Water plant upgrades, old debt are concerns
Staff reporter
City water treatment plant improvements, costs, and bond refinancing were discussed Tuesday by Hillsboro City Council members.
Refinancing of a bond was approved following remarks made by mayor Delores Dalke.
Dalke said she was concerned about the city's debt load and the refinancing of a 1981 bond.
"We're rebonding or refinancing $1,645,000 of debt created in 1981," Dalke said, "and then we'll be spending over $3 million for another debt. We're never going to get caught up."
Dalke said the city needs to do some planning to pay off debts before refinancing occurs again.
"Updates aren't going to last 40 years (the life of the bonds)," Dalke said. Morgan Marler, water plant supervisor, said generally updates are required about every seven years.
Jerry Rayl, senior vice president of Gold Capital Management, presented a proposal regarding the refinancing of the 1981 bond for water plant upgrades.
The bond had been reissued or refinanced in 1996 to pay for water plant improvements.
Rayl said some lenders are forcing cities to consider a long-term loan at a low interest rate.
"The cities never get the loan paid off before the next update," said Rayl.
Rayl suggested additional funds be set aside to pay off loans early.
"We're going to have some tough sessions ahead of us to make some decisions," said Dalke. "In 10 to 14 years we'll be back doing this again and this bond still won't be paid off."
With the lower interest rates, the debt service schedule reflected the pay-off date as one year earlier than the 1996 bond. The city's payment will be the same.
The city has applied for a loan and grant through Rural Development for the water plant upgrades.
Dalke asked Rayl if there was any savings in reissuing the bond one time or numerous times.
"What if Rural Development doesn't come up with the funds we need and we need more bond money?" asked Dalke.
Historically, Rural Development is able to adjust the loan to cover the expenses, said Rayl. He added the cost of issuing the bonds is a percentage and there is no anticipated more expense if more bond money is needed at a later date.
Interest rates may increase, said Rayl, and encouraged the council to make a decision.
Steve Garrett, city administrator, and Marler reviewed a list of water treatment plant upgrades with the council.
Upgrades discussed were replacement of existing raw water pumps at Marion Reservoir, construct an additional solid contact unit, install domes on two solid contact units, install new flash mixer and motor, various chemical feed upgrades, add a powdered activated carbon injection feed system, two filters, two UV (ultraviolet) units, baffling to the clear wells, a pump on Peabody's clear well for back-washing filters, electrical and controls upgrade, turbidimeters installed on all filters, stand-by generator that would provide electricity to treatment plant, and telemetry to towers and pump houses.
Replacement of distribution lines will include installation of an eight-inch water line from Lincoln Street to Jefferson Street. Currently, a four-inch water line runs from Lincoln to D streets, causing water pressure problems.
An eight-inch water line off A Street, replacement of water lines at Willow, Juniper, and Ash streets, and extension of lines in Carriage Hills and Willow Glen to improve water quality were proposed.
Funds for distribution lines would come from bond money.
The proposed upgrades have been sent to Kansas Department of Health and Environment for approval.
