Will Country Estates project affect sewer rates?
May 05, 2010 | 08:35 AM
Lyons — The Gathering Place was crowded with concerned residents recently when Country Estates Sanitary District discussed how upcoming wastewater treatment projects would affect quarterly sewer bills.
Planning a project to replace part of the Country Estates sewer system and paying for a third of the new Lyons wastewater treatment plant, residents seemed convinced their rates, already the highest in the state, would only keep skyrocketing.
But Country Estates officials believe otherwise.
The district's financial adviser, Dave Wagner said during his 35 years in the profession, he's never seen an entity receive a 2.375-percent interest rate on a loan for such a project. The U.S. Department of Agriculture issued Country Estates Sanitary District about a $1.4-million loan to pay 35 percent of the new Lyons plant and $3.1-million grant for updating sewer pipes, manholes and other parts of the district's system.
"That means Country Estates will be paying 25 percent of those funds out of your pocket but the federal government is paying 75 percent, not to be repaid, so that's why this is worth it," Wagner said. "That amounts to about a $58,400 loan payment a year for 38 to 40 years."
Some residents were upset by that amount, including Gary Carr who believed that would amount to each of the 207 Country Estates residents paying $23.46 per month in additional fees.
But district officials said that would not be the case.
"We're currently paying $71,000 a year in debt now that will be going away with these funds, so that means that amount will be dropping to about $58,000," Sanitary District Administrative Assistant Cynthia Ganka said.
Wagner said that's because some of the USDA funds also will cover previous debts.
"I don't see how this could do anything but help bring rates down a little, probably not a lot, but included in the funding package is $300,000 of refinancing short-term debt," Wagner said. "Some of that is engineering costs, and preliminary debts — frankly, much of it is operating deficits built-up because the high flow and charges from Lyons (wastewater treatment plant)."
In addition, Country Estates Engineer Brandon Foss said through the project that old, leaky clay pipes were being replaced with new, tighter PVC pipes which would reduce leaks and how much water is being sent to the Lyons wastewater treatment plant. There also will be less maintenance once the project is finished because the system is being condensed.
"This will reduce sewer lines by about 5,700 feet or over a mile of sewer less to maintain and cause future leaks," Foss said. "We'll also be abandoning manholes in the old system, so there will be about 44 fewer manholes to maintain which is good news."
Currently, Ganka said Country Estates has been sending about 15 million gallons of water and sewage annually to Lyons. The improvements should tighten the system to only send 7 million gallons a year, she said.
Wagner said this likely will result in lower user fees.
"We'd be able to finance the new system using the current budget without rate increases," he said. "There's actually going to be a little contingency built in that is not in the current budget."
Currently, that budget is about $306,000. Wagner said if Lyons decreases charges by 30 percent before of water flow reduction, Country Estates would see about a 15-percent decrease in their rates because about half of Country Estates budget funds Lyons treatment.
"There is no comparisons between the PVC to the old, clay pipes — they're very tight," he said. "I think there's a very good chance user fees will be reduced, but I don't think the time to reduce them is until you get a year under your belt, get the project done, and save those decreases for probably the (2012) budget prepared in fall 2011."
He said if the district did not go through with the project as funded by the USDA, the budget would likely increase about $15,000, which sewer users would see on their bill. Plus, the equipment as it is now would only become more expensive to maintain and repair in the future.
Wagner said be believes Lyons Sanitary District would not likely be given the Clean Water Fund loan through the Department of Natural Resources for the new plant if Country Estates did not got through with the funding package for updating their own system.
"They looked long and hard on whether the people of Lyons could keep making their payments to ensure payback of the loan and concluded that the financial assistance was the best chance to bring costs down here, so under those conditions, they, frankly, reluctantly offered the loan to Lyons," he said.