Goshen News, Goshen, IN

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March 19, 2013

Nappanee takes step toward $27 million sewer project

NAPPANEE — The Nappanee Board of Public Works and City Council have approved seeking financing for a $27 million sewer project.

Mark Downey, Commonwealth Engineers, gave the council and board options for the federally-required project Monday night. Mayor Larry Thompson called the plan, “The most boring and most expensive project in Nappanee.”

Downey said, “Way back in the late 1980s” the Environmental Protection Agency handed down to the states a mandate for elimination or treatment of CSO’s. He said it took the agency and the state nearly 10 years to establish guidelines and about 15 years ago the state gave the city of Nappanee 20 years to comply with the regulation.

Since the body of water that receives Nappanee’s wastewater is the Berlin Court Ditch — basically an agricultural ditch — city officials felt it should not be held to the “fishable, swimmable” standards EPA was requiring. Downey said they made that argument around 2005-2006. The Indiana Department of Environmental Management agreed, but the EPA did not. So in 2007 the city negotiated for a state judicial order saying the city would comply with transporting and treating the stormwater overflow vs. the more expensive separation of the combined sanitary and stormwater sewers.

The solution for the city is to build a new sewer and interceptors along each of the 10 CSO’s to transport the stormwater to the treatment plant and treat it.

CSO’s start at the west end of town — just west of Locke Street, according to Downey, and travel along the ditch to Miriam Street. In a lot of cases the new lines and interceptors will go through park property.

A couple of residents were present and one woman asked how big the pipe would be. Downey said the pipe would be 48 inches on the west end and would grow to 66 inches at the wastewater plant. The depth of the pipe would be 12 feet to 18 feet below ground. He said there will probably be a need to remove some trees along one side of the path at the park near the foot bridge.

New Council Member Jacob Dermott asked if there would be ponds and Downey said there would be underground storage tanks and they are making sure everything is covered; no odors will escape and there won’t be open lagoons.

The original plans were to do the project in three phases — the judicial order gives the city until 2030 to fully comply.

Phase I of the project is expected to be from 2011-2015 and includes Interceptor, pump station and storage tanks for one year, one hour rain event and the projected cost is $11.8 million.

Phase II is expected to be 2018-2019 and consists of wet weather treatment, 5 million gallons daily capacity for one-year, one-hour rain event. The cost is $8.6 million.

Phase III will expand the storage tank for 10-year, one-hour rain event, which is necessary for full compliance, at a cost of $6.9 million, bringing the total cost to $27,186,592.

Before finances were discussed, Downey answered questions. The mayor asked him to explain the reasoning of city’s CSO’s locations. Downey said everything south of the Berlin Court Ditch is a combined sewer and the reason is because the north side of the ditch wasn’t developed until the 1960s or 1970s when standards changed. So when the north side, including Northwood subdivision, was developed there had to be separate sanitary sewers installed that do not carry storm water.

Funding

Jeff Rowe, H.J. Umbaugh and Associates, gave options that the city has to obtain funding ,plus the probable impact to sewer rates through 2027 for each option. He listed three sources and four options for the board and council to consider.

The first source is through the USDA Rural Development Grant Program — this is a subsidized loan, which would be part loan, part grant. The city may qualify for up to 45 percent grant. The current interest rate is 2.75 percent and it would be a 40-year loan with a 10-year reserve requirement. There would be an annual reporting requirement.

“Interest rates are at a historic low so despite the economy this is a good time to borrow,” Rowe said.

There’s no guarantee the city would receive the funding, or that they would get up to 45 percent in grant funds, but preliminary talks show they are eligible, according to Rowe.

“This would reduce the overall rate impact but the flip side is you would pay more in interest over the 40 years,” he said.

The second source would be IFA State Revolving Funds — the city has used this source of funding before. It has a 2 percent interest rate, which could be lowered a half-percent with a green project reserve — a possibility if the city connects a bike path over the disturbed land when the project is completed. This option would be a 20-year term with a five-year reserve requirement. The SRF program has an annual funding cycle which starts in July and they have a priority list for projects. Rowe stated since this is a government mandated project, that might help move it up the priority list, but again there are no guarantees.

    The third source of funding would be the open market bond — a traditional financing option which requires bidders to bid on bonds and then the one with the lowest interest rates wins — the current interest rates range from 3.1 to 3.4 percent.

Rowe said when looking at the Rural Development Grant program they considered the impact if instead of doing the project in three phases as planned, they combined it to a single phase project to obtain the 45 percent grant amount.

In the Rural Development Alternate one, the single phase project — rates would increase 58 percent, for the Rural Development Alternate two — 3 phase project, rates would increase 44 percent, for the SRF funding, rates would increase 68 percent and with the open market funding, rates would increase 77 percent.

    Looking at the city’s current sewer rates for each option the average monthly bill might be $55 for Rural Development Alternate one, $49.91 for Rural Development Alternate two, $58.23 for SRF option and $61.35 for open market.

    However, when projecting those sewer rates out to the end of the project in 2027, the monthly bill might then be $65 for Rural Development Alternate one, $88 for Rural Development alternate two, $110 for SRF, and $118 for open market.

    So the lowest overall impact on rates for residents from 2013 to 2027 would be obtaining the Rural Development Alternate One grant combining the three phase project into a single phase.

The Board of Works members first voted and made a recommendation to the council to authorize the mayor and clerk-treasurer along with Rowe and Downey on their behalf to pursue the funding options with both the Rural Development Grant and the State Revolving Fund. The City Council then approved that recommendation.

    

 

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