City to use $30M state loan to replace water treatment plant; rate impact unclear
Using a loan from the state of Tennessee, the city of Oak Ridge is replacing its 1943 plant that provides the city with drinking water.
"My only concern is that the current facility lasts until this one's ready," City Council member Ellen Smith said at a special City Council meeting on June 21.
"We're going to move forward as fast as we can," Oak Ridge Mayor Warren Gooch said.
The resolution to take out the loan and a memo explaining it are available on the city of Oak Ridge website attached to that meeting's agenda. The loan from the state is for $30 million, while the project's full cost estimated at $53.6 million.
During the recent Oak Ridge City Council meeting, city of Oak Ridge Public Works Director Patrick Berge said erosion threatened the 1943 plant, which originally belonged to the U.S. Department of Energy.
Oak Ridge City Manager Mark Watson said it is cheaper to build a new plant than to repair the old one. He said the old one used parts that would have to be custom made if the city had to replace them.
Berge said the city will conduct a study about the project's effects on water utility bill rates for Oak Ridge residents.
"There's a likelihood rates will increase," he said, but like Watson, he said building a new plant is the cheapest option.
Berge said the builders plan to break ground for the plant in November and have the plant ready to provide water by spring of 2025. He said the current staff will continue to work at the future plant.
Oak Ridge-based Jacobs Engineering Group designed the plant and will be involved in construction administration.
"We have full confidence that Jacobs can complete this project and do a good job for the city," Berge said in an interview with The Oak Ridger.
The state will set a fixed interest rate when it approves the loan. It's anticipated to be 2.48%.
Sewer improvements
At its recent meeting, City Council also approved a $1.9 million loan for sewer system improvements. The project includes rehabilitation or replacement of up to 350 manholes, rehabilitation of about 10,000 linear feet of sewer mains, and evaluation and design of improvements needed for the Emory Valley Sewer Pump Station, a memo included in the same meeting agenda stated. Ratepayers will pay for paying back this loan.
As with the drinking water plan loan, the state will set this rate at the meeting in which it approves the loan. This rate is estimated to be 2.42%.
As with the water plant loan, there will also be an administrative fee of .08% annually of the outstanding loan balance. Monthly Interest and fees on the outstanding loan balance begin once loan draws occur. The city can prepay all or part of the loans.
Ben Pounds is a staff reporter for The Oak Ridger. Call him at (865) 441-2317, email him at bpounds@oakridger.com and follow him on Twitter @Bpoundsjournal.
This article originally appeared on Oakridger: City using state loan to replace water treatment plant; may raise rate
