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Council hears proposal to allow inter‑utility loans to cover shortfall; vote delayed for clarifying language
Summary
Council members heard first reading of ordinance 2026‑13 to let Bloomington’s municipally owned water and wastewater utilities make short‑term loans to each other via a cash reserve fund, with staff saying loans would be interest‑free, repayable in under 12 months and capped at $4 million; council postponed final action to June 10 to tidy statutory language and oversight details.
The Bloomington Common Council on Wednesday unanimously introduced Ordinance 2026‑13, a change to municipal code that would allow the city’s water and wastewater utilities to lend to one another through a dedicated cash reserve fund. City Utilities Director Katherine Zerger told the council the change follows Indiana Code 8‑1.5‑3‑11 and would provide flexibility to address timing gaps between rate cases.
Zerger said the water utility is temporarily operating with a deficit and the wastewater utility’s more recent rate increase has left it in a stronger cash position; the ordinance would permit a loan from wastewater to water to be repaid once the pending water rate case is implemented. Staff said loans are expected to be interest‑free in practice and short term (less than 12 months). Council members asked for guardrails and transparency: who sets any interest rate, whether loans could effectively subsidize one utility with another’s ratepayer funds, and whether approvals and repayments would all be reported to the Utility Service Board (USB).
During discussion Zerger said any loan would be documented as a loan (not an outright transfer) and must be repaid, with USB approval of transfers and claims. Council members pressed for clarity on statutory citations and the ordinance’s wording; some members found a sentence of draft code confusing and urged breaking it into clearer clauses. Staff said the ordinance largely mirrors state statute but agreed to clarify language. Council also asked whether a cap was appropriate; staff indicated the loan would be anticipated not to exceed $4 million.
A public commenter asked what would happen if the full authorized loan amount was not used; staff said any unused authorized balance would be applied to pay back the outstanding loan amounts and would not be retained as an appropriation by the lender utility.
Outcome: Council voted to postpone the ordinance’s final reading until June 10 so staff and the city attorney could refine the code language and add clarifying guardrails and fiscal notes.
