Albert Lea non-union city employees will see a 2.5 percent raise in 2016.

The Albert Lea City Council approved the raise at its meeting Monday night.

City Manager Chad Adams said the raise is a cost-of-living adjustment and is consistent with increases approved by other unions in the city.

Adams said funding for the raises will come primarily from expenditure savings and reductions in other areas of the budget.

He said the wage and salary increases are part of a larger compensation plan to ensure the city is compensating its employees competitively.

“Doing so helps us retain our quality employees and attract new quality employees when attrition occurs in a particular department,” Adams said.

Non-union employees received a 2.25 percent raise for 2015.

During the Monday meeting, the council also:

Approved an 8 percent increase in the water rate, equivalent to a $1.62 increase per month for the average residential customer. The sewer rate wasn’t increased.

Approved a five-year capital improvement plan that includes $15.86 million in projects for 2016.

Approved a lease agreement with Albert Lea Community Theatre to allow storage of materials at 314 S. Broadway on the second floor and in the basement for $100 a month. Adams said the revenue will help offset heating and utility costs.

Voted to support a $45.5 million increase in local government aid effective in 2017 across the state.

Approved a property tax levy of $109,000 for the Albert Lea Housing and Redevelopment Authority Property Tax Levy. This was the third straight year the figure had stayed at the same.

• Approved a request for annexation of a home at 2008 Country Club Road to connect to the city’s water system.