Starting in July, Ames residents will see a slight increase in their water and sewer rates.

The Ames City Council on Tuesday approved a 3.5% increase in water rates while sewage service will increase by 5.5%. The increases will take place on July 1, the start of the 2026-27 fiscal year, and they’re largely driven by a nearly $65 million, state-mandated nutrient reduction project at the water pollution control plant.

Ames’ rates are below the state’s median water rates. The city is in the 15th percentile in terms of cost for the water rates, which means that 85% of the utilities in the state are charging more than Ames for drinking water, Water & Pollution Control Director John Dunn said at the meeting.

The average annual water rates include:

• U.S. average annual increase: 6.79%
• Iowa average annual increase: 6.68%
• Ames average annual increase: 2.88%

Looking at rate increases is part of the city’s annual budget process. Staff included a model for the water and sewer funds that reflects current and projected operating and capital expenses over the next 10 years, and the resulting annual ending fund balances in each of the two funds.

“We don’t ask for rate increases that we don’t need,” Dunn said. “Evolving regulatory requirements are certainly one of the issues that we face.”

Such requirements are driving the city’s nearly $65 million investment in the water pollution control facility. The city also has to prepare for floods, droughts, derechos or any other complications.

This model is used to establish a long-range pattern of rate increases that will fully finance these self-funded enterprise utilities, including an operating reserve that is slowly being increased to a target of 25% of the annual operating budget, according to council documents.

“By planning ahead, we can do small increases on a frequent basis, as opposed to suddenly having to shock ratepayers with a 25%, 35% or 45% increase at one time,” Dunn said.

Sewer rates increase by 5.5%

Sewer rates are set to increase this summer as well. The existing minimum charge for sewer rates is $13.73. The rate will increase by $0.75, bringing the new minimum charge to $14.48.

The rates, which Dunn said are slightly higher than inflation, are mostly driven by the city’s Nutrient Reduction Strategy. The strategy aims to improve water quality across Iowa by reducing nutrients that flow into rivers and streams.

The average increase for sewer service is:

• U.S. average annual increase: 4.85%
• Iowa average annual increase: 3.42%
• Ames average annual increase: 4.38%

What’s next: The council’s next regularly scheduled meeting will be 6 p.m. April 28 in council chambers, 515 Clark Ave.