Archive for Wednesday, January 14, 2004

Council to finance about $3.8 million for sewer plant

January 14, 2004

If plans progress as city officials hope, a Topeka company could break ground as early as March on a new sewer plant for Tonganoxie.

At Monday night's city council meeting, City Administrator Shane Krull told council members that if all paperwork is completed with the state, which is helping with financing for the project, the sewer plant could be operating by March 2005.

The $3.68 million plant is planned near the existing plant. BRB Contractors of Topeka, which was chosen to construct the operation, submitted a bid of $2,763,000. A total of 16 pieces of equipment for the plant were bid separately by other firms, for a total of $923,906.

The city already has paid $380,000 of the $523,000 in anticipated engineering costs.

At Monday's council meeting, members unanimously agreed to borrow up to $3.81 million, to be paid back over 20 years at an interest rate of 3.08 percent. The Kansas Department of Health and Environment will administer the loan.

Whether the city spends the full $3.81 million depends on whether the city wants to "pay ourselves back" for the engineering work and whether any cost overruns occur, Krull said.

At the urging of council member Velda Roberts, city staff members will undertake a review of residential sewer rates and how they are determined.

Krull agreed that should be completed before the city starts repaying the sewer plant loan in September 2005. Both residential and commercial rates, along with fees charged for new sewer connections will increase to help finance the project, Krull said.

According to one proposal, the base sewer rate of $7.06 for residential customers would increase over time -- until it reached $15 in 2024, the final year of the loan repayment.

But the city has not yet approved a new rate plan.

Current city sewer rates for residential customers are based on the amount of water a customer uses each month. During the summer, both water and sewer rates can increased because some customers water lawns and gardens.

"I think a lot of people are concerned that they pay sewer bills based on water they put on their lawns," Roberts said.

Krull said that a more fair formula might be the so-called three-month winter average. An average is taken of the amount of water used by a residential customer during November, December and January, and that is used as the basis to figure sewer bills.

That way, the use of more water will not affect sewer bills.

In addition to increases in the rates that city sewer users will pay, a combination of other sources will be used to repay the $3.81 million loan, including:

  • Connection fees charged for new customers.
  • A $177,000 capital reserve fund of accumulated connection fees. The city has paid engineering fees for the plant from this fund.
  • A $400,000 grant from the Kansas Department of Commerce and Housing.

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