City Councilman Steve Stefanovich, left, and Mayor Lew Starling listen to a report on moving forward with preliminary work for a multi-million dollar water treatment plant expansion.
“We feel like there are some opportunities for grants and low interest money,” city manager John Connet told the Council at its monthly meeting Tuesday.
Wooten Company officials spoke to City Council during a special meeting last month about a $4.6 million water treatment plant expansion that would meet the maximum demands of the city of Clinton for the next 20 years.
The proposed project consists of the expansion of the water treatment plant by 1.5 million gallons per day, along with the construction of three new deep wells and three new shallow wells, with related piping. Additionally, a redundant water line would be built extending from the water treatment plant to the city.
With the proposed 1.5 million gallon per day expansion, the 12-hour water supply would be able to increase to 4.37 million gallons per day. A water system must meet the maximum daily demand (MDD) and the expansion would be able to serve that demand until 2030.
According to Connet, following a Nov. 12 special meeting, city staff contacted USDA and local banks about financing for the water plant expansion. It received quotes from RBC (4.9 percent for 10 years), BB&T (4.97 percent for 20 years) and First Citizens Bank (5.75 percent for 15 years).
The city manager said USDA’s interest rate is by far the lowest at 3.37 percent, and it is for 40 years with potential grant funding.
City officials have been told USDA may provide up to a 45 percent grant and low interest on a loan. An annual 100 percent loan payment would be $218,800. A 45 percent grant would mean an annual payment of $120,630, over 40 years.
During last month’s meeting, mayor Lew Starling and Councilman Steve Stefanovich both expressed apprehension over entering into a long commitment.
“We would essentially be doubling the cost over 40 years,” the mayor said. “There’s a ton of interest in there.”
Connet said the loan could be paid back sooner, with the city likely having the option to set up its own debt schedule and make larger payments. He reiterated that point Tuesday.
“USDA is still the low interest rate but the term is still long,” stated Connet, who added the city would be able to pay it off early. “USDA would not penalize us for paying the loan off early, which would be our recommendation.”
He requested permission to move forward with completing the preliminary engineering report, necessary environmental documents and the USDA funding application.
The cost to move forward with preliminary work is not to exceed $33,500, which is available in the city of Clinton’s Water and Sewer operating budget.
Wooten Company engineer Chris Thomson has told city officials that, if they decide to move forward with the $4.6 million expansion, it would be doing so at the “most opportune time.”
“Although it is a costly project, it is an advantageous time to proceed with it,” noted Thomson. “It’s a good solid time as far as USDA loans go.”
A good time for loans doesn’t necessarily mean an equally opportune time for grant money, Connet relayed to the board. The city manager spoke to Ed Causey, area director for USDA, and he said grant money was not as substantial as were loans.
“The grant money is limited,” Connet remarked. “Mr. Causey felt like all grant money would be obligated by February.”
Connet said no additional work would be completed until it is determined how much grant money would be available for the project. Once a number is obtained, then the city can proceed with the project.
“Once we hear back from USDA,” said Connet, “we’ll come back to Council for further approval.”
Chris Berendt can be reached at 910-592-8137, ext. 121, or by email at sicrime@myclintonnc.com.
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