Average Minneapolis homeowners' utility bills rising to near property tax levels

Owning a home is becoming more expensive in Minneapolis, and it's not just the booming real estate market.

If the City Council approves Mayor Jacob Frey's budget, the average homeowner next year will pay $1,249 in utility fees — for drinking water, wastewater, garbage collection and storm drainage — a cost that has continued to rise in recent years as the city seeks to repair an aging sewer infrastructure and embark on new building projects.

This combination of fees rose 26 percent since 2014 for the average customer, according to city data. Under Frey's proposed budget, utility fees will cost just about $130 less than what the median homeowner pays to the city in property taxes in 2019.

And while the city meets grueling resistance and appeals on property taxes ever year, the utility fees mostly pass unnoticed, said City Council Member Linea Palmisano, who chairs the council's budget committee.

"I have hundreds of conversations a year — or maybe in the thousands — about property taxes. I have one to three conversations a year about utility increases," she said.

These fees are a significant revenue driver. Next year, utility payments will bring in about $234 million, according to projections in the mayor's budget proposal. That's more than $35 million more than in 2016.

Cities in the metro area use different forms of billing, so it's difficult to say exactly how Minneapolis' $1,249 per year stacks up. But it's considerably more than nearby suburban cities such as Bloomington, where the average property owner pays about $958 per year for utilities.

The increase goes in part toward the city's investments in technology, such as "televising" the sanitary and storm­water systems, said Brette Hjelle, director of business administration for Minneapolis public works. This means sending cameras through pipes and tunnels to better identify where they're leaking.

While city officials say these advancements have allowed them to make smarter investments, it's also exposing all the problems that come with a sewer system that mostly dates to the 1930s or earlier, with some sections originally built in the 1880s. "Old doesn't necessarily mean failing, but these are things that do need maintenance," Hjelle said.

The city is also scheduling maintenance and planning projects around a 20-year street-repair plan. When the city is already digging up roads, public works will use that time as an opportunity for underground repairs.

The fees will also fund routine updates and building projects such as switching out water meters and replacing water mains, active projects such as rehabilitating the city's water filtration plant in Fridley, and updating systems to better prepare for contingencies such as flooding.

By 2023, Minneapolis plans to raise almost $40 million more in revenue from utilities, according to projections, meaning those bills are likely to continue rising.