Sewer rates to increase 6% in July

During its Jan. 4 meeting, Creston City Council voted to raise residential wastewater rates by 6%, effective July 1.

City Administrator Mike Taylor said project costs of the the second phase of the mandated waste water treatment facility improvement plan, a nutrient reduction system project, is coming in higher than originally anticipated.

“We’re just trying to get ahead of the borrowing a little bit,” he said. “We paid at least $1 million for the first phase from cash on hand as we went through the project, and I think that’s what we’d try to do with this is pay some of this so we don’t have to borrow as much.”

Historically, residents see a 4.5% increase annually. While funding from the American Rescue Plan could be available for the project, Taylor said there are other projects also competing for that same funding the city has been allocated.

During the council’s Dec. 22 meeting, Tiona Pooler, Independent Public Adivisors, LLC, met with the council to review the operational and capital improvement financial plan for the waste water treatment plant. She provided two scenarios for the council to choose from:

A) With the projected increase for sustaining the debt that will be incurred, Pooler projected an increase of 6%, which would increase the cost of sewer rates from $4.22 to $4.47 per 100 cubic feet, effective July 1.

B) Offsetting the increase with the use of COVID funds the city received, the increase would continue with the initially proposed 4.5%, increasing the cost of sewer rates from $4.22 to $4.41 per 100 cubic feet, effective July 1.

Pooler told the council if it does not chose the first option, it rates will need to be increased to 6% in a couple years before going back down to 5%.

“That’s just because of the increase in debt service that you’ll be funding through these rates if you don’t offset with ARPA,” she Pooler. “I would recommend, if you’re not going to apply those funds, that you might want to start using your rates in 23 to prepare for this oncoming debt service so that it’s not such a huge increase that you’d have to do later. It allows you sort of to build that cash, prepare for the debt service that’s coming.”

A resolution offered by Rich Madison and seconded by Terry Freeman approving use of COVID funds failed. A second resolution offered by Jocelyn Blazek, seconded by Brenda Lyell-Keate, to approve a waste water rate increase of 6% passed. Madison voted against the 6% increase.

An average monthly bill will increase from $24.54 to $25.77.