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Construction has started on a new wetland-cell sewer system for the city of Lake Henry (population 90). If construction and testing goes well, the new system could be operational yet this fall.

The entire project is expected to cost $510,000. The city of Lake Henry has received over $360,000 in grants for the project, but also has a $147,000 loan. The loan is for 30 years at 4.5 percent interest.

"If the project goes over budget, then the city has to pick it up, too," said Dan Liebl, the former mayor of Lake Henry who has coordinated the sewer project for the city.

Currently, the city of Lake Henry charges $15 per month for homeowners and businesses and $20 per month for the two bars in town for sewer fees. The council proposed raising those fees to $25 per month for homeowners and businesses and $35 per month for the two bars.

Interest payments on the loan will amount to $9,000 per year, Liebl told the audience of 25 people at a public hearing on Thursday. The city also needs to cover maintenance costs and save money for improvements.

In all, he said, the city needed about $20,000 a year in revenue. The new fees (with 54 total hookups) would generate $16,440 annually. The city also budgets a little over $6,000 for maintenance to the sewer system, yielding yearly sewer system revenues to the city of $22,640.

The city of Lake Henry had been advised to charge residents $30 per month and businesses $75 per month by the USDA, but felt these rates were rather steep.

Without a water meter, the city has to charge some sort of flat fee. The city could have charged a large hook-up fee to the new sewer system and paid for the loan up front, but residents at the public hearing expressed a preference in keeping the monthly fees. Residents will still be billed every six months.

The new sewer system should enable the city to expand. For years, the city was not allowed to increase the use of its old sewer system, which was installed in 1952.

The council could also raise the hook-up fee to the sewer system. The hook-up fee is now $50; residents felt it could be increased.

The sewer system will require weekly readings and monthly tests and other maintenance costs, such as mowing the three-acre site for the sewer system north of town.

Reed beds - that would have taken the sludge from the tanks - were cut from the project to keep it within budget. As a result, Lake Henry will have to continue to haul the sludge to Paynesville. Eventually, the city of Lake Henry will need to construct the reed beds and stop hauling the sludge, said Liebl.