The Haines Borough Assembly introduced an ordinance recently that would accept a $1.7 million loan from the state to improve the municipality’s dilapidated wastewater treatment plant.
The low-interest loan, from the Alaska Department of Environmental Conservation, would be used to fund the first phase of the plant project – replacement of the failing building.
The structure’s painted steel supports are rusting and eroding to the point where the roof began to cave in during the winter of 2013-2014 after heavy snowfall. Staff had to shore up the sagging roof with a timber support beam.
The borough has struggled for several years to decide how to fund the necessary improvements to the structure. It applied for a $2 million state grant for the past two years, but was denied. The assembly recently raised water and sewer rates to begin saving money for the facility’s maintenance, but those just went into effect May 1.
The loan represents a “Plan B” if the borough can’t secure less-costly forms of funding soon, said chief fiscal officer Jila Stuart. “It’s obviously better to get grant money if we can get grant money.”
The loan acts sort of like a line of credit which the borough can draw from if other funding sources are insufficient in covering project costs, she said. The borough isn’t required to spend all or any of the loan.
“It’s kind of a fallback plan. I’m pretty sure we will have to use the loan to make up some of the cost of construction, but until we put it out to bid and find out how much it is actually going to cost and find out whether we get a Municipal Matching Grant, we don’t know how much of the loan we will need,” Stuart said.
Borough manager David Sosa has recommended accepting the loan but limiting the amount to $1 million to minimize the requirement for a rate increase, which would be borne by water and sewer customers.
The borough budget for the upcoming fiscal year, passed by the assembly last month, also includes a plan to spend $330,000 of the sewer fund’s reserve and $69,000 from the borough’s capital improvement project fund on the first phase of the wastewater treatment project.
The borough also will apply again for the state matching grant that it has been denied two years, Sosa said. “If a grant is awarded, (the borough) can use funds from the grant to recoup any expenses incurred within the 120 days preceding the effective period of the grant,” he said.
Last week, engineer Jim Dorn and electrical engineer Ben Haight visited the wastewater treatment plant with plant operator Scott Bradford and interim public facilities director Brian Lemcke. The group was devising a plan on how to keep the facility operational while the building that houses the machinery is being replaced.
The four men walked through the plant Tuesday, the insulated walls ripped and bloated with moisture, the steel supports eaten away by rust and the corrosive gases from the treatment process.
Lemcke said he hopes to have the first phase of the project out to bid by this fall, with construction slated for spring.
“In my position, I don’t care how we fund it, but we have to, or the thing is going to collapse,” Lemcke said. “This isn’t a project that can be put back.”
According to charter, the assembly is required to authorize the borrowing of money via ordinance. The $1.7 million loan ordinance is scheduled for its second public hearing Tuesday, June 23.