The Clinton Herald, Clinton, Iowa

January 19, 2013

Sewer accounts for most of borrowing

By Katie Dahlstrom
Herald Staff Writer

CLINTON — An examination of the city’s outstanding obligation report reveals an apparent imbalance. Sewers accounted for 80 percent of the city of Clinton’s outstanding debt at the end of last fiscal year. Of the $89 million in sewer revenue bonds and general obligation bonds combined, $70.9 million paid for sewer projects.   

This borrowing is reflected in customer’s sewer rates, which are obligated to pay what the city borrows in sewer revenue bonds.  While city officials say they are working to deflect any future rate increases as a result of mandated sewer projects, more borrowing for these types of projects will occur in order to comply with the long-term control plan laid out by the Iowa DNR and EPA for keeping pollutants out of the Mississippi River.

“It’s the circumstances we’re in,” City Finance Director Jessica Kinser said. “It is a big number, but the city has signed a consent decree saying we will do these things. That’s the circumstance of our time.”

Under threat of fines or court action, the city is required to complete a number of expensive projects. The plan requires the city to spend an estimated $95 to $105 million over the next 25 years on various projects to reduce the amount of combined sewer overflow events that end in waste, debris and other material being deposited into the river.  

“You can kind of tell who has had to do some improvements to their system and who hasn’t. Unless somebody’s kept up and made improvements every 30 or 50 years...you have to pay for it at sometime,” Kinser said.

 Work on the projects listed in the plan began on June 1 and will conclude in December 2037. Work includes sewer lining, slough repairs and cleaning, completing new pump stations, sewer separation and other expensive projects.  

The bonds also have paid for the wastewater treatment plant, the most expensive capital project in the city’s history.

“When you just built a new treatment plant, as we have, that number is going to be high as we’ve borrowed all the money and now we’re going to pay it back,” Kinser said. “That number is going to get smaller every time, but that asset still exists.”

The city plans to add one more sewer revenue bond to pay for the 25th Avenue North pumping station. The city has tentatively agreed to use local option sales tax to issue a general obligation bond for $20 million over the course of two years.  

“We have a lot of work to complete within the system and we’re not going to ask the ratepayers to pay it,” Kinser said.

In order to improve the situation, Kinser has proposed restructuring a $62 million sewer revenue bond from a 20-year payment schedule to a 30-year payment schedule.

“I think it’s a better option for the citizens,” Kinser said.