Mitchell leaders consider hiking water rates to add $60 million secondary water source, fund infrastructure

MITCHELL — As Mitchell continues exceeding its maximum daily capacity of water from its supplier, city leaders are looking to secure a secondary water source and position Mitchell for future growth.

However, adding another water source will come with a hefty price tag.

During Monday’s work session meeting, the Mitchell City Council learned it would cost between $40 million to $150 million to secure a secondary water source and expand the city's capacity. For the city to fund such an endeavor, it will result in Mitchell residents seeing their water and wastewater bills increase over the next few years, according to city officials.

“We’re using more water than we are guaranteed to have access to now. If you don’t do something to secure additional water, you’re going to be short from where we currently are now, with or without growth,” City Administrator Stephanie Ellwein said to the council during Monday’s discussion.

Mitchell Mayor Bob Everson echoed the importance of securing a secondary water source, pointing to it as a move that would prepare Mitchell for future growth. By expanding the city's water capacity, Everson says it will allow Mitchell to support new industries, businesses and homes with ample water.

“If we don't do something, water will be an issue in this city,” Everson said.

According to Public Works Director Joe Schroeder, the city exceeds the daily limit of 2.6 million gallons of water per day roughly 25% of the year. With the forecasted growth that Mitchell is expected to see over the next two decades, Schroeder said the city’s maximum daily water capacity is projected to increase to over 5 million gallons per day.

“During the summer, our average is roughly 2-3 million gallons per day. Our highest ever recorded was 4.41 on July 6, 2017,” he said.

While Schroeder noted B-Y Water District – the city’s sole water supplier that funnels Mitchell's water from a large pipe connecting to the Missouri River – has never disagreed to supply Mitchell with water in times the city exceeded its daily capacity, he said the contract between the two allows B-Y Water to decline providing anything over the daily capacity of 2.6 million gallons per day.

Schroeder pitched a handful of secondary water source options for the council to consider, including building a pipe to connect with Fort Randall Community Water District, expand facilities with B-Y Water, upgrading the Lake Mitchell Water Treatment Plant and building its own pump station along the Missouri River in Chamberlain.

Using B-Y Water is estimated to cost $40 million – the cheapest option. The option to build a pipe connecting to Fort Randall Community Water District would cost $60 million, which Schroeder said would not go against the city’s debt capacity due to Fort Randall Water agreeing to take on the debt service while the city pays off the $60 million over three decades.

For the Lake Mitchell Water Treatment Plant that sits along the north side of the city to become a secondary source, it would cost roughly $43.5 million. Schroeder said the risk of low levels of lake water – an issue that has occurred frequently over the past few decades – could create challenges if the city were to entertain the lake water treatment plant option. In addition, the water would have be treated at an intense level to be usable.

“At one point, we did pump James River water back up into the lake. It’s partly why we looked at going to B-Y Water in 2003,” Schroeder said.

Building a water pump station and pipeline from Chamberlain to Mitchell would cost $150 million. Schroeder emphasized that option would require higher water and wastewater rates, along with additional staffing to oversee the facility.

“The city has water rights near Chamberlain, and it would essentially pump water to our water treatment plant. It would be a 75-mile transmission line,” he said of the Chamberlain source.

Among the handful of options, Schroeder recommended entering into an agreement with Fort Randall Community Water District. The $60 million price tag of going with the Lake Andes-based supplier was the third cheapest option.

While utilizing B-Y Water for an additional source was the lowest cost option at $40 million, Schroeder explained that it would make the city reliant on one water supplier. By choosing Fort Randall Water, not only would it provide the city with additional water capacity, but it would also be a safety net if any emergency breakdowns or catastrophic events disrupted B-Y Water District’s facility.

“It would provide a minimum of 2.5 million gallons per day. There would be the possibility for more. We would be looking at 38 miles of transmission line from their plant near Platte to Stickney. Twenty to 60 years from now, I don’t think anybody would say we made a bad choice,” Schroeder said of pursuing Fort Randall Water.

Council member Susan Tjarks asked whether there are opportunities to welcome new customers such as rural communities by adding a secondary water source to help fund the project? Schroeder indicated there is “potential” for that type of revenue stream. However, he noted that wouldn’t be possible until the city has the water source secured.

Considering the city’s recommended secondary water source would also rely on the Missouri River, Tjarks questioned whether the key waterway will remain plentiful enough to support Mitchell’s estimated daily usage for years to come. According to Schroeder, the Army Corps of Engineers indicated there are no concerns of the future water loads within the Missouri River system. He said Rapid City, the state’s second largest city, is mulling over utilizing the river for another source of water.

Council member Jeff Smith characterized the pursuit of a secondary water source as a "big decision" that needs to be carefully discussed. Davison County Commissioner Randy Reider, was in attendance and expressed his support for adding another water source, pointing to it as a key move for future growth.

With the potential of taking on a $60 million project to add another water source, a leader of an engineering firm who completed a study on the city’s water rates explained how it would impact rates.

According to one of the proposed rate structures that was outlined by Shawn Koorn, vice president of HDR Engineering, the base rate for water fees would increase to $13.80 per month this year, marking a roughly $4 jump from the current $9.21 base rate. The unit rate is proposed to jump to $5.20 this year as well, which is a little over $1 from the existing $4.15 unit rate.

In 2024, water base rates would increase to $17.46 per month, while the unit rate would jump to $6.58.

For wastewater rates, the proposed model would increase the average monthly bill – which is at $39.01 – to $51.49 this year. In 2024, the monthly bill would jump to $54.33.

The models provided proposed rate increases from now until 2027. Council President Kevin McCardle calculated the average monthly bill – combining water and wastewater – for Mitchell residents would increase to $140 by 2027.

“We develop rates that generate sufficient revenue to support your operating and capital needs. The second part is developing equitable and cost-based rates,” Koorn said.

A key part of the proposed equitable rates entails adjusting water and wastewater rates based on category users, including commercial businesses, industrial businesses and residential users. Koorn said the equitable rate structure could calculate costs based on the meter sizes of each user, along with usage.

Councilman Marty Barington emphasized that “it’s never fun to raise rates,” but he said the future of Mitchell’s growth hinges on it.

No action was taken on Monday. City officials wrapped up the meeting by encouraging public input at its next meeting on Monday, Feb. 6 to gauge residents' stance on the proposed water rate increases.