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Board examines $1M–$5M water options, discusses buying bulk water vs building infrastructure
Summary
Board members reviewed a detailed comparison of buying bulk water from a private supplier versus building interconnection or new well infrastructure; staff presented cost estimates showing per-100-gallon purchase rates (~32¢) versus city production (~19¢) and multiyear capital estimates ranging from about $1M to $20M depending on the option.
A lengthy presentation to the Eldridge City Utility Board laid out three broad options for meeting demand in the south/southwest growth area: (1) interconnect and blend with a private utility (American/American Water), which could require a new well house and large mains with total costs the presenter estimated as high as about $4–5 million; (2) buy bulk water from a private supplier with a lower up-front cost (presenter cited a ~ $1,000,000 well-house-plus-connection scenario for some options), but higher per-unit purchase costs; or (3) invest in future treatment-plant upgrades that could cost in the tens of millions.
The presenter summarized per-unit costs: "Ball wire from American Water based on their tariff is 32¢ per per 100 gallons. Our production cost is 19¢." He added a comparison of raw-cost components (chemicals, electricity and maintenance) that drive the city’s production cost and noted the treatment approach (filtration vs. simple injection) raises the city’s overhead. "We're losing money for what we what we're buying versus what we could produce," the presenter said, explaining that buying water at the higher tariff would mean the utility pays more per unit even if some capital costs are avoided.
Board members and staff discussed site options, permitting uncertainties and risk if the city relied on a private bulk supplier. Staff cautioned that some interconnection or blended models require Iowa DNR approval and engagement with the Iowa Utility Commission to secure bulk rates or protections against service cutoff. The presenter recommended follow-up steps including: confirming potential interconnect points, engaging with Iowa DNR and the Iowa Utility Commission about bulk-service terms, and testing identified sites for new wells.
The board did not take a formal vote on procurement. The discussion closed with staff identifying financing possibilities — using an interfund loan for lower rates on payback or pursuing a state revolving fund construction loan for projects — and emphasizing that long-term treatment-plant overhaul remains a high-cost option in the future.
