Sanitary Sewer Capacity Funding

Promise to the public: Staff is reaching out to the public to share information about the sanitary sewer capacity issue and collect feedback about the concerns and impacts these funding options could have on various stakeholders. Staff will share project updates on this site, including key themes and learnings from the public, and how public input was incorporated into the staff recommendation to the City Council.

The Current Issue: The sanitary sewer capacity funding project seeks to determine long-term funding options for the City of Bloomington to redevelop its sanitary sewer system. Staff have identified sanitary sewer capacity limitations due to land use changes projected to generate significantly more wastewater flow than what currently exists. Strong market interest for redevelopment in Bloomington has caused portions of the city to reach sanitary sewer capacity limits. Between now and 2040, based on City forecasts, it is estimated that approximately $55 million in sanitary sewer improvements will be needed to meet the capacity demand of redevelopment throughout the City. An additional $12 million is expected to be needed to add capacity to the Metropolitan Council’s interceptor system.

Without these sewer capacity improvements, development would likely divert to other cities or areas of Bloomington that have sufficient capacity. Many of the areas in Bloomington that have higher levels of remaining sewer capacity are less suited for higher density new development due to their lack of proximity to transit, freeways and amenities.

Proposed Solution: Staff have identified a variety of funding options and are currently seeking feedback on how best to increase sanitary sewer capacity. Funding options include: 1) implementing a local Sewer Availability Charge (SAC) fee paid by new development; 2) utilizing sanitary sewer utility rates; 3) pursuing Federal and State government grants and appropriations; 4) utilizing development funds like Tax Increment Financing; 5) increasing debt service to be repaid by the property tax levy; and 6) utilizing special assessments on properties directly benefiting from sewer capacity improvements.

The City will continue to seek out Federal and State government resources to fund expansion of the sanitary sewer system, but these resources are often not guaranteed and based on short-term fixes. The City does have direct control, however, on two long-term funding options – implementing a local SAC fee and setting sanitary sewer utility rates.

A potential policy solution to address the long-term need to update our sanitary sewer system is to implement a City SAC fee on all new development and/or increase utility rates on all rate payers. To understand how these two options could impact you, see the "Scenarios for SAC and Sanitary Sewer Utility Rates" in the Documents tab on the right hand side of this webpage. If the City Council chooses to adopt a City SAC fee at its December 2nd meeting, the City SAC fee would take effect on January 1, 2025 (see the "Proposed City Ordinance Establishing a City SAC Fee" document).

Update from October 14^th and December 2^nd City Council Meetings: The City Council directed staff to address sanitary sewer capacity needs through a mix of fees on new development and modified utility rates. After a public hearing on December 2^nd, the City Council adopted a City SAC Fee of $2,026 per SAC unit. This City SAC Fee will be in effect for building permit applications submitted after January 1, 2025.