SSB 1117 (LSB 1183XC (2) 91)

SENATE FILE _____ 

BY  (PROPOSED COMMITTEE ON LOCAL GOVERNMENT BILL BY CHAIRPERSON WEBSTER)

A BILL FOR

An Act relating to sewer service by establishing a maximum rate increase charged by governmental entities.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 331.465, subsection 1, Code 2025, is amended to read as follows:
   1.  a.  The board may establish, impose, adjust, and provide for the collection of rates to produce gross revenues at least sufficient to pay the expenses of operation and maintenance of the county enterprise or combined county enterprise and, if revenue bonds or pledge orders are issued and outstanding under this part, shall establish, impose, adjust, and provide for the collection of rates to produce gross revenues at least sufficient to pay the expenses of operation and maintenance of the county enterprise or combined county enterprise, and to leave a balance of net revenues sufficient at all times to pay the principal of and interest on the revenue bonds and pledge orders as they become due and to maintain a reasonable reserve for the payment of the principal and interest, and a sufficient portion of net revenues shall be pledged for that purpose.
   b.  Rates shall be established by ordinance. Rates or charges for the services of a county enterprise defined in section 331.461, subsection 2, paragraph “b”, if not paid as provided by ordinance, constitute a lien upon the premises served and may be certified to the county treasurer and collected in the same manner as taxes. The treasurer may charge five dollars for each lien certified as an administrative expense, which amount shall be added to the amount of the lien to be collected at the time of payment of the assessment from the payor and credited to the county general fund.
   c.  The aggregate of the rates and charges for sewer services shall not exceed the lower of one hundred two percent of the aggregate of the rates and charges from the previous budget year or the percentage increase in the consumer price index for the midwest region as determined by the United States department of labor, bureau of labor statistics, or a successor index. Increases to rates and charges for sewer services planned prior to July 1, 2025, for repayment of debt incurred before July 1, 2025, shall be excluded from rate and charge increase limits established in this paragraph. If rate and charge increases for sewer services exceed the limits required in this paragraph, the increased rate or charge shall be effective at the start of the budget year. The board shall direct the county commissioner of elections to submit to the registered voters of the county at the next general election the question of whether to accept the increased rate or charge by the proposed amount. The result of the election shall take effect immediately upon certification. If the question fails, all rates and charges paid by customers for sewer services exceeding the limits established by this paragraph from the beginning of the current budget year until the certification of the general election shall be refunded by January 1 following the general election.
    Sec. 2.  Section 358.20, subsection 1, Code 2025, is amended to read as follows:
   1.  a.  Any sanitary district may by ordinance establish just and equitable rates, charges, or rentals for the utilities and services furnished by the district to be paid to the district by every person, firm, or corporation whose premises are served by a connection to the utilities and services directly or indirectly. The rates, charges, or rentals, as near as may be in the judgment of the board of trustees of the district, shall be equitable and in proportion to the services rendered and the cost of the services, and taking into consideration in the case of the premises the quantity of sewage produced thereby and its concentration, strength, and pollution qualities. The board of trustees may change the rates, charges, or rentals from time to time as it may deem advisable, and by ordinance may provide for collection. The board may contract with any municipality within the district, whereby the municipality may collect or assist in collecting any of the rates, charges, or rentals, whether in conjunction with water rentals or otherwise, and the municipality may undertake the collection and render the service. The board of trustees may also contract pursuant to chapter 28E with one or more city utilities or combined utility systems, including city utilities established pursuant to chapter 388, for joint billing or collection, or both, of combined service accounts for sanitary district services and utility services, and the contracts may provide for the discontinuance of one or more of the sanitary district services or water utility services if a delinquency occurs in the payment of any charges billed under a combined service account. The rates, charges, or rentals, if not paid when due, shall constitute a lien upon the real property served by a connection. The lien shall have equal precedence with ordinary taxes, may be certified to the county treasurer and collected in the same manner as taxes, and is not divested by a judicial sale.
   b.  The aggregate of the rates and charges for sewer services shall not exceed the lower of one hundred two percent of the aggregate of the rates and charges from the previous budget year or the percentage increase in the consumer price index for the midwest region as determined by the United States department of labor, bureau of labor statistics, or a successor index. Increases to rates and charges for sewer services planned prior to July 1, 2025, for repayment of debt incurred before July 1, 2025, shall be excluded from rate and charge increase limits established in this paragraph. If rate and charge increases for sewer services exceed the limits required in this paragraph, the increased rate or charge shall be effective at the start of the budget year. The board of trustees shall direct the county commissioner of elections to submit to the registered voters of the city at the next general election the question of whether to accept the increased rate or charge by the proposed amount. The result of the election shall take effect immediately upon certification. If the question fails, all rates and charges paid by customers for sewer services over the limits established by this paragraph from the beginning of the current budget year until the certification of the general election shall be refunded by January 1 following the general election.
    Sec. 3.  Section 358C.15, subsection 1, Code 2025, is amended to read as follows:
   1.  a.  A board of trustees may by ordinance establish equitable rates, charges, or rentals for the utilities and services furnished by the district to be paid to the district by every person, firm, or corporation whose premises are served by a connection to the utilities and services directly or indirectly. The rates, charges, or rentals, as near as may be in the judgment of the board of trustees, shall be equitable and in proportion to the services rendered and the cost of the services, and taking into consideration in the case of the premises the quantity of sewage or water produced or used and the concentration, strength, and pollution qualities of the sewage. The board of trustees may change the rates, charges, or rentals as it may deem advisable, and by ordinance may provide for collection. The board may contract with any municipality within the district, whereby the municipality may collect or assist in collecting any of the rates, charges, or rentals, whether in conjunction with water rentals or otherwise, and the municipality may undertake the collection and render the service. The rates, charges, or rentals, if not paid when due, shall constitute a lien upon the real property served by a connection. The lien shall have equal precedence with ordinary taxes, may be certified to the county treasurer and collected in the same manner as taxes, and is not divested by a judicial sale.
   b.  The aggregate of the rates and charges for sewer services shall not exceed the lower of one hundred two percent of the aggregate of the rates and charges from the previous budget year or the percentage increase in the consumer price index for the midwest region as determined by the United States department of labor, bureau of labor statistics, or a successor index. Increases to rates and charges for sewer services planned prior to July 1, 2025, for repayment of debt incurred before July 1, 2025, shall be excluded from rate and charge increase limits established in this paragraph. If rate and charge increases for sewer services exceed the limits required in this paragraph, the increased rate or charge shall be effective at the start of the budget year. The board of trustees shall direct the county commissioner of elections to submit to the registered voters of the city at the next general election the question of whether to accept the increased rate or charge by the proposed amount. The result of the election shall take effect immediately upon certification. If the question fails, all rates and charges paid by customers for sewer services over the limits established by this paragraph from the beginning of the current budget year until the certification of the general election shall be refunded by January 1 following the general election.
    Sec. 4.  Section 384.84, subsection 1, Code 2025, is amended to read as follows:
   1.  a.  The governing body of a city utility, combined utility system, city enterprise, or combined city enterprise may establish, impose, adjust, and provide for the collection of rates and charges to produce gross revenues at least sufficient to pay the expenses of operation and maintenance of the city utility, combined utility system, city enterprise, or combined city enterprise. When revenue bonds or pledge orders are issued and outstanding pursuant to this subchapter, the governing body shall establish, impose, adjust, and provide for the collection of rates to produce gross revenues at least sufficient to pay the expenses of operation and maintenance of the city utility, combined utility system, city enterprise, or combined city enterprise, and to leave a balance of net revenues sufficient to pay the principal of and interest on the revenue bonds and pledge orders as they become due and to maintain a reasonable reserve for the payment of principal and interest, and a sufficient portion of net revenues must be pledged for that purpose. Rates must be established by ordinance of the council or by resolution of the trustees, published in the same manner as an ordinance.
   b.  The aggregate of the rates and charges for sewer services shall not exceed the lower of one hundred two percent of the aggregate of the rates and charges from the previous budget year or the percentage increase in the consumer price index for the midwest region as determined by the United States department of labor, bureau of labor statistics, or a successor index. Increases to rates and charges for sewer services planned prior to July 1, 2025, for repayment of debt incurred before July 1, 2025, shall be excluded from rate and charge increase limits established in this paragraph. If rate and charge increases for sewer services exceed the limits required in this paragraph, the increased rate or charge shall be effective at the start of the budget year. The governing body shall direct the county commissioner of elections to submit to the registered voters of the city at the next general election the question of whether to accept the increased rate or charge by the proposed amount. The result of the election shall take effect immediately upon certification. If the question fails, all rates and charges paid by customers for sewer services over the limits established by this paragraph from the beginning of the current budget year until the certification of the general election shall be refunded by January 1 following the general election.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill creates a maximum yearly increase allowed for sewer rates charged by counties, cities, and intergovernmental sewer services. The bill sets the maximum increase of sewer services rates and charges at 2 percent more than the aggregate of rates and charges from the previous budget year or the percentage increase of the consumer price index for the midwest region, whichever is lower. The bill excludes increases to rates and charges planned prior to July 1, 2025, for repayment of debt incurred before July 1, 2025, from the increase limits. The bill provides that if rate and charge increases exceed the limits, the increased rate or charge shall be effective at the start of the budget year. The relevant authority shall direct the county commissioner of elections to submit to the registered voters of the jurisdiction at the next general election the question of whether to accept the increased rate or charge by the proposed amount. The result of the election shall take effect immediately upon certification. If the question fails, all rates and charges paid by customers for sewer services exceeding the limits required by the bill from the beginning of the current budget year until the certification of the general election shall be refunded by January 1 following the general election.