The Clinton Herald, Clinton, Iowa

April 24, 2013

Prior sewer rate decision reversed

Residents face a 9.5 percent hike after all

By Katie Dahlstrom Herald Staff Writer
The Clinton Herald

---- — CLINTON — Clinton residents face a 9.5 percent sewer increase after all, Clinton City Council members decided following a discussion regarding the implications of keeping rates as they are.

Council members during their April 9 meeting rejected the rate increase 5-2, but following through with this decision could have major effects on the city, Interim City Administrator Jessica Kinser explained.

During the Clinton City Council’s Committee of the Whole meeting Tuesday night, Kinser told council members that without at least a 9.5 percent increase, the city would not be able to pursue a $6.55 million state revolving fund loan. The city would be unable to pursue the loan because without the rate increase, it could not prove that it had the sufficient rates to meet the requirements of the state revolving fund.

Without the loan, the city would not be able to complete the 25th Avenue North pump station project under the timeline mandated by the city’s long-term control plan. The entire project is estimated to be about $7.5 million with the remaining $1 million coming from local option sales tax.

By delaying the project, the city would face anywhere from $300,000 to $1 million in fines from the EPA and Attorney General’s office. The city would also risk a $150,000 fine for severing the already approved contract with the project contractor.

Kinser said she and Jenny Blankenship, of Public Financial Management, have discussed other ways to pay for the pump station, including a general obligation bond. However, pursuing this kind of bond would bring the city beyond its established debt capacity.

Using the local option sales tax to fund the project entirely was also explored, but that option would further delay other items in the plan. This option would hurt the city later, Kinser explained.

“As I sit here with you tonight, I’m telling you that really the only way that we can get this done that does not mess up other plans that we’ve had is to move forward with that 9.5 percent rate increase in order to utilize the state revolving fund as the funding source for the 25th Avenue North project,” she said.

At-large Councilwoman Jennifer Graf addressed the city’s loss of citizens and tax dollars to pay for infrastructure the city already struggles with. She also called attention to the financial and legal repercussions the city could suffer because council members don’t want to enact the rate increase.

“I can guarantee there isn’t one hand that would raise and say ‘We really want to raise the taxes for our citizens. None of us want to. None of us want to. This is very painful,” Graf said.

Ward 3 Councilwoman Bev Hermann made the motion to send the increase for a vote at the next regularly scheduled council meeting. She said she believed the rate increase needed to happen based on the consequences if it did not. She also pointed to the actual amount of the increase, which would bring the cost per unit from $8.18 to $8.96.

“When I look at this, this 9.5 percent increase, it amounts to 78 cents a billed unit, 78 cents. I think we need to go ahead and do this and get started on this project and deal with the rest of it as we go,” Hermann said.

Council members agreed to move the rate increase to their next City Council meeting, with At-large Councilman John Rowland dissenting.

The council also voted to hold a workshop to explore the options for funding long-term capital projects in order to avoid future rate increases.

“We’re stuck here,” Ward 2 Councilwoman Julie Allesee said. “It sounds like we’re stuck. But if we can have these meetings to look at these capital projects and come up with a way that’s more affable for our citizens, I think that it’s our due diligence to do that.”

The city already uses some measures to help increase collections on sewer bills such as the income offset program and monthly billing. City officials also plan to discuss ways to handle businesses and establishments with certificates of occupancy that have severely outstanding sewer bills.

Officials could pursue a franchise fee, stormwater runoff fee, hiring an outside collections agency and a capital levy as potential options to increase revenue for the city.

Council member John Rowland suggested writing letters regarding the city’s financial hardships to other levels of government as well as selling the wastewater treatment plant and sewer system to a private industry in order to improve the city’s financial situation.

Council members were scheduled to discuss cutting five positions and reducing other expenditures that would have had a $679,000 impact on the sewer fund. These cuts were needed to close a $760,000 operational expenditures gap the city faced without the rate increase.

Because the rate increase is moving forward to the next council meeting, council members decided to defer those discussions.