Question 5: Bond for waste water, drinking water facilities

By Natalie Bazinet
Staff Writer
    At the bottom of their referendum question ballot, Mainers will have the option to vote yes or no on a $7.9 million bond that will replenish the revolving loan fund for public drinking water systems and for wastewater treatment facilities.
    Formally, Question Five will read “Do you favor a $7,925,000 bond issue to be expended over 2 years for revolving loan funs for drinking water systems and for wastewater treatment facilities, which will make the State eligible to secure $39,625,000 in federal grants?”
    It’s no coincidence that the $7.9 million amounts to 20 percent of the potential federal grant funding; according to officials with the Maine Water Utilities Association, Question Five is the 20 percent match needed for the 2012 -13 State Revolving Fund Capitalization Grants.
    The $7.9 million bond actually allocates funds for two separate revolving loan funds — $3,590,000 for the Department of Health and Human Services over two years for the revolving loan fund for drinking water systems, and $4,335,000 for the Department of Environmental Protection over two years for the revolving loan fund for wastewater treatment facilities.
    These programs allow for departments and utility districts to apply for loans that fund wastewater or drinking water facility improvements and upgrades.
    This summer, for example, the Caribou Utilities Department completed a water main replacement project that was funded by a loan from the State Revolving Loan Fund (SRLF), through the Maine Drinking Water Program which is through DHHS.
    “The pipe we replaced on High street, at least part of it, was some of the original water pipe that was place in Caribou in 1889,” explained Caribou Utilities District General Manager Alan Hitchcock.
    By utilizing the loan fund, the district was able to obtain a loan at approximately 1 percent.
    Hitchcock explained that had they not been able to access a low-interest loan through the SRLF, the district would have had to borrow through conventional borrowing with much higher interest rates.
    Having borrowed $431,420 for the project at an approximate 1 percent interest with a 20-year payback period, the water main replacement will cost roughly $501,233.
    “The project was crucial,” Hitchcock explained. “It’s a fairly high density commercial area,” he said, explaining the structures that line the street include a supermarket, the fire department, a bank, the library, Caribou’s municipal building and a gas station, as well as various shops, stores and residences.
    “It is important that we replace infrastructure on a regular schedule, and the ability of districts to borrow from the revolving loan fund allows us to do this at a lower cost than if we had to borrow commercially — and that’s reflected in the rates we charge to our customers,” Hitchcock explained. “If we had to borrow at higher rates, our customers would have to pay more in our rates.”
    “The bond issue allows replacement while keeping rates as low as possible,” he added.
    In neighboring city Presque Isle, the Superintendent of the Presque Isle Water District Steve Freeman explained that his district was able to obtain SRLF funding for a project they completed this summer as well, a reconstruction project on South Main Street right in front of the University of Maine at Presque Isle campus that utilized both water and sewer loan funding.
    Though the final cost of the project was less than anticipated, the district originally secured about $100,000 for wastewater improvements and $686,000 for drinking water improvements — loans that were secured with a very low rate of approximately 1 percent.
    “It’s almost 2 percent below the market rate, so it’s a good time to do projects if you have projects to do,” Freeman explained.