Council approves water service agreement for Hidden Lakes subdivision; developer to contribute to future loop and general fund, agrees to voluntary annexation

The council voted June 16 to authorize a water service agreement allowing the proposed Hidden Lakes subdivision (a rural development north of LaCina Meadows) to tap an existing Iowa City water main. Hidden Lakes is outside the city's corporate limits and outside the city's designated growth area.

Key terms and why the city agreed:
- The developer will pay all costs to extend and build the internal water distribution infrastructure; the city will not contribute capital for the extension.
- To recognize city costs and future maintenance and service considerations, the developer will make two one-time payments of $225,000 each: one to the city's water fund to help offset the cost of constructing a future south loop in the water distribution system (reducing dead-end mains); and one to the city's general fund to partially recognize that residents will use city services but remain on county property tax rolls.
- Residents in this and a nearby noncontiguous development (LaCina Meadows) will pay a surcharge (1.5x) on city water rates; staff said that is the city's current practice for similar noncontiguous customers.

Annexation and legal language:
- Council approved an amendment adding a voluntary-annexation clause: the property owner agreed to voluntarily annex the subdivision into the city when the city's corporate limits become adjacent and the city can provide full services. The clause was added to ensure the agreement "runs with the land" and binds successors in interest.

Background and public-health context:
- City staff described a precedent: in 2017, the city agreed to provide water to nearby LaCina Meadows when the Department of Natural Resources identified radionuclide problems in private wells. That previous extension was paid for by LaCina Meadows and the DNR; Iowa City agreed to maintain the main and charge higher water rates to those users.

Council vote and follow-up:
- Council approved the agreement as amended (7-0). City staff said the agreement will be implemented through standard permitting and coordination and that the required easements and technical details will be finalized as part of the plat and infrastructure review process.

What the agreement does not do: The city is not annexing the property immediately and will not pay capital extension costs; rather it accepts the developer's contribution to future infrastructure and the enhanced water rate to cover maintenance.