Cape authorizes $31 million loan for wastewater treatment plant

Construction of a new $66 million wastewater treatment plant is likely to begin sometime in August, now that the Cape Girardeau City Council has authorized a $31 million loan from the Missouri Department of Natural Resources. The city was also approved this month for a second State Revolving Fund low-interest loan to complete the job for an additional $39 million.

Still a question, however, is whether the final cost of the plant and an additional $5 million in infrastructure work will prompt another sewer rate increase.

On Monday night, the council agreed unanimously to enter into an agreement with the state to repay the loan by July 1, 2034, making 39 semiannual payments, according to finance director John Richbourg. Bid advertisements began Sunday and they will be opened July 3, though the winning bid must come from one of 12 applicants who were prequalified.

City officials described the agreement as the first step of getting the sewer plant built, which would bring the city into compliance with state and federal standards that no longer allow untreated wastewater to be bypassed into the Mississippi River, which happens at the city's existing plant about 30 to 40 times a year.

"It's the first half of the funding that makes the whole thing happen," said Public Works director Tim Gramling.

The debt will be repaid partially from an increase in sewer rates that city users saw last year, which saw the average monthly charge jump from $13.54 a month to $33.23 a month, which pays for roughly 5,000 gallons of water, Richbourg said. The rest will come from the extension of a quarter-cent sales tax. Both were approved by 80 percent of voters in April 2011.

But, with so many unknowns, the city opted not to increase the rates to the full amount approved by voters. If the bids come in high, the city has the leverage to increase the rates again by roughly another $3 to make sure the debt can be paid off, Richbourg said.

Gramling said that may not be an issue. With a struggling economy, he's hopeful an upside could be that contractors are hungry for such a high-dollar project and the bids may come in under the estimated cost.

"These economic times we've seen and what we've seen in the industry, these 12 contractors are probably looking pretty hard for some work," Gramling said. "So we could see some very good numbers."

The prequalified contractors have done projects of similar size and scope, Gramling said, and mainly came from the Kansas City, Mo., and St. Louis areas, though some bids came from Minnesota, Illinois, Indiana and Georgia. A prebid conference for applying contractors will be held in June.

Another unknown at the time of the election was whether the city would qualify for the State Revolving Fund loan, which comes with an about 2.45 interest rate, about 1 point lower than general revenue bonds, Richbourg said, noting that the rate won't be set until the loan closes.

The wastewater treatment plant is the biggest capital improvements project in the city's history. The plant, which will be built at the Public Works Department site at 2007 Southern Expressway, will replace the 52-year-old plant off South Sprigg Street.

smoyers@semissourian.com

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Pertinent address:

2007 Southern Expressway, Cape Girardeau, MO

429 Cooper St., Cape Girardeau, MO