HomeMy WebLinkAboutA039 - Hearing on proposal to enter into a sewer revenue loan and disbursement agreement to borrow money thereunder in a principal amount not to exceed $337,000 for the Ioway Creek Stabilization ProjectITEM #:43
DATE:09-23-25
DEPT:FIN
SUBJECT:
PUBLIC HEARING ON PROPOSAL TO ENTER INTO A SEWER REVENUE
LOAN AND DISBURSEMENT AGREEMENT TO BORROW MONEY
THEREUNDER IN A PRINCIPAL AMOUNT NOT TO EXCEED $337,000 FOR
THE IOWAY CREEK STABILIZATION PROJECT AND AUTHORIZING THE
RELATED REDUCTION OF THE INTEREST RATE ON THE SEWER
REVENUE BOND, SERIES 2023B.
COUNCIL ACTION FORM
BACKGROUND:
The Water Resource Restoration (WRR) Sponsored Projects Program is administered through
Iowa’s Clean Water State Revolving Fund (CWSRF), a low-interest loan program operated by
the Iowa Department of Natural Resources (DNR) and the Iowa Finance Authority (IFA).
Established under Iowa Code § 384.84, the program allows wastewater utilities to finance both
system improvements and watershed-based nonpoint source projects through a single loan.
The loan carries a reduced interest rate, ensuring that utilities pay no more in overall debt
service than they would for the wastewater project alone. This structure effectively allows
communities to complete both infrastructure and restoration projects for the cost of one.
The City is seeking to utilize this program to support the Ioway Creek Stabilization
Project in Brookside Park. Construction began on June 16, 2025, and is scheduled for
completion in December 2025. The project addresses significant erosion that has been
impacting both public parkland and adjacent private property.
The planned improvements include the installation of in-stream rock features, the relocation of
approximately 500 feet of creek channel, the stabilization of streambanks, the establishment of
appropriate native vegetation, and the extension of an existing storm sewer. These measures
are consistent with the types of natural channel design and stabilization practices eligible
under the WRR program. They are expected to provide lasting environmental benefits,
including protection of natural habitat, reduced sedimentation, and improved downstream
water quality.
To finance this work, the City proposes to amend its 2023 CWSRF loan, which provided
approximately $7.5 million for sewer collection system improvements. By enrolling in the
WRR program, the City is eligible for a 0.5% interest rate reduction on that loan,
resulting in projected savings of approximately $337,000. Those savings would then be
applied to support the Ioway Creek project through a separate SRF loan in the same
amount at zero percent interest, amortized over the remaining term of the 2023 loan.
This financing structure would ensure that the City does not incur higher debt service
costs than it would have under the original wastewater-only loan.
In accordance with Iowa Code § 384.24A, the City Council, on September 9, 2025,
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established September 23, 2025, as the date for a public hearing on the proposed amended
loan agreement. Following that hearing, staff recommends that the Council adopt a resolution
authorizing the agreement, which will enable the City to formally participate in the WRR
program and secure the financing needed to complete the Ioway Creek Stabilization Project.
Additionally, the resolution authorizes the related rate reduction for the Sewer Revenue bond,
Series 2023B by 0.5%, which will offset the additional debt service associated with the Ioway
Creek Project.
ALTERNATIVES:
1. Adopt a resolution instituting proceeding to take additional action for the authorization of
a loan and disbursement agreement and the issuance of a not-to-exceed $337,000
Clean Water State Revolving Fund Loan and related interest rate reduction on the Sewer
Revenue Bond, Series 2023B.
2. Do not adopt a resolution instituting proceeding to take additional action for the
authorization of a loan and disbursement agreement and the issuance of a not-to-exceed
$337,000 Clean Water State Revolving Fund Loan and related interest rate rection on
the Sewer Revenue Bond, Series 2023B and direct staff to evaluate additional funding
strategies to support the Ioway Creek Project.
CITY MANAGER'S RECOMMENDED ACTION:
Through the State’s Water Resource Restoration Sponsored Projects program, the City
is able to pair its wastewater financing with a qualified stormwater initiative, receiving a
reduced loan interest rate that generates funding for additional water quality
improvements. In this instance, the interest rate adjustment provides $337,000 in
funding to support the Ioway Creek stabilization project. This approach allows the City
to advance critical streambank and habitat restoration efforts without increasing the
utility's debt service costs. Therefore, it is the recommendation of the City Manager that the
City Council adopt Alternative No. 1 as stated above.
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