News : Urbana to build new Water Storage System

The City of Urbana has published a list of questions and answers concerning the construction of a new water storage system. The information is shared below.

QUESTIONS ANSWERED

I've heard water rates are going to increase. Is that true? Before a rate increase can go into effect, it will need to be approved by three readings of the City Council.

Why would water rates increase?

Rates could increase for two reasons.

1) Rate increases may be needed to keep up with the increased cost of maintaining and operating the water system. Water rates have not increased since 2008, but costs for things like chemicals, electrical power, and repair equipment have increased significantly over the last 16 years.

2) The more significant portion of a potential rate increase would go towards funding a new water storage tank. The new water storage tank is projected to cost approximately $3.4 million, which will be funded by a loan payable over 20 years.

Why is a new water storage tank needed?

The average daily water usage is projected to exceed the volume of water that can be stored in the City's two elevated storage tanks within the next 5 years. The Iowa Department of Natural Resources requires that the water storage volume exceed the average daily demand for the water system design year. Additionally, the current water storage volume does not provide the recommended level of fire protection for the city. The new water storage tank will improve fire protection levels for the city, meet system storage compliance through the 2045 design year, allow for residential and commercial growth throughout the city, and reduce the potential for system contamination through depressurization.

When did the City of Urbana last do a major water system improvement?

The last major water system improvement was in 1993 when the South Water Tower (by the Intermediate School) was built. In 1993, the population of Urbana was 694. Today, the population of Urbana is 1,599.

Project Description

The project includes construction of a new water storage tank and booster pump station. Unlike the two existing elevated water storage tanks, this new water storage tank will be constructed at ground level. The booster station will be used to help regulate water system pressures and the volume of water stored in the new tank. This will be like the new systems recently installed in Fairfax, as shown in the below image. Several other local communities have recently made similar additions to their water system.

How will the construction project be financed?

The City plans to use the State Revolving Fund (SRF) to pay for the project. The Iowa Department of Natural Resources and the Iowa Finance Authority administer the SRF. By using an SRF construction loan, we can secure a fixed interest rate. The loan will be repaid over a period of 20 years with revenue received from the rates charged to residents.

Why not bond for this project?

If the City were to use a water revenue bond issue you would expect interest rates of 4.5% to 5.5% in today's interest rate market. A general obligation bond issue would have rates at approximately 3.5% to 4.25% and a general obligation borrowing of any type would count against the City's debt capacity, which would not leave the City any capacity for other street related projects that might come up in the foreseeable future. The current State Revolving Fund (SRF) rate as of today is 2.75% but this is a rate that now re-adjusts until you lock it in (at the time of construction loan application submission).

Did the City receive any grants for this project?

The City of Urbana does not qualify for any grants currently. We continue to seek grants for this and future projects.

There is a lot of information on my utility bill.

See SAMPLE in the second photo.

What exactly do my water and sewer charges mean?

The usage charge varies each month. The usage is the amount of water that flowed through your meter during the monthly cycle. Once a month the meters are read to determine how much water/sewer you have used. Currently, the water does NOT include a Flat Capital Fee each month. The proposed Flat Capital Fee is a fixed amount that does not change each month. It helps cover the cost of capital infrastructure and meters.

The city is required to collect a Water Excise Tax. This tax is collected by the city but passed directly through to the State of Iowa.

What are the current WATER RATES?

The rates are below.

Gallons Used Per Month/Rate

First 2,000 $19.17 (minimum bill)

2,001 and over $8.00 per 1,000 gallons

Please call City Hall at 443-2400 if you have additional questions or if you would like to discuss your utility bill further.