A loan of up to $3.5 million from the sewer fund to Fort Dodge Fiber, the municipal broadband utility, was approved by the City Council Monday.

While the council approved a maximum of $3.5 million, City Manager David Fierke has said about $2.8 million is needed.

The loan will be paid off with revenues generated by Fort Dodge Fiber.

“Fiber pays for itself,” Councilman Kim Alstott said. “This will not go on the taxes.”

The loan has a 5.25 percent interest rate. It must be fully repaid to the sewer account by June 1, 2029.

Councilwoman Lydia Schuur was absent from the otherwise unanimous vote to approve the loan.

The loan became necessary because constructing the broadband system turned out to be more expensive than expected and took longer than expected.

In a report to the council, Fierke wrote that the initial budget was based on “mid-level designs,” but the final plans expanded the network’s scope.

Construction delays pushed back the time frame for connecting customers by about a year, so the utility could not start collecting revenue.

The utility is scheduled to begin making principal payments next month on the initial $33 million loan that was taken out in 2021 to pay for construction.

Without additional financing, Fort Dodge Fiber would have to reduce how much it spends on customer connections in order to make the principal payments on that initial loan, according to Fierke.

Monday’s vote marked the second time the council has tapped the sewer fund to help Fort Dodge Fiber.

On Sept. 9, 2024, the council voted to loan the broadband utility $3,165,000 million.