Cape sewer plant project approved for low-interest government loans

Friday, July 1, 2011

When Cape Girardeau officials sent out an application for a low-interest government loan last year, public works director Tim Gramling said he would have been thrilled if they were approved for half of the $72 million needed to pay for a new sewer treatment plant and other systemwide improvements.

Now word has come from the Missouri Department of Natural Resources that the city has been given the green light for $25 million in loans this year and as much as $45 million next year -- which would be almost enough to cover 100 percent of the project.

"This is much more than we expected," Gramling said.

What's good news for Gramling may be even better news for those who pay city utility bills. The savings caused by the lower interest rates has Gramling optimistic that further rate increases won't be necessary. There's even a slight chance, he said, that rate increases set to take effect today could come down.

"That's an analysis we'll have to do," Gramling said. "I'm hesitant to say they'll come down, but they could. But I'm optimistic that they're going to be significantly lower than what we were looking at."

Earlier this month, the city was approved for two phases of state revolving fund loans -- a guaranteed $25 million and as much as $45 million next year, depending upon how much federal and state funding is available.

The Clean Water State Revolving Fund Program is a partnership between the U.S. Environmental Protection Agency and each state, said DNR spokeswoman Renee Bungard. The act is the primary federal legislation for protection of surface waters, and Cape Girardeau was eligible because the new sewer plant would keep untreated sewage from bypassing the system and being dumped into the Mississippi River. With the existing plant that has happened as much as 30 to 40 times a year during heavy usage times. A new plant would increase capacity and keep that from happening, city leaders say. The new plant should be finished in 2014.

The low-interest loans are 30 percent of the market rate, she said, which provides a hefty savings for communities that participate.

On July 1, Cape Girardeau residents will see sewer rate increases of $20 per month on average toward the new plant, an amount on top of the annual adjustment based on residents' most recent winter usage. The $20 portion was just the first planned increase, which is being used to pay for the design of the new plant. The preliminary design phase, done by St. Louis-based Jacobs Engineering, is costing the city about $170,000 and the main design costs more than $2 million.

The city was planning on looking at another increase when the final numbers came in from project bids, Gramling said. Those increases may be less or not have to happen at all, he said.

"When we were going around talking to voters, we were talking worst-case scenario so no one was surprised," Gramling said. "The picture's looking much better than it was. Now that we have this news, it could mean a fairly significant difference in rates. This could be a very good thing for the city."

About 80 percent of Cape Girardeau voters approved the plan in April, saying yes to two propositions that provide a plan to pay for the new plant and a multitude of sewer line improvements. The city said at the time that the average monthly sewer charge would go up $23 a month if city voters approved the measures. Voters approved the extension of a quarter-cent capital improvement sales tax and a proposition that authorized $72 million in bonds. The sales tax would be used to repay the bonds.

Another development that has given Gramling cause for optimism is that other similar projects are coming in well under bid. He said another sewer plant project near St. Louis was expected to cost $108 million but came in at $80 million. If that happens, it could have a greater effect on sewer rates, he said.

"It's still kind of a complex situation, but I guess the bottom line is now we know that we qualify for more SRF money than we thought," he said. "That means we don't think the rates are going to be as high as we thought."


Pertinent address:

2007 Southern Expressway, Cape Girardeau, MO

Map of pertinent addresses

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