A state loan with a 1.75 percent interest rate will be used to pay for improvements to the Fort Dodge water system.

The City Council on Monday approved a loan agreement for $25,286,000 from the revolving loan fund operated by the state to finance water and wastewater projects in Iowa communities.

The loan will pay for expanding the John W. Pray Water Facility on Phinney Park Drive and installing reverse osmosis equipment there. The reverse osmosis equipment will reduce the hardness of the city’s water, but will not produce true soft water.

Loan money will also pay for drilling a new well and building a water main to connect it to the water facility.

The state will not be writing the city a check for the full $25,286,000. City Manager David Fierke said as bills for the projects come in, Fort Dodge will get money from the state to pay them. When all the work is done, the state will tally up how much it gave the city and the city will pay back that amount, plus the 1.75 percent interest, over 20 years.

In another infrastructure related move, the council hired Rasch Construction Inc., of Fort Dodge, for a project along 13th Avenue South. The company will be paid $1,022,005.

The work includes installing a new, larger sanitary sewer; a new water main; new storm sewer and complete reconstruction of 13th Avenue South between 23rd and 26th streets. The work will begin soon and continue throughout the rest of the year.

Crow River Construction, of New London, Minnesota, submitted the only other bid of $1,178,755.