Keokuk officials flag major sewer projects, warn of EPA consent-order pressure and rate hikes

Keokuk city staff presented council with a package of sewer capital needs tied to regulatory compliance and aging infrastructure, and said the work will be funded through transfers, borrowing and stepped rate increases.

City administrator Jim, speaking to the elected body and staff, said the wastewater budget shows only two line-item increases this year—sludge-hauling contract escalators and additional diesel fuel for the plant generator—but the department faces larger capital needs including a primary digester rehabilitation estimated at about $325,000 in FY28 and clarifier turntable replacement bids ranging from about $45,000 to $75,000. “We have about a half an hour” to switch to generator power when called by the utility, Jim said, illustrating operational constraints the plant manages.

The council heard that the city carries bond proceeds from a 2023 borrowing (roughly $1.88 million) that must be spent within a multi-year window; staff urged that some of those proceeds be applied toward sewer-eligible projects so the SEC and credit rules are satisfied. Jim said the city also received about $800,000 into a fund from regulatory settlement receipts and expects roughly $185,000 still available for pre‑treatment improvements required by the DNR and EPA.

To stretch capital dollars, staff discussed pursuing State Revolving Fund (SRF) loans with a possible 30% grant rebate and other federal/state grant programs. “We’re trying to maximize 30% funding,” Jim said, noting eligibility hinges on getting projects on the SRF intended‑use plan in time.

Meeting participants also reviewed sewer-rate adjustments already scheduled in the staffing memo: a 7% residential increase that began Jan. 1, a second 7% adjustment in midyear and a further 7% next January (a roughly 21% cumulative increase over a year). Commercial accounts classified as ‘Class 1’ are subject to an automatic 10% annual increase under existing ordinance language. Staff said those moves are intended to cover debt service and reduce reliance on transfers from other funds.

Why it matters: the wastewater plant operates under DNR/EPA oversight and a consent-order timeline to reduce combined sewer overflows. Staff said the city cannot afford the full set of deep-separation projects (the earlier tunnel proposal, once estimated in the millions) and is pursuing monitoring and targeted projects to persuade regulators that less-costly alternatives can meet water-quality goals.

What’s next: staff will continue refining project lists, pursue SRF/CDBG eligibility where possible and return to council with financing proposals and grant-application timelines. Council members asked for more granular cost estimates for the primary‑digester rehab and lift‑station work before final votes on transfers or borrowing.