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Needed wastewater treatment plant may cost us
By Carol Broeder/Arizona Range News
While a bond election will not be necessary, replacing the city's troubled wastewater treatment plant may mean a sewer rate increase in the long run.
For several months now, the Willcox City Council has been considering this issue.
Working with Tetra Tech for engineering services, both city staff and council has looked at several alternatives for plant replacement, including improvements to the existing lagoon system; a Single Basin Activated Sludge System, a packaged plant system, and an Oxidation Ditch System, said Ruth Graham, the city's finance director.
The council selected the oxidation ditch system as the best alternative at its July 6 meeting.
City Manager Pat McCourt told the council in June, "The current wastewater treatment plant is not producing the quality of effluent necessary to meet the discharge standards required under the Clean Water Act."
"Significant steps must be taken to address this concern to the environment, life, safety, and health of the community, and the possible violations of state and federal laws," he said.
McCourt said at that time that while the total fiscal impact to the city was unknown, the estimated ranges are "capital $5.6 million to $7.3 million and present value of operating and maintenance costs between $4.9 million to $12.5 million."
"It is anticipated that some portion of the capital costs will be received in the form of grants; the remainder of the capital costs will come from bonds secured by the rates on the sewer system," said McCourt, adding that operational costs will be paid from the rates on the sewer system.
On April 19, the council had authorized the application for a CWSRF Loan for planning and design services, up to a maximum amount of one million dollars, from the Water Infrastructure Finance Authority of Arizona (WIFA) to begin the process of replacing the plant, she said.
Since then, WIFA authorized a loan to the city, which will draw against the funds as need, up to the $1,000,000 maximum amount, said Graham, adding that the loan will be repaid with funds from the sewer utility revenues.
"The city has also been working with the USDA to secure permanent, long-term financing for the construction of the wastewater treatment plant oxidation ditch system," she told the council.
"The outstanding balance of the WIFA loan will be incorporated into the long-term financing to be provided by the USDA."
The loan period is for three years.
At its Aug. 30 meeting, City Council also unanimously approved a resolution amending the city's 2001 sewer revenue bonds.
On Jan. 23, 2001, the council had adopted a bond resolution to issue City of Willcox Arizona Sewer Revenue Bonds, Series 2001A and 2001B, known as the "2001 Bonds," said Graham.
The United States Department of Agriculture (USDA) is the owner of all of the outstanding 2001 Bonds, she said in her Aug. 27 letter to council.
The council had already been considering the proposed one million dollar WIFA loan for planning and design services for the oxidation ditch wastewater treatment system for the city.
"As a part of such financing, the city desires to amend Section 2 of the 2001 Bonds Bond Resolution to amend the definition of the term 'maximum annual debt service,'" Graham explained.
"Such amendment must be approved by not less than two-thirds of the bondholders (USDA), and shall have the effect of amortizing the loan payments" on the WIFA loan, with a balloon payment due in three years, by assuming level payments of principal and interest over a period of 25 years, she said.
City Council unanimously approved the amendment, which was necessary to secure the proposed WIFA financing.
Prior to the vote, Councilman Woody Johnson asked if there would be an increase in sewer rates due to the project.
"The sewer rates wlll have an increase," said McCourt, adding that he would bring "more accurate numbers" back to the council at a future meeting.
Graham told the Range News later that sewer rates are currently "under review" by the city.
"We don't anticipate they will go up due to the WIFA loan," she said.
According to Managing Director Mark Reader, with Stone and Youngberg, LLC, the city will be paying 0.345 percent interest on that loan.
Based on a three-year index because it's a three-year loan, it's "almost a zero-percent loan," he told the council.
However, the USDA funds will be a combination of a loan and a grant; and will be based on a two-part formula - a fixed base as well as sewer use.
"The USDA will be looking at our rates," explained Graham, adding, "We need to make sure that our utilities are self-supporting. But, we are not anticipating a big (rate) increase."
In a related matter, the council also voted unanimously to approve a settlement agreement between the Arizona Department of Health Services (ADHS) and the city regarding its wastewater treatment lab.
The city's lab receives an annual inspection from ADHS.
"As a result of the inspection in 2009, there were many violations listed, some dating back to 2003, which had not been corrected," said McCourt, adding that since then staff has corrected all violations, the lab was re-inspected is now in compliance.
He explained that ADHS has the ability to fine on a daily basis for violations.
City staff discussed the situation with ADHS, who indicated it would accept $5,000, per the July 29 settlement agreement.
For several months now, the Willcox City Council has been considering this issue.
Working with Tetra Tech for engineering services, both city staff and council has looked at several alternatives for plant replacement, including improvements to the existing lagoon system; a Single Basin Activated Sludge System, a packaged plant system, and an Oxidation Ditch System, said Ruth Graham, the city's finance director.
The council selected the oxidation ditch system as the best alternative at its July 6 meeting.
City Manager Pat McCourt told the council in June, "The current wastewater treatment plant is not producing the quality of effluent necessary to meet the discharge standards required under the Clean Water Act."
"Significant steps must be taken to address this concern to the environment, life, safety, and health of the community, and the possible violations of state and federal laws," he said.
McCourt said at that time that while the total fiscal impact to the city was unknown, the estimated ranges are "capital $5.6 million to $7.3 million and present value of operating and maintenance costs between $4.9 million to $12.5 million."
"It is anticipated that some portion of the capital costs will be received in the form of grants; the remainder of the capital costs will come from bonds secured by the rates on the sewer system," said McCourt, adding that operational costs will be paid from the rates on the sewer system.
On April 19, the council had authorized the application for a CWSRF Loan for planning and design services, up to a maximum amount of one million dollars, from the Water Infrastructure Finance Authority of Arizona (WIFA) to begin the process of replacing the plant, she said.
Since then, WIFA authorized a loan to the city, which will draw against the funds as need, up to the $1,000,000 maximum amount, said Graham, adding that the loan will be repaid with funds from the sewer utility revenues.
"The city has also been working with the USDA to secure permanent, long-term financing for the construction of the wastewater treatment plant oxidation ditch system," she told the council.
"The outstanding balance of the WIFA loan will be incorporated into the long-term financing to be provided by the USDA."
The loan period is for three years.
At its Aug. 30 meeting, City Council also unanimously approved a resolution amending the city's 2001 sewer revenue bonds.
On Jan. 23, 2001, the council had adopted a bond resolution to issue City of Willcox Arizona Sewer Revenue Bonds, Series 2001A and 2001B, known as the "2001 Bonds," said Graham.
The United States Department of Agriculture (USDA) is the owner of all of the outstanding 2001 Bonds, she said in her Aug. 27 letter to council.
The council had already been considering the proposed one million dollar WIFA loan for planning and design services for the oxidation ditch wastewater treatment system for the city.
"As a part of such financing, the city desires to amend Section 2 of the 2001 Bonds Bond Resolution to amend the definition of the term 'maximum annual debt service,'" Graham explained.
"Such amendment must be approved by not less than two-thirds of the bondholders (USDA), and shall have the effect of amortizing the loan payments" on the WIFA loan, with a balloon payment due in three years, by assuming level payments of principal and interest over a period of 25 years, she said.
City Council unanimously approved the amendment, which was necessary to secure the proposed WIFA financing.
Prior to the vote, Councilman Woody Johnson asked if there would be an increase in sewer rates due to the project.
"The sewer rates wlll have an increase," said McCourt, adding that he would bring "more accurate numbers" back to the council at a future meeting.
Graham told the Range News later that sewer rates are currently "under review" by the city.
"We don't anticipate they will go up due to the WIFA loan," she said.
According to Managing Director Mark Reader, with Stone and Youngberg, LLC, the city will be paying 0.345 percent interest on that loan.
Based on a three-year index because it's a three-year loan, it's "almost a zero-percent loan," he told the council.
However, the USDA funds will be a combination of a loan and a grant; and will be based on a two-part formula - a fixed base as well as sewer use.
"The USDA will be looking at our rates," explained Graham, adding, "We need to make sure that our utilities are self-supporting. But, we are not anticipating a big (rate) increase."
In a related matter, the council also voted unanimously to approve a settlement agreement between the Arizona Department of Health Services (ADHS) and the city regarding its wastewater treatment lab.
The city's lab receives an annual inspection from ADHS.
"As a result of the inspection in 2009, there were many violations listed, some dating back to 2003, which had not been corrected," said McCourt, adding that since then staff has corrected all violations, the lab was re-inspected is now in compliance.
He explained that ADHS has the ability to fine on a daily basis for violations.
City staff discussed the situation with ADHS, who indicated it would accept $5,000, per the July 29 settlement agreement.
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don wrote on Sep 8, 2010 3:33 PM: