$ 2.49$ 2.66$ 2.85$ 2.56$ -10.18%50,000 - 150,000 Gallons 2.78$ 2.95$ 3.13$ 3.35$ 3.58$ 3.20$ -10.61%150,000 + Gallons4.00$ n/aIrrigation & Bulk WaterConsumption (per 1k)All Usage 3.48$ 3.69$ 3.91$ 4.18$ 4.47$ 5.00$ 11.86%
City of OtsegoPublic Utility ChargesSanitary Sewer Rate Comparison2026Actual Increases 10.00% 10.00% 10.00% 2.00% 2.00%Proposed2021 2022 2023 2024 2025 2026 ChangeBase RateBase Fee 14.11$ 15.52$ 17.07$ 17.41$ 17.76$ 18.12$ 2.03%Flat Fee 51.61$ 55.95$ 54.72$ 57.83$ 60.29$ 61.51$ 2.02%ConsumptionPer 1,000 Gallons of Water Usage 7.50$ 8.25$ 9.08$ 9.26$ 9.45$ 9.64$ 2.01%DaytonBase Charge 47.76$ 52.54$ 57.79$ 58.95$ 60.13$ 61.33$ 2.00%Consumption 2.64$ 2.90$ 3.19$ 3.25$ 3.32$ 3.39$ 2.11%
City of OtsegoPublic Utility ChargesMonthly Bill Estimations2026Proposed2025 2026 ChangeResidential (Winter = 4,501 Gallons)Base Fee 5.14$ 9.19$ Consumption: 0-5K Gallons 12.83$ 11.52$ Subtotal - Water Charges 17.97$ 20.71$ 15.28%Base Fee 17.76$ 18.12$ Consumption 42.53$ 43.39$ Subtotal - Sanitary Sewer Charges 60.29$ 61.51$ 2.02%Total Monthly Estimated Bill 78.26$ 82.22$ 5.06%Residential (Summer = 13,478 Gallons)Base Fee 5.14$ 9.19$ Consumption: 0-5K Gallons 14.25$ 12.80$ Consumption: 5-15K Gallons 30.35$ 27.13$ Consumption: 15K + Gallons -$ -$ Subtotal - Water Charges 49.74$ 49.12$ -1.25%Base Fee 17.76$ 18.12$ Consumption (4.501K Gallons) 42.53$ 43.39$ Subtotal - Sanitary Sewer Charges 60.29$ 61.51$ 2.02%Total Monthly Estimated Bill 110.04$ 110.63$ 0.54%
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CITY OF OTSEGO
COUNTY OF WRIGHT
STATE OF MINNESOTA
RESOLUTION NO: 2026-11
MODIFYING WATER & SANITARY SEWER
UTILITY RATES FOR 2026
WHEREAS, Otsego City Code Chapter 7; Section 2 outlines that in order to pay for the costs associated with Water and Sanitary
Sewer utility systems, that a just and equitable charge will be imposed upon users of those systems; and
WHEREAS, the Otsego City Council has identified and reviewed the operating, capital and debt service requirements of the
Water and Sanitary Sewer utility systems.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF OTSEGO, MINNESOTA:
1. That the following rates, fees and charges be imposed on users of the Water utility system:
a. Base Charge (Monthly for All Users)
b. Usage Rates (Monthly Per 1,000 Gallons of Consumption)
Meter Size
2026 Base
Charge
5/8"9.19$
3/4"9.19$
1.00"20.22$
1.50"45.95$
2.00"58.82$
3.00"183.80$
4.00"459.50$
6.00"735.20$
Customer Type Consumption
2026
Rate
Residential, Apartments, & City Owned 0 - 5,000 Gallons 2.56$
Residential, Apartments, & City Owned 5,000 - 15,000 Gallons 3.20$
Residential, Apartments, & City Owned 15,000 - 35,000 Gallons 4.00$
Residential, Apartments, & City Owned 35,000+ Gallons 5.00$
Commercial, Industrial & Institutional 0 - 50,000 Gallons 2.56$
Commercial, Industrial & Institutional 50,000 - 150,000 Gallons 3.20$
Commercial, Industrial & Institutional 150,000+ Gallons 4.00$
Irrigation & Bulk Water All 5.00$
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c. Bulk Water
In order to access bulk water from the system, a meter rental from the City is required. There is a $200.00
deposit required for that meter. The rental fee for that meter is a minimum of $50.00, which includes the
first month, with each additional month being charged at $50.00.
The consumption tracked by the meter will be billed at the rates identified in paragraph 1(b) of this
resolution. The local sales tax rate of 7.375% will also apply to the entire bulk water rental and
consumption charge incurred.
2. That the following rates, fees and charged be imposed on users of the Sanitary Sewer utility system:
a. Base Charge
b. Usage Rates (Per 1,000 Gallons of Average December-February Water Usage)
c. Usage Rates (Per 1,000 Gallons of Actual Sewer Usage)
d. Minimum Charges
These charges come into effect for new accounts where there is less than three months of usage history
to base the average from. This minimum monthly charge is $61.51.
3. That the rates, fees, and charges outlined in this resolution shall be effective for all billings issued on or after March 1,
2026.
Customer Type Frequency
2026
Rate
All Otsego Users Monthly 18.12$
Introductory Flat Fee (New Accounts)Monthly 61.51$
All Wholesale Users Quarterly 61.33$
Customer Type Frequency
2026
Rate
All Otsego Users Monthly 9.64$
Customer Type Frequency
2026
Rate
All Wholesale Users Quarterly 3.39$
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ADOPTED by the Otsego City Council this 23rd day of February, 2026.
MOTION BY:
SECONDED BY:
IN FAVOR:
OPPOSED:
CITY OF OTSEGO
__________________________________
Jessica L. Stockamp, Mayor
ATTEST:
__________________________________
Audra Etzel, City Clerk