WARSAW — Wheels were set in motion last week for the Warsaw town board to apply for $2.4 million in USDA funding to help upgrade its water treatment/sewer plant

Interim town manager Tommy Combs discussed briefly where the town is currently in the process of making improvements to the Kings Court well and the water/sewer treatment plant. In earlier action taken by the board, members approved spending $100,000 of local money to match a Rural Center grant totaling $500,000, along with the Clean Water Management Trust Fund, grant for $500,000. According to the manager, it now appears that the Clean Water grant will not materialize due to budget cuts.

Tyndall Lewis, consulting engineer with McDavid Associates, was present at the Oct. 12 meeting to to discuss the status of the Rural Center grant and other options for the town to upgrade water quality and sewage treatment. Lewis explained that the first step in the process was for the board to submit a project description to the state clearinghouse. Once approved by the clearinghouse, the application will be sent to USDA for review and approval. This process will require public advertising as well as a public hearing so residents can comment on the project. He explained the urgency in getting this all done as quickly as possible because the USDA grant is part of the stimulus funding and the window of opportunity is limited.

Lewis explained that the project would include rehabilitation of sewage collection, an outfall at the wastewater treatment plant, pump station upgrades with the addition of meter/scada equipment, which will allow the Public Works Department to access water and sewage usage at any time via computer, and an automatic meter read. The project is estimated to cost $2.5 million. Projected revenues presented for the project by Lewis show that the Rural Center grant for $500,000, combined with a USDA grant of $1,125,000 plus a USDA loan of $750,000 added to $125,000 in local funding would cover the costs.

In information Combs provided to the town board, he said, “There is no clarity at this time or a way to better project where this application process will end up. The only way to see what happens is to move forward and take it a day at a time. At best it is obvious that rate increases will be required, but that is the cost of grant funding. Many people believe that once the stimulus funding runs out it will be more and more difficult as time moves forward.”

The McDavid representative expressed that the current rate charged by the town does not meet the requirement of the USDA grant. “In our preliminary study, we believe the current rate to be $27.33. The average rate must be $32 by the end of the project to receive USDA approval for the grant. It appears that we need to look at a 10 percent sewer rate increase for the next two years to meet this requirement.”

Both Lewis and Combs stressed that it is important that the town understand the situation. They explained that if you raise rates gradually it is better than a one-time hit of 20 percent. If the town does not raise rates, when it takes on a large capital project it will be offered loan funding in lieu of grant funding and the required increase in user rates will be designated for the additional debt service to repay the loan.

“The town is financially much better off to routinely and consistently raise rates each year in reasonable amounts and use the income to upgrade and improve the town utility system or create reserve funds to assist with capital projects rather than keeping rates constant and then be faced with a huge rate increase to finance a capital project and have to use all the additional income from the rate increase to service the new debt,” added Lewis.

Mayor Win Batten explained that as the town grows and the water needs increase, it would be necessary to bring on the two wells that the town currently uses but cannot utilize due to the extreme levels of iron found in their water. “The Kings Court well has the capacity now to provide the town with all the water needs that can be seen in the near future. We just have to be able to have the capacity to make the water usable to the public.”

After hearing the recommendation from the town staff and the consulting engineer, the board moved unanimously to give them permission to proceed with, and submit, the clearinghouse request. Lewis reminded the commissioners that there is nothing binding regarding the clearinghouse submittal and the town has the option to decline any offer that is made throughout the entire process.

To contact Billy Todd, call 910-592-8137 ext. 117 or e-mail sigeneral@myclintonnc.com.