Sioux City weighs rollback of 300% stormwater rate hike amid state revenue caps

Sioux City weighs rollback of 300% stormwater rate hike amid state revenue capsFollowing ratepayer sticker shock, city officials are evaluating phased rate increases to fund critical drainage projects while grappling with new state legislation capping general fund revenue growth.

The City Council previously approved a 300% one-time increase to the stormwater collection fee to fund capital projects and a Storm Water Master Plan.

Large commercial properties experienced severe rate shocks, with some monthly bills jumping from $600 to $2,400.

A proposed hybrid option would reduce the initial hike to 100% and phase subsequent increases, shifting Master Plan costs to the property tax base.

City officials warned that a state-mandated 2% cap on general fund revenue growth complicates the ability to absorb infrastructure costs via property taxes.

Separately, the council advanced plans for a $325 million Phase 1 upgrade to the city's Wastewater Treatment Plant.

Sioux City, Iowa, is reconsidering its stormwater fee structure after a recently implemented 300% rate hike resulted in severe sticker shock for large property owners. During a September 14 meeting, Assistant City Manager Teresa Fitch presented the City Council with alternative rate scenarios to mitigate the impact. The council had previously approved a one-time 300% increase—raising the average monthly residential rate from $2.27 to $9.08—to fund the city's Capital Improvement Program (CIP), the Bacon Creek Culvert project, and a comprehensive Storm Water Master Plan. While the absolute dollar increase was manageable for residential users, Mayor Robert E. Scott noted that owners of large properties with significant impervious surface area saw their monthly bills skyrocket, in some cases jumping from $600 to $2,400. To address the backlash, Fitch detailed "Option 4," a hybrid approach that would implement a 100% rate increase in FY 2027, followed by phased annual increases through FY 2031. This option would generate sufficient revenue to fund the CIP and the Bacon Creek Culvert project but would remove the Storm Water Master Plan from the rate base, shifting its cost to property taxes. However, the pivot to property tax funding is complicated by recent state legislation. City Manager Michael Collett explained that the state has capped general fund revenue growth at 2%, severely restricting the city's ability to capture revenue from new development. "We are looking at at least $2 million in a deficit that the city will need to find... There'll be service cuts," Collett warned, emphasizing the difficulty of absorbing the master plan's costs into a constrained general fund. Despite the fiscal hurdles, the council indicated consensus support for the phased approach to provide ratepayer relief while maintaining funding for essential capital projects. Staff will prepare the formal recommendation for an upcoming agenda. In separate water infrastructure business, the council authorized plans and specifications for the $325 million Phase 1 Improvements to the Wastewater Treatment Plant. Assistant Public Works Director Vicki Baker noted the SRF-funded project will address critical safety, odor control, and operational reliability issues, featuring significant demolition of outdated structures. The council also approved a $1.38 million change order to RP Constructors for additional emergency bypass pumping and repairs following a catastrophic failure at the Bridgeport West Lift Station. Staff noted the city is currently assessing its ability to seek compensation from the contributing industry for the lift station failure.