The city council in Charles City Monday evening approved the preliminary plans and contract for a project that will expand the city’s water treatment capacity from 3.3 million to 5 million gallons of water per day.
The $10.3 million project will be funded with a low-interest loan from the Iowa Finance Authority. The loan will be repaid through a utility rate increase.
The project is moving forward at a time when an announcement that  ethanol producer VeraSun, Inc. is seeking bankruptcy protection has sparked some anxiety in the community. VeraSun’s Charles City site of one of its largest, most modern facilities. It is also the city’s biggest
water utility customers.
The amount of water VeraSun buys from the city offsets other costs.
Councilman Kevin Simonson asked City Administrator Tom Brownlow what would happen if the plant had to close. VeraSun uses about 1 million gallons of Charles City water each day.
A spokesman from VeraSun informed the Press that the company plans to keep operating its Charles City facility as usual.
Brownlow and City Attorney Ralph Smith also believe the plant will continue to operate, if not by VeraSun, then by another company.
However, Simonson’s question echoed the concerns of people who have called the Press wondering the same thing: Assuming the worst-case scenario — the plant closing — what would be the impact on the city and its residents?
The pipeline connecting the city to the ethanol facility was financed by VeraSun, and under the current agreement, it would belong to the city if the plant closes. The city would, however, have to keep repaying the IFA loan for the expansion project. To do so would likely require another rate increase.
Smith said if necessary, he will seek advice from an attorney who specializes in bankruptcy.
Regardless of what happens with the ethanol plant, the city’s current water plant is operating on what Brownlow earlier this year described as “borrowed time.”
“We’re seeing problems start to crop up,” said Water Superintendent Steve Simerson.
A representative from Fox Engineering said redesigning a smaller water plant at this stage would not result in much of a cost savings, nor would it meet the needs of future industry, assuming VeraSun continues to operate.
Final bids for the water treatment plant expansion project are due Dec. 9, and the contract will be awarded Dec. 15.
In other business Monday evening, the city council:
• Approved a change order for the 2008 Digestor Improvements Project totalling $20,777, which brings the contract to $267,777. The project was originally estimated to fall under $300,000. The improvements are expected to extend the life of that part of the water treatment facility by about 20 years.
• Approved an updated resolution about reducing water utility bills after a customer reports and repairs a leak. The new resolution adds an appeal process and adds a minimal charge for water treatment if it is determined that the water leaks down a normal drain into the sewer system.
• Approved setting Nov. 17 as a public hearing on the disposal of a property located at 614 9th Ave., which the city acquired earlier this year. The buyer has planned to demolish the existing structure, clean up the lot and build a new garage.
City Hall will be closed on Tuesday, Nov. 11, which is Veterans Day. The city council will meet next at 7 p.m. on Wednesday, Nov. 12 in the City Council Chambers for a workshop.