November 22, 2014
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Sewer facilities plan drafted, funds could be problematic

Add up the 2012 project priority list of wastewater projects statewide, including $11.5 million of improvements to the Warwick treatment plant, and the total tops $1.2 billion.

That far exceeds the funds available to the state Clean Water Finance Agency, the source of low-income bonds municipalities and agencies use to finance, usually over a 20-year period, sewer construction, system improvements, storm water collection systems and community septic system loan programs.

Those funds flow into the state from the Environmental Protection Agency. The federal funds require a 20 percent match from the state. But both the feds and the state are looking to make cuts.

Yet Warwick, like other municipalities, is faced with Department of Environmental Management mandates to reduce the levels of nitrogen and phosphorous discharged into rivers and the Bay.

Will the low-interest loans that have been used to finance so much of Warwick’s sewer system be available when the authority implements a newly completed facilities plan that among other projects calls for $11.5 million of treatment plant upgrades in three years? And if the low cost financing is not there, how much more will the Warwick Authority need to raise user rates, which are already increasing and are projected to take a big bump in 2014?

Among the many municipalities and agencies also looking to use agency financing is the Rhode Island Airport Corporation that is looking to borrow $25 million to build a storm water runoff system that will collect and treat deicing fluid.

“Those are very good questions,” muses Anthony Simeone, executive director of Rhode Island Clean Water Finance.

The pinch of loan requests exceeding available funding is already being felt.

Simeone said the agency has the capacity to fund $72 million of the $167 million in pending requests.

“We’ve met with borrowers and asked them what do you need this year to cover cash flows,” Simeone said last week. One Warwick request in the pipeline for funds is the $2.4 million used to rebuild the Cedar Swamp pump station that had a catastrophic failure last year, threatening a shutdown of almost half of the city’s sewers. But will the loans be there for other projects?

Simeone wonders. Funding through the State Revolving Fund, SRF, is drying up and borrowers have to turn to straight market loans. Under the SRF, interest rates are two thirds of the market rates; meaning borrowers are paying interest rates in the range of 2.5 to 3.5 percent. Clean Water pays .07 percent on EPA funds used for wastewater projects and 1 percent for drinking water projects.

Started 20 years ago, the agency has assets of $1.2 billion in loans. Payments and interest earned go back in replenishing the fund.

EPA funds are in the range of $8 million to $12 million annually that need to be matched by 20 percent in state money.

“We’re rapidly running out of that, too,” Simeone says of state funds.

Save the Bay will be lobbying the General Assembly for a $40 million clean water bond, Jane Austin, senior policy analyst for the organization, said last week.

Austin observed that stimulus funds were used to finance a number of clean water projects, but that now that those funds have been depleted, “we have to replenish the state bond authorization.”

How the higher cost of financing improvement projects could impact Warwick sewer rates is unknown at this time.

There’s no escaping a significant increase in 2014 under the facilities plan filed Dec. 1 with DEM and available for review at the Warwick Sewer Authority and the Warwick Library. The plan can also be viewed online, although Janine Burke, Warwick Sewer Authority executive director, cautions because of its size “it’s going to take time to download.”

“We want to give folks enough time to be aware of [the plan] and the public hearing,” she said. A public hearing, which has not been scheduled yet, will be held early next year. That will be followed by a 30-day comment period, at which time it will be adopted.

Comments on the plan are to be submitted in writing and Burke is hopeful of input from some authorities in the field, including Scott Simpson, who is the superintendent of the West Warwick sewer system and Ed Soltys, project manager for the Woonsocket system. Both are Warwick residents.

But under the consent agreement reached in 2008 with DEM, the authority has no option but to meet new discharge levels for phosphorus and nitrogen of 0.1 mg/l and 8.0 mg/l, respectively. The facilities plan defines a strategy for completing those upgrades while taking into account future flows and potential changes in future effluent limits.

Once a plan is in place, design of the project will begin with the intention that the project will be ready to advertise for bids in the summer of 2013.

“And that’s right around the corner. We’ve got to start lining things up,” says Burke.

Construction would start after a contract is awarded with the bulk of added expenses coming in 2014. In anticipation of those costs, the authority has projected a series of rate increases, with the biggest hit for residential customers coming in 2014. The residential consumer rate, which is now $38.81, would climb to $45.95 per 1,000 cubic feet of water used. The set residential customer charge would climb from $25.75 to $30.49 by 2014. After 2014, both the usage and set residential rates would decline slightly. Commercial rates, which are tied to the size of water meters, as well as water usage, would continue to increase through 2016.

Asked how Save the Bay could support such a substantial investment in wastewater treatment or only such a minimal reduction in pollutants when the money would have greater impact if sewers were extended, Austin said, “Warwick needs to do both, treat the waste to a reasonable standard and extend sewers.”

While Austin said the required reductions in nitrogen and phosphorous, “may sound like small amounts, it doesn’t mean they don’t have significant impacts in the aggregate.”

As for what it will cost users, Austin observed that the Warwick Sewer Authority didn’t raise rates for 18 years.

“It’s not going to get any easier,” she said, “what they’re being asked to do is getting more complicated.”

In addition to calling upon the authority to remove greater levels of pollutants, she noted that Warwick is also faced with improvements aimed at protecting vulnerable pump stations in low lying areas.

Angelo Liberti chief of surface water protection, at DEM said that while the Warwick plant is “awfully close to compliance” on the level of nitrogen discharge, it has a ways to go to meeting phosphorous requirements. He said the standard is based on meeting new EPA guidelines. Phosphorous promotes weed growth in the river and that is of concern, he said.


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