Greater MN water projects will flow from Legislature’s bonding package

Three hundred miles separate Appleton from Aurora, but big water infrastructure needs contrasted against limited tax bases put them in the same boat among Greater Minnesota communities.

Appleton, in the western part of the state, has about 1,400 people. Far to the northeast, Aurora’s population is slightly higher at around 1,700. They share similar median household incomes in the $40,000 range.

When cities are working with those numbers, building a new treatment plant for drinking or wastewater becomes a pipe dream without outside assistance.

That’s where state and federal funding comes in, said John Olinger, Appleton’s city administrator. “This is the only way we could do it,” he said. “There’s no other way.”

Minnesota’s Water Infrastructure Fund, or WIF, is a critical source of help for the two cities, plus dozens of others farther down the alphabetical order on the state’s project priority lists. The program’s funding will keep flowing, mostly to Greater Minnesota, after legislators allocated $87 million during a special session completed earlier this month.

Out of all the Legislature did this year, getting this funding — part of $176 million total for various water-focused programs — will make the most impact around the state, said Bradley Peterson, executive director at the Coalition of Greater Minnesota Cities. The expenditure is also the single biggest category of funding approved in the state’s $700 million bonding package.

“It really speaks to the Legislature’s commitment and the governor’s commitment to dealing with these issues,” Peterson said.

The $87 million is split into equal $43.5 million portions for drinking water grants and wastewater grants within the Water Infrastructure Fund, overseen by the state’s Public Facilities Authority. The rest of the $176 million is comprised of:

• $39 million for a state match to federal grants in a revolving loan program
• $32 million for a point source implementation grant (PSIG) program 
• $18 million for an emerging contaminants grant program

Water infrastructure investments are a core focus for Peterson’s coalition each session. These projects bring obvious benefits to locals, but he pointed out the positives extend beyond city limits. “We all have an interest in clean water, being the Land of 10,000 Lakes and with all the rivers we’ve got, and that water moves,” he said.

The water quality challenge

Problems flow downstream, in other words. A community’s water quality may very well be influenced by failing infrastructure far away.

Aging infrastructure gives Appleton and Aurora another thing in common. The latter is currently building a new water treatment facility to replace one built in the 1950s.

Part of a $33 million project, the plant is more than a decade in the making, said Mayor Doug Gregor, and wouldn’t be feasible without “enormous help” from regional, state and federal funding. Construction began last year, and the facility is on track to be operational for Aurora and the town of White’s residents in 2026. Another nearby city, Hoyt Lakes, will eventually connect to the plant.

Factoring in all funding sources, City Administrator Luke Heikkila estimates Aurora will still have about a $5 million shortfall to cover for the project. Without such high levels of outside aid, including $5 million from WIF, footing the bill would be an impossible burden on residents. “Our water rates would need to be more than 2.5 times what the state considers affordable,” he said.

Rate increases still happen in some form or another when cities accept WIF funds, a way to ensure money is set aside for infrastructure upkeep over time. It’s less than what paying for it all on their own would be, though. The program overall turns otherwise unattainable projects into realities, said Craig Johnson, senior intergovernmental relations representative for the League of Minnesota Cities. “It’s very much targeted for property-poor communities, where the cost of putting in infrastructure would make it so no one would be able to afford living there anymore because of water and sewer bills,” he said.

Infrastructure needs in Appleton

Appleton simply wouldn’t be in a position to cover full costs to replace its aging sewer and water lines, Olinger said, let alone spring for a new wastewater treatment plant. The agriculture-centric city was hit hard by economic downturns in the farming industry in the 1980s, reminiscent of what the mining industry’s decline did to Aurora. Another blow to Appleton’s economy came in 2010 when a prison closed down.

Olinger stepped in as city administrator in 2023. Water and sewer funds are in the red, he said, while infrastructure upgrades are long overdue. WIF funds are allowing the city to replace sewer and water lines in phases. The Legislature’s replenishment of the program has him looking hopefully to the program for an eventual wastewater treatment plant upgrade — the city previously completed a water treatment plant — to meet updated state requirements on phosphorus levels.

Clearbrook, a city with about 460 people in northwestern Minnesota, recently used state funds to update its water tower and build a water treatment plant capable of staying on top of state manganese level standards. Lucie Thompson, city clerk and treasurer, said the plant’s benefits were easily noticeable when the municipal pool opened this season. Much less treatment was needed on the water. “It was a night and day difference,” she said.

Sen. Rich Draheim, R-Madison Lake, represents similar communities in southern Minnesota with low tax bases. If state agencies adjust water standards, he said, it’s only fair to help cities meet them. “We as a state make our requirements for water more stringent and in doing that force the communities to have to upgrade something that they weren’t planning on upgrading,” he said.

Along with refilling the state’s water program buckets in the recently completed special session, legislators raised the maximum award for WIF projects from $5 million to $10 million. Caps on PSIG awards rose from $7 million to $12 million. Construction costs are increasing, Peterson said, so the caps should rise with them to account for inflation.

Aurora’s mayor and city administrator welcomed the changes, even though the city can’t currently benefit from them. Projects already underway aren’t eligible for the bumped up funding. Gregor and Heikkila hope lawmakers amend the language next session to include ongoing projects. For their city, more WIF funding could be the final piece to their water project puzzle.

This article first appeared on MinnPost and is republished here under a Creative Commons Attribution-NoDerivatives 4.0 International License.