City to borrow $21.5M for water plant project

PORT WASHINGTON - The City of Port Washington is poised to borrow $21.5 million to finance improvements to its water filtration plant next week.

With work on the water plant slated to begin next month, aldermen on April 4 authorized the bonding as part of the Safe Drinking Water Loan the city is using to pay for the work.

The Safe Drinking Water Loan fund provides long-term loans at a reduced interest rate — 55% of the market rate, officials noted.

In Port’s case, the interest rate is projected to be 2.15% over 20 years, officials said.

The loan, which is expected to be finalized on April 24, includes everything from the $18.2 million in construction costs, $960,000 in design costs, $1.2 million in construction administration, $220,000 in closing costs and miscellaneous expenses, as well as a $910,000 contingency fund.

That contingency fund elicited the most discussion, with some aldermen questioning why the city is borrowing for something it may not need.

The contingency fund is 5% of the loan, something required by the Department of Natural Resources, City Engineer Roger Strohm said.

Ald. Dan Benning noted that because of the way the notes are structured, the city will in effect borrow as it needs the funds.

“If we don’t use it or need it, we won’t borrow it,” he said.

That will not only give the city needed flexibility when it comes to the contingency fund, he said, but also allow for so-called value engineering, which reduces costs on a construction project.

The borrowing will be repaid through the water rates. The city last year increased rates by 43.8%, hiking the average bimonthly bill about $42.

That increase was the first of two increases approved last year by the Public Service Commission. The second phase of the increase, which will bring rates up another 22.5%, is expected to go into effect in late 2025.

That increase of $31 per bimonthly period, will bring the average  bill to an estimated $170, according to the city.

The increases are needed to pay for the modernization of the water plant, a project mandated by the DNR, which is requiring that the plant meet current codes and address deficiencies, primarily regarding backup power and changes to the clearwell, that had been grandfathered by the state in the past.

The project includes building an addition to the plant that will take up much of the grassy area just south of the existing facility.

It will also include the replacement of equipment that’s at the end of its life, officials said, noting much of the equipment is at least 50 years old and some is more than 70 years old.

The project will begin with site work in May, Strohm said. The emergency generator needed to ensure the plant isn’t without power is scheduled to arrive on June 28, he noted.

“Six weeks before that, things will start happening,” he said.

In addition to bonding for the water plant project, aldermen approved preliminary steps needed to take out a $12.8 million Clean Water Fund Loan to pay for work at the wastewater plant. That project is also expected to be done this year.