The Clinton Herald, Clinton, Iowa

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November 2, 2013

Committee debates how city will pay for sewer work

CLINTON — The looming $2.6 million bill from the Iowa Department of Transportation for completed Camanche Avenue sewer work sparked a debate among members of the Capital Improvements Program Committee on Wednesday about what the city wants to do and what its obligations are.  
"There's no bill sitting in front of us right now, but we need to program this because everything we do has an impact on our general obligation debt capacity, including this," City Administrator Jessica Kinser told committee members as they narrowed the list of projects the city will fund.   
City staff proposed a $2.2 million state revolving fund loan partnered with a $400,000 general obligation bond to pay for the sewer and other work that the state already completed.  
The SRF loan has to be paid with sewer rates, meaning if more debt is incurred but not retired rates have to rise. The DOT bill will come in late 2015, the city's fiscal year 2016.  
The city's original plan was to use a general obligation bond to pay for the bill, which was slashed by $2.7 million thanks to a TIGER grant the city received last year. 
Staff suggested the SRF loan would be the preferable option for paying the Camanche Avenue sewer bill because of the changes in local option sales tax funding, the city’s tight general obligation bonding capacity as well as a fiscal year 2016 obligation the city has to purchase more land in the Lincolnway Railport.  
The cash flow model prepared by Public Financial Management, the city’s financial adviser, showed a 9.5 percent sewer rate increase in 2014 and 2015. However, Kinser explained during last week's discussion, those numbers were mere place holders and the model at the time it was prepared last year did not include this $2.2 million SRF loan.
At-large Councilman John Rowland was adamant Wednesday that Clinton residents are "maxed out" in terms of rates and fees.  

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