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A necessary and responsible increase

Water rates will go up three percent in North Liberty
Water rates go up three percent in North Liberty starting with water used next month. The North Liberty City Council approved the first reading of an ordinance for the rate increase Tuesday, June 9. Two more readings are required before it can take effect and are scheduled for later this month.

NORTH LIBERTY– Water rates in North Liberty increase by three percent next month. The City Council approved the first reading of an ordinance authorizing the increase Tuesday, June 9, during a regular meeting conducted online via the Zoom virtual meeting platform. Two more readings are required with the second scheduled for later this month and the third to occur during the first meeting in July.
The new rate starts with water used in July according to Assistant City Administrator/City Clerk Tracey Mulcahey.
A public hearing, by phone and email, was held with no comments received.
City Administrator Ryan Heiar opened discussion on the increase saying, “It’s unfortunately that time of year when we talk about our utility rates.” He noted the city increased water and wastewater (sewer) rates the past 10 years.
In his packet to the council, Heiar said, “As previously mentioned, actual revenues are very close to what was budgeted. Expenses are currently on track to come in as budgeted or slightly lower. Staff is recommending a three percent water rate increase to ensure that the city remains compliant with the debt service ratio defined in the loan agreements.”
In a follow-up email, Mulcahey explained when the city sells water or sewer bonds, repaid with water or sewer revenues, the income in the fund is required to fund the operating costs plus 1.2 times the amount of the city’s owed principal, interest and fees for that utility.
“In the past, the revenues have come up slightly short of that ratio,” she said. “That shortfall results in non-compliance with the loan agreements for that utility.”
The city’s financial adviser recommended a three percent increase in order to ensure compliance through a 1.32 debt service ratio, which should be able to be maintained above the required 1.20 ratio.
“In addition, the proposed increase will sustain a moderate fund balance reserve, which is also a priority,” Heiar said in the packet.
During the meeting, Heiar said the fund balance is necessary in case anything happens to the millions of dollars worth of equipment the city has in providing water service. Wastewater and storm water rates will remain unchanged, Heiar said.
“As much as it pains us to have to make this recommendation, we wouldn’t be responsible if we didn’t,” he added.
The second June meeting, to be conducted via Zoom and viewable online through the city’s website, the city’s Facebook page, on YouTube, and on NLTV is scheduled for Tuesday, June 23, at 6:30 p.m. The first July meeting, which potentially could be held in City Hall, according to Mayor Terry Donahue, is set for Tuesday, July 14.

Pull Quote
“As much as it pains us to have to make this recommendation, we wouldn’t be responsible if we didn’t.”– Ryan Heiar, North Liberty City Administrator