By Alex Bridges
Strasburg may not need to raise sewer rates to cover the cost to upgrade its wastewater treatment plant.
Town Council learned this week that Strasburg should receive $5.7 million in grant money to spend toward expanding the facility. The town needs to upgrade the plant to comply with stricter state and federal environmental regulations.
Strasburg leaders recently approved a contract with English Construction to build the plant upgrade for $20.62 million. The contract also includes the construction of a new Department of Public Works facility in the North Shenandoah Industrial and Business Park at a cost of nearly $4 million.
The town already received good news about the loan it must take out for the project. Strasburg can borrow the $17 million needed for the project at zero interest for 25 years.
Town Manager Judson Rex said Friday the low cost of the project and the higher grant amount have prompted officials to revisit sewer rates. Rex wouldn't say for certain if the lower cost to the town would translate in no rate increase for next year. The town had estimated that it would need to raise sewer rates over time to cover the debt payments on the project.
"That's something that we're looking at right now," Rex said.
Town officials plan to present a proposed fiscal 2015 budget to council Monday. Council may consider options on sewer rates. Initially, when the town began work on the project, officials estimated Strasburg would need to pay about $810,000 on annual loan payments.
"So, with the additional grant money, the zero percent for 25 years, we feel that annual debt service that we were anticipating is going to be a lot less, maybe around $700,000," Rex said. "That translates into some good savings, and we have other sewer projects and needs but we think that's going to translate into at least being able to keep our rates where they are."
The town currently charges residential customers $21.14 for the minimum use up to 2,000 gallons per month and $11.48 for each 1,000 gallons over that amount. Non-residential users and customers outside town limits pay higher rates.
"Again, we're exploring a couple different scenarios but I think that our rates are in a good position now to fund the debt service that we anticipate for the wastewater upgrade," Rex said.
The Department of Environmental Quality approved the grant through its Water Quality Improvement Fund program. Strasburg officials had projected early on in the process that the town would receive $4.5 million in grant money.
Officials estimate the town needs to borrow between $16 million and $17 million for the project. Town Council plans hold a public hearing May 5 on the borrowing proposal. Council may approve a resolution to borrow up to $17 million.
The amount the town needs to borrow may change by the time the project designs are finalized, Rex said. Officials also need to complete closing documents Strasburg must file with the Virginia Resource Authority, the agency that administers the loan program through the DEQ. The town is borrowing money through the DEQ's Clean Water Revolving Loan Fund.
Council already held a hearing on the loan needed for the public works project and approved the action.
English Construction expects to break ground on the upgrade project May 1, Rex said. This has pushed officials to figure out what it should do with the former town shop that lies adjacent to the excavation site for the sewer plant project. The town had to vacate the building last week after engineers discovered deficiencies in the structure that posed safety problems.
Contact staff writer Alex Bridges at 540-465-5137 ext. 125, or firstname.lastname@example.org