2009-12-12 / Top News

DPW Eligible for $10.3 Million in Grants, Loans

Money Comes Through for Wastewater Plant
By Karen Gould

Mackinac Island is eligible for more than $10.3 million in loans and grants to repair its wastewater treatment facility. The funding would cover the entire estimated cost of the Island's two-phase project designed to increase the life expectancy of the wastewater plant by 30 years.

A $2,578,000 grant and a $7,733,000 loan at an estimated 3.3% interest will be funded by the American Recovery and Reinvestment Act through the U.S. Department of Agriculture Rural Development. The package could change as the project progresses and it is not a commitment of funds, but can be used for planning purposes, the USDA has told the city.

Receiving the grant and loan is good news, said Tom Lewand, the chairman of the Board of Public Works, although timelines for using the funding are uncertain.

"We are just not going to draw it down all at once," he said. "We can't afford to. If we borrowed $7 million, it would have a dramatic impact on water rates and that just simply is not going to happen."

The project engineer and bond council already have begun to explore the funding stipulations to determine if the city can continue with its twophase approach and if funds will remain available through the length of the project.

"We don't want to do the whole $10 million at once,” said Mr. Lewand, "so we are exploring options to make sure we can take a part of the grant and borrow part of the money and just do it in phases like we talked about doing it before.

"We're trying to phase in a little bit in 2010 and 2011 and doing the rest of it in seven to nine years."

The project is being engineered by John Rafter of Fishbeck, Thompson, Carr and Huber of Grand Rapids.

Improving the reliability of the plant is included in the first phase of the project and is estimated to cost $5.2 million. Work would center on upgrades and repairs and maintenance to the most critical and oldest components of the plant.

The second phase will involve more upgrading to increase the plant's life. The upgrades will allow for future expansion and will slightly increase plant capacity, said Mr. Lewand, but not significantly.

"There is some modest pickup in capacity that will occur because of more efficient new systems," he said. "We're not intending to expand the system."

The wastewater plant serves more than 267 year-around users and about 230 seasonal users. Operations began in 1971 and the age of mechanical equipment varies from 18 to 38 years.

Roughly 62 residential equivalency units (REUs) remain available before current wastewater plant capacity is reached. An REU is the amount of water a typical four-person household would use and equals water used by 2.8 motel rooms or 250 square feet of restaurant space. On Mackinac Island, each REU is sold to users for $6,023.

The city also allocates the distribution of its remaining REUs. Ten are available each year. Two of them are reserved for residential use and the other eight are distributed on a firstcome basis for commercial or residential use.

"We looked at the possibility of expansion and made a conscious decision to not plan for any expansion at this time," Mr. Lewand said. "Whether that will change in the future would depend on the resources of the system, but we feel the rates are as high as they can go, and just maintaining the system, which is what this will do, is about all we can realistically project doing, which is why we've reduced the number of REUs being given out every year."

The federal funds could be available within three months, the USDA has said, but the city doesn't expect engineering to be completed for a while longer.

"As long as the project continues to progress with engineering designs," said Department of Public Works Director Bruce Zimmerman, "another six months of eligibility status will be given."

The grant from the American Recovery and Reinvestment Act only is available if the city agrees to the loan, Mr. Zimmerman said. How that might impact other funding options is not yet clear. He said the city continues to seek other funding options that could have lower interest rates, such as the Michigan Revolving Fund and the Department of Energy.

The Board of Public Works is expected to meet in December, although a meeting date has not yet been set.

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