The city of McMinnville is looking at a $4 million upgrade to its Wastewater Treatment Plant in the near future.
A Water and Sewer Committee meeting is scheduled for 6 p.m. on Monday, March 16, to discuss authorizing a resolution to secure State Revolving Funds for the project. On Thursday, March 19, at 6 p.m. there will be a special called session of the Board of Mayor and Aldermen to consider the resolution.
According to city engineer Anthony Pelham during a presentation made Tuesday night, the wheels have been turning slowly on obtaining a loan for the upgrades and the paperwork on the loan was finally received the day before.
“We’ve been in this process for quite some time. We’ve worked with Bill Brock (former Water Department director and current city administrator) and the Water and Sewer Department over the last couple of years. We’ve gotten to the point now where they’ve finally sent the loan package. I haven’t had a chance to read it because it was just received yesterday.”
The proposed project is $4 million to upgrade and enhance the wastewater treatment plant. The last major upgrade to the plant, excluding the installation of a sludge treatment facility, was more than 20 years ago.
Along with a low-interest rate, the loan will give the city $200,000 in principal forgiveness leaving only $3.8 million the city has to repay.
“It’s almost like a grant, but they don’t call it a grant. It’s principal forgiveness,” said Pelham. “You borrow $4 million and repay $3.8 over 20 years at an interest rate of approximately 1.17 percent with a quarter point deduction.”
McMinnville’s Water and Sewer Department is an enterprise system, meaning user rates, fees and charges must be sufficient to meet the actual cost of providing water and sewer services.
No rate increase will be necessary, as Pelham says the state loan required a review of the financial viability of the department and it found that current rates are sufficient to fund the upgrade without a rate increase.
“SRF is not requiring any additional rate increase to support this project,” said Pelham. “We have their financial sufficiency approval that the current rates are sufficient to support this debt service. Annual debt service payments will be approximately $256,000.”
City administrator Bill Brock said, “The rates were already increased to cover the cost of this project.”
He was referring to the water and sewer rate increase that went into effect in January 2014. Customers inside the city limits were given a 19 percent increase and those outside the city limits saw a 30 percent increase. The increase generated close to $1 million in additional revenue to cover $854,388 the state said the department needed to cover expenses and an additional amount for future upgrades.
Both meetings will be held at City Hall.