Another step in the process to upgrade the Leavenworth wastewater treatment plan took place on July 11 at a public hearing which was conducted primarily to comply with the requirements of the loan to the city.
City Administrator Joel Walinski said this is one of the requirements of the Rural Development loan they are applying for, to show why the upgrade is necessary, what the city is trying to do and what are the potential implications for the rates.
“The reason we’re doing the waste treatment plant improvement is mainly to address the TMDL (total maximum daily load) on phosphorus. We need tertiary treatment at the treatment plant. We have a plant that has plenty of capacity. We’re at about 65 percent going into a 20 year history,” Walinski said. “ ... some of the machinery at the plant does need to be replaced. That is part of this process too.”
As part of the waste treatment plan, Walinski said they looked at the collection system. There are a number of pieces with the city collection system that need to be upgraded, particularly the interceptor that runs along the river, which needs to be replaced.
A portion of the interceptor has been replaced, but it needs to be finalized, he said. Overall improvements come to about $13 million. This is a rough estimate, which was used for the loan application.
“We’ve put in the application, which is currently being reviewed by RD, Rural Development funding. We’re hoping that with the approval of this, which we should hear about in October. The funding does not become available until we break ground,” Walinski said. “If we go this route, there will be construction funding, which we will have to reach out to a bank. Cashmere Valley (Bank) has said they would provide us with construction funding, which is probably a loan of one or two years, to cover the initial cost of engineering and initial cost of construction.”
Once the construction begins, that is when the RD funds becomes available. As part of the application requirements, the city has completed an environmental assessment and has done a preliminary engineering report, which has been reviewed and accepted by RD.
The engineering reported basically took the waste treatment facility plan and put it into a format that RD likes, he said. The other piece, which Finance Director Chantell Steiner has been working on quite a bit, is the financial feasibility and cost analysis.
“The cost analysis comes out of the facility plan, but financial feasibility is where Chantell provides a lot of the numbers, how those numbers affect us, in terms of where it fits in the overall program,” Walinski said. “Do we require for poverty rates here in town? Do we hit that poverty measure? That is about median incomes. What does that look like once our rates have increased? How does that fit? If it is over a certain level, you hit your poverty basis and that’s when RD can step in and say, we can provide you a low interest loan and we can provide some grant funding.”
Mayor Cheri Kelley Farivar asked if the current rate study would factor into this. Walinski said they are going to use the current rates. He said they are locking in the rates for this piece of the study. Also the debt service is locked in too.
That is an important piece, Walinski said, because there is a lot of debt on the books right now for the waste treatment plant.
“But over the course of the next two years, that debt is going to be disappearing. We do want to get locked in so they take a look at where we are financially right now,” he said.
Councilman Elmer Larsen wondered if they could divert some of the RD funds to a Leavenworth to Peshastin wastewater pipeline, if the regionalization study says that is feasible.
“I don’t think that would be available, however, I think our timing looks pretty good here. We’ll get the regionalization study started. It will be completed by the end of December, first part of January. At that time, the council can still have some flexibility, because you’re not signing off on anything,” Walinski said. “You still have the flexibility, if the regionalization study would say, ok this is the best way to go. Take those $8 million towards piping to Peshastin, if that is the best methodology. We would stop with the RD funding and have to after some other type of funding.”
In terms of the application, Walinski said he thinks they’ve done a pretty good job in terms of the facility plan providing a lot of options and not locking the city into anything right now.
“If we go with the phosphorus tertiary treatment, is there is a different place we can put it so we don’t have to rebuild the full public works building? That is a question in the report. We still have to figure that out,” Walinski said. “I know Herb (Amick, public works director) has looked at two or three different options. Is sand filtering the best method to use? There is other types of filtering that we’re looking at. Some are more expensive, some are less expensive.”
One of the other pieces, Walinski said, is the collection system, in terms what is spent on it. At some point in time, he said the council would have to make a decision on what to do with the collection system improvements, primary, secondary, etc.
Since the city is putting in for full funding, all the collection projects can be done. Those are questions for down the road, he said. The city is applying for a 40-year loan from RD with an interest rate of 3 percent.
“ ... if we do our loan only, the new sewer rate is $92 per month, per household. Currently, the rate is $55.64. The hopeful scenario, if we did treatment and collection for $13 million and we had a 55 percent loan, 45 percent grant, then that rate increase would be $24, which would be $79,” Walinski said. “The other piece that we haven’t figured into this, the debt service part. Right now, your rate has $11 or $12 of debt service that will be going away by 2019-2020. There will be a decrease.”
Other factors play into it too, Walinski said. The council could decide not to borrow the entire $13 million, and not do the full project. Regionalization might play into it. The city could dip into cash reserves to buy down the project, he said.
“There are other ways to reduce the $13 million. That can bring down those prices too. I think staff has done a good job realizing we have a certain standard of treatment plant that has to be in place. We have a collection system that has to be in place. But also, measuring in on rates is very important,” Walinski said. The goal, he said, to be comfortable enough so that in late October, the city have Varella (engineers) finalize some of the engineering. Councilwoman Sharon Waters asked if regionalization would factor into any of their decisions.
Walinski does not believe the city will be far enough along to make any firm decisions on regionalization
“But it could be by January or February, we can say, do we think that is going to influence our engineering going forward? That is going to have to be a conversation we are going to have to have. Does the regionalization look promising? Is there a piece there we can grab onto and change our overall planning process? That’s going to be a January-February conversation,” Walinski said.
Councilwoman Margaret Neighbors asked what happens if the RD funding does not come through. Walinski said their second plan is to apply for Ecology funding.
“That is a stripped down version, where it would just focus on the facility. You can either do collection or plant improvements. You can’t combine. RD lets you combine,” Walinski said. “Those applications are due Oct. 15. We’re going to proceed with those in the event this doesn’t come through.”
Talking with RD, Walinski said they are very supportive of this program. The RD regional office is very supportive too. Councilwoman Carolyn Wilson asked how the city would qualify for poverty when the property values here are so high. Walinski said property values do not factor in.
“We use Chelan County median income. You take your rate, divide it by the median income and if its greater than 2 percent, you start the walk up the hill toward your poverty level. Definitely, if it hits 4 or 5 percent, it is poverty. Definitely, with our rate, it would be greater than 3 percent,” he said.
Although it is a called a poverty factor, Farivar said it might be better called a hardship factor. That is, how much more of a hardship would it be on the rate payers?
Ian Dunn can be reached at 548-5286 or editor@leavenworthecho.com.
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