Horace council weighs TAP fee for regional sewer; staff will study risks and breakeven scenarios

City staff presented concepts for a TAP fee (a one-time connection fee) to help fund regional sanitary sewer improvements, noting the approach could be an alternative to special assessments and could be paired with State Revolving Fund (SRF) loans at low interest.

Staff explained a TAP fee could cover the upsizing of regional infrastructure (for example, to enlarge a lift station from a local to a regional capacity) while leaving local lift-station costs to be special assessed. Brenton said the approach is a long-term funding strategy and that staff had modeled several scenarios; he cited a conversation about a proposed TAP fee at roughly $3,250 and noted that a breakeven calculation in one model came out at about $2,800 per new connection.

Council members pressed staff on the risk to the sewer utility if development underperforms the projections. City staff and a finance presenter noted that TAP-fee-backed debt would be secured by the sewer utility; if lots do not develop as quickly as expected, the city could need to cover debt service from the utility or other sources and might trigger rate increases. Staff said they will refine breakeven analysis, explore triggers to notify council if development lags, and return with further options; council did not take action tonight.

Why it matters: adopting a TAP fee would change how regional sewer infrastructure is financed and could shift timing of costs from special assessments toward utility-backed debt and per-connection charges. Council members highlighted a tradeoff: less up-front special assessment burden for property owners versus an increased risk to the sewer utility and ratepayers if development trajectories change.

Next steps: staff will continue modeling scenarios, consider cost-sharing and term variations, and return with more detailed breakeven analysis and recommended triggers to protect the utility.