Hastings Utility Board Regular Meeting - March 12, 2026

The Hastings Utility Board met on March 12, 2026, at 9:00 AM at the Airport Conference Room. The meeting featured a clean audit report for FY2025, a Q1 FY2026 financial update, a report on water main breaks potentially related to seismic activity, a virtual tour of the Pollution Control Facility (PCF), and an update on the Share the Warmth program.

Consent Calendar

• Approval of Minutes: Minutes of the February 12, 2026, meeting were approved (Motion by Dewalt, second by Kvols, carried 4-0-1, with Meeske absent).

Public Comments & Testimony

• Willis Hunt: Expressed the position that Hastings Utilities, as the city's primary revenue generator, should be reviewed to find ways to decrease costs and increase returns to reduce or maintain property taxes for Hastings citizens.

Manager's Communications

• The Utility Manager reported the utility is investigating the potential for a Phase III solar farm, leveraging possible ITC credits. The market for gas generation was described as very expensive. Hastings currently sits on generation capacity exceeding its city's needs, but long lead times necessitate planning for 5 to 10 years in the future.

Discussion Items

Virtual Audit Presentation from AMGL

• Marci Luth (AMGL) presented the FY2025 audit findings.
• Key Financials:
  • Received an unmodified opinion.
  • Total revenue increased by approximately $10 million.
  • Net position increased by $13.4 million to $262 million (a 5.4% increase).
  • Total assets were $285 million (up $14M).
  • Cash and investments totaled $38.8 million.
  • Unrestricted net position was $46 million (17% of equity; the goal is 40%).
  • Operating cash flow was a positive $20 million.
  • Debt decreased to $8.3 million.
• Audit Adjustments: Five adjustments were proposed, increasing the utility's net position by $282,000.
• Internal Controls: The recurring comment about a lack of segregation of duties was noted. Luth stated 99% of their similarly-sized clients have this comment. Board member Jeanette Dewalt praised the small number of adjustments given the utility's size.
• Operational Context: Derek Zeisler noted that the higher than usual cash balance is partly due to delayed capital projects and reimbursements from contribution and aid projects.
• Debt Coverage Ratio: Luth explained the utility targets a 15% operating ratio. The electric fund currently sits at 5%, while the combined system rate is 17.9%.

Q1 Financial Update (FY 2026)

• Jaci Higgins presented the financials for October through December 2025.
• Electric Department: Revenue decreased compared to the prior year due to the Payment in Lieu of Tax (PILT) being moved to a dividend fee. A longer-than-normal, compliance-driven fall outage (approximately five weeks) reduced generation revenue but kept expenses high.
• Gas Department: The PILT change similarly impacted income. A very mild fall led to low gas usage, though running gas Units 4 and 5 to supply electric generation partially offset the lost revenue. The mild weather allowed for an extended construction season.
• Water Department: Revenue decreased due to the PILT/dividend change and reduced yard watering demand from a wet late summer and fall.
• Sewer Department: Revenues and expenses remained consistent. Staff are working through billing system issues related to the recent software conversion.

Water Outages Update

• Brandan Lubken reported on several recent water main breaks.
• Earthquake: A 4.1 magnitude earthquake struck 30 miles south of Hastings on March 1st.
• March 3rd Break (13th & Baltimore): A major break in a 10-inch cast iron main occurred at 3:30 AM. Dispatch was commended for quickly activating five wells (pumping 8,000 gpm) to maintain system pressure. The leak impacted 27 customers; water was restored by 7:00 PM.
• March 6th Break (D & Emerson): A second break in a 6-inch main required cutting out and replacing a valve structure. The crew worked from 4:00 PM Friday until 4:00 AM Saturday. Lubken thanked a neighbor who provided food to the crew.
• Infrastructure Plan: Lubken described the utility's strategy to replace 4-inch mains (approximately 18 miles remaining) to improve fire flow and address lead service line replacement. The current break rate is 8 per 100 miles (below the AWWA goal of 15), though the rate has increased 50% over the last 20 years. Ductile iron is the preferred replacement material.

Pollution Control Facility (PCF) Virtual Presentation

• Brandan Lubken gave a virtual tour of the wastewater treatment plant.
• Capacity & History: The plant treats an average of 3.4 million gallons per day (MGD). It has undergone three treatment iterations: Rotating Biological Contactors (1980-2002), Trickling Filter (2002-2014), and Activated Sludge (2014-present).
• Treatment Performance:
  • CBOD: 113 mg/L down to 1.75 mg/L.
  • TSS: 354 mg/L down to 2.43 mg/L.
  • Ammonia: 36.1 mg/L down to 0.13 mg/L.
• Biosolids Management: Anaerobic digestion produces biogas (40%) used for plant heat and Class B fertilizer (60%). Approximately 2.5 million gallons of biosolids are land-applied annually on 80-acre city-owned parcels.
• Recent & Upcoming Capital Projects:
  • Complete: New digester covers, RBC building conversion to maintenance shop, West Basin commissioning.
  • Pending: UV sterilization (required by permitting cycle end in 2029), Nitrate & Phosphorus removal (dependent on state regulation, currently awaiting direction), and Lagoon rehabilitation (25-year-old sludge lagoons need overhaul).
• Sewer Collection:
  • A contractor completed year three of a sewer cleaning and inspection project. A significant finding is a corroded concrete main under Burlington Avenue (3 to 4 blocks) that requires relining.

Share the Warmth Update

• Karl Block announced that the Share the Warmth program has qualified with the Hastings Community Foundation. For the first time, the program will participate in Give Hastings Day on May 7, 2026, to raise funds to assist utility customers in need.
• The board acknowledged the contributions of board member Susan Meeske in facilitating the collaboration with partner agencies.

Key Outcomes

• Consent Agenda: Approved.
• Audit Received and Discussed: The FY2025 audit was reviewed with no major issues.
• Reports Received: The board received the Q1 financial update, water outage report, and PCF virtual presentation.
• Share the Warmth: New fundraising strategy approved via Give Hastings Day.
• Adjournment: The meeting was adjourned at 10:20 AM (Motion by Dewalt, second by Kvols, 4-0-1).