To help fund water system improvements and utility projects facing the city, the Mitchell City Council approved a resolution Monday that will increase water and sewer rates for residents over the next two years.

Among the projects that the city will use the rate increases to help fund includes the construction of a new groundwater tank, north wastewater treatment plant improvements, repainting and improving the west water tower, replacing a lift station along Lake Mitchell and some of the Phase II portion of the East Central Drainage project, according to City Administrator Stephanie Ellwein said. In total the increases are intended to help fund just over $20 million in water system and utility improvement projects facing the city over the next two years.

“The unit increases are essentially to cover the increased costs of operation,” Ellwein said, emphasizing the water and utility projects are critical for the city to fulfill.

For city water rates, the resolution increases the base rate for water costs by 91 cents, along with a unit rate increase of 25 cents, which will go into effect in September. That means the water rate change will equate to an average monthly increase of $2.33 for a 4,000 gallon user, bringing the total to $27.72 per year.

The second water rate increase will go into effect in May of 2021, which raises the base fee by $3.24. Broken down further, that means the second water rate increase results in an average monthly increase of $3.24, bringing the annual increase to a total cost of $28.88 for the year.

For the proposed sewer rate increases, the resolution raises the base rate by $2.55, and the unit rate by 16 cents, which will go into effect Sept. 1, 2020. That means the increase will raise the cost for sewer services by $3.41 per month, equating to an annual increase in the amount of $40.89 for a 4,000 gallon user, according to Ellwein. The second rate hike for sewer services will increase the base fee by $6.71 per month, resulting in a $80.52 increase for the full year.

Public Works Director Kyle Croce broke down the water system projects that the city is seeking to fulfill, which includes building a groundwater storage tank and a request to repaint and replace a valve on the west town water tower. Of the utility and water system projects, the construction of a 2.5 million gallon groundwater storage tank estimated at a cost of roughly $5 million is a top priority, Croce said.

Representing the most costly project for wastewater system improvements is the construction of the north wastewater treatment plant at cost of $10 million. In addition, the replacement of the Dailey lift station along Lake Mitchell at a cost of $2.8 million is a factor driving the rate increases.

Ellwein compared Mitchell’s rates to similar sized South Dakota cities, noting Mitchell’s is considerably lower than other communities. For example, Ellwein said the city of Pierre raised its water and sewer rates on three separate occasions in 2019. Mayor Bob Everson said water and sewer service rates in Mitchell are nowhere the highest in comparison to other like-sized cities also known as first-class municipalities, noting the rates fall in the "middle of the pack" among other cities.

In addition, Ellwein emphasized the city of Mitchell's water and sewer rates are too low for the city to apply for state grants that could fund utility and water system improvement projects.

"We don't even qualify for grants, because our rates are way too low to qualify," Ellwein said.