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The current $100,000 tax levy does not support the needs of this fund. A property tax levy of <br />$250,000 is being proposed for 2026 and forward, which is an increase of $150,000 per year <br />relative to 2025. This change will ensure there is appropriate funding to meet future <br />expenditures. <br />Utili . Funds <br />• Public Works staff continues to evaluate the condition of City utilities throughout the <br />community. The majority of street projects currently include a minimum amount for isolated <br />utility repairs, but these amounts could increase as locations are identified where broader <br />water, sanitary sewer, and drainage replacement is needed. <br />• For the Sewer Fund, no I&I grant funds have been included in the plan as the amounts are <br />unpredictable. <br />Rate increase assumptions are as follows: <br />■ Water — 2026 (4%), 2027-2028 (6%), 2029-2035 (3%) <br />■ Sewer — 2026-2035 (3%) <br />■ Storm — 2026-2028 (6%), 2029-2035 (3%) <br />The Minnesota State Legislature passed a bill increasing the safe drinking water fee from <br />$9.72 to $15.22 per water service connection per year. This rate increase will take effect <br />January 1, 2026, and is driven by significant inflation that has occurred since the last <br />increase in 2019, projected and potential deep reductions in federal funding, increased lab <br />costs for drinking water testing, the need for drinking water data updates and <br />improvements, and the numerous changes in Safe Drinking Water Act (SDWA), including <br />new rules and enforcement requirements that have occurred and are being planned in the <br />next few years. <br />Council Direction <br />Staff is seeking direction from the City Council regarding the following items: <br />2026 Projects <br />As we review the 2026 projects, does the Council have any questions, comments or concerns <br />about including them during budget preparation? <br />2026 Property Tax Levy <br />The levies for the Equipment/Building Replacement (from $100,000 to $250,000) and Public <br />Safety Capital ($260,000 to $300,000) funds are currently proposed to increase in this plan. What <br />increases, if any, should staff assume? <br />2026 Rate Increases - Enterprise Funds <br />A rate study was completed in 2018. Annually, staff perform a review to ensure rates are at an <br />appropriate level in order to meet future anticipated expenditures. Rate increase assumptions are <br />proposed in 2026 and in future years in order to maintain a positive fund balance across the three <br />funds. What changes, if any, should staff assume? <br />Local Government Aid (LGA) <br />The omnibus tax bill includes an $80 million annual increase in local government aid. Arden <br />Hills received $121,471 of LGA in 2024 and is expected to receive $122,591 in 2025. Staff <br />recommends that these funds are not used for general operations (the state has unallotted LGA in <br />Page 4 of 5 <br />