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City of Delavan revisits utility numbers

By Catherine W. Idzerda
July 14, 2015

DELAVAN—A development outside Delavan's borders could help the city's water utility's debt.

But it would require the city's water utility to build a water line to a subdivision, and the Delavan City Council voted against the idea in June.

On Monday, the council and the water and sewer commission met to discuss the financial and philosophical issues of extending water service, but without coming to any new decisions.

At issue is an intergovernmental agreement that would allow the city to extend its water lines into the town of Delavan to provide service for Sho-Deen Homes, a development that eventually will encompass more than 600 households on 300 acres at the corner of Mound Road and County F.

In May, the council voted against providing water service to the development. But the water and sewer commission had already requested more information.

City staff, working with consultants, studied the issue and discovered the system already has the capacity to meet demand and that the utility would gain about $224,000 in revenue.

The move also could help the city trim its water utility debt, said Kelly Hayden, city finance director.

Water connection fees, the utility itself and money that comes from TIFs, or tax increment financing districts, usually cover the water utility debt.

TIFs allow a city to make improvements in order to attract private investment. As the district's property values rise because of new investments, the increases in property taxes are used to repay the city's costs.

But city development has been flat, and the water utility has been using its temporary investment account to pay its debt.

“The utility can't keep operating like this,” Hayden said Monday.

In a memo dated June 25, Hayden wrote, “If the development situation does not improve in the city, the water utility will end up advancing $1.7 million to cover the impact fee shortfall.”

If the utility provided water for the development, the connection fees could be reduced to $255,583, the memo said.

Alderman Bruce DeWitt said his objection to providing water to a subdivision outside of the city was “philosophical, not financial.” Providing such services to the town does nothing to further development in the city, he said.

Alderman Gary Stebnitz said he had lived in both the city and the country, and water service never factored in to his decision to move.

In addition, DeWitt expressed concerns that any intergovernmental agreement between the town and the city could be altered by the whims of the state legislature, leaving the city in deep trouble.

One addition to the recent state budget would have made it more difficult for water utilities and municipalities to decline services outside their boundaries.

The motion would have overruled any ordinance or existing intergovernmental agreement.

City Administrator Denise Pieroni said she didn't know if the issue would return for another council vote.

The council has a closed session meeting Tuesday, July 14, to discuss an intergovernmental agreement between the town and the city.