Hermantown businesses take issue with new stormwater fee
The city of Hermantown is continuing to discuss its proposed stormwater utility fee after experiencing pushback from the city's business community, which argues the fee disproportionately affects them.
The fee is expected to fund the city's maintenance of ditches, culverts, bridges and stormwater ponds, as required by the Minnesota Pollution Control Agency, according to City Administrator John Mulder. It balances funding, the city's maintenance needs and protecting the environment, he said.
"It's a thing that we're all studying, trying to figure out what the best solution is. No final decisions have been made so there's a lot of ongoing discussion on it and we're continuing to work on it," Mulder said.
However, business owners in Hermantown felt "blindsided" by the city's fee proposal, which led to opposition at an April 16 public hearing, because some thought the proposal was already set in stone, Hermantown Chamber Board President Topher Davis said. The city seems to have stepped back since the public hearing to continue discussions, he said.
The Hermantown Chamber of Commerce has heard a lot of feedback from businesses in opposition to the proposed fee, Davis said. The Chamber's Board of Directors passed a resolution opposing the fee after hearing that two-thirds of the collections would come from businesses.
The city is proposing a stormwater utility fee of $5 per month for single-family homes and $5 per 2,500 square feet of impervious surface per month for multi-family units and businesses. The city would offer credits to businesses with a large amount of impervious surface if they take steps to reduce runoff or treat the water, Mulder said.
"They could reduce their fee by half if they have those things in place. In some cases, it might very well be worth an investment of some money. 'I can spend some money this year because I can reduce my fee forever,' " he said.
Tim Herstad of United Truck Co. questioned the city's need for the revenue when it's spending money on projects such as building a softball field. He estimates his company would pay between $3,400 and $4,000 if the fee were implemented.
"It is an unjust fee. It is unreasonable. There's no requirement by law for them to administer a fee. They are creating this fee as an additional tax, or (as) they call it, a revenue stream," Herstad said.
Eric Hoglund, president of Northern Exposure Manufacturing, said he believes most of the community doesn't know about the proposed fee.
"They were showing the normal property owner paying about, I would say, not even a tenth of what the business owner is going to end up paying. ... Some of us guys heard about this by word of mouth. Nothing was sent out," Hoglund said.
The city held two informational meetings in January and a meeting with the Hermantown Chamber Board of Directors in March, followed by a meeting with Chamber business leaders. Herstad said he went to the first meeting in January and was one of two people in the audience.
The council hasn't taken action on the proposed fee since the April 16 hearing, and has not formulated the next steps, but will likely continue discussions after receiving the input at the public hearing, Mulder said. He estimated that the earliest the council could make a decision either way is June.
Mulder added that although this would be Hermantown's first stormwater utility fee, neighboring communities already have them. Hermantown's fee would be less than the one in Duluth, about equal to Superior and slightly more than Cloquet.
"It's not new to people living in other cities and businesses in other cities where it would create a competitive disadvantage. ... If the same business was in Duluth, they'd actually pay more," Mulder said.
In addition to the concern that the fee would disproportionately affect businesses in the city, the majority of businesses in Hermantown are located along U.S. Highway 53, whose right of way isn't within the city's jurisdiction, Davis said. Hoglund also questioned why businesses along the highway should pay a fee, which would likely total thousands of dollars annually, when the city doesn't maintain the highway on which the business is located.
Mulder responded that stormwater along that route makes its way into local ditches and through local culverts.
"It's one entire system. It's kind of like saying, 'When I flush my toilet, it goes into a pipe on somebody else's road so why do I have to pay to fix that road when the pipe breaks?' It's all part of a large system. We're in this together," Mulder said.