Greeneville Water Commission May Borrow Money to Cover Sewer Project Costs | Local News

The Greeneville Water Commission can borrow money through a bond issue to help pay for the many sewer projects it needs to tackle in the coming years.

The motivation behind the move comes from a study by Jackson Thorton, an accounting and consulting firm that presented its findings to the Water Commission on Tuesday.

The study shows that the sewerage system will require more funding than it will receive in revenue in order to complete all maintenance work on the sewer lines and treatment plant planned by the Sewerage Commission. ‘water.

According to the Water Commission’s five-year capital projects plan, it will need about $8.2 million in revenue each year to pay for the projects. However, the utility currently only generates about $4.1 million in revenue each year.

According to Laura White, superintendent of the Greeneville Water Commission, projects expected to be funded in the future include the installation of a screw press at the sewage treatment plant to replace aging centrifuges and treat solid waste, and replace and rehabilitate sewer lines throughout the Greenville Sewer System, including downtown.

“The projects we do are things we can’t take away. Sewer is so expensive. These are things we have to do. We have a 38-year-old factory and lines that are 70 and 80 years old, so maintenance costs are high. We kind of have to catch up,” White said.

White noted that when she started working at the Water Commission in 2010, there hadn’t been a sewer rate increase for almost 10 years and there was no organized sewer line rehabilitation plan. This led to fares well below cost and older lines not regularly maintained. According to White, in the past, aging sewer lines were not well maintained due to the lack of a line rehabilitation plan. The lines would simply be patched up when they suffered breakdowns and leaks.

Today, the Water Commission has found itself in a difficult position due to years of low tariffs and poor maintenance of aging lines.

A 15% increase in water and sewer rates to be carried out over three years was approved by the Greenville Mayor and Aldermen’s Council in August, and this rate increase will be enough to keep the water system running smoothly. maintained, according to the study.

However, the cost-revenue gap in the sewer system remains even after this recent rate increase due to the number of projects associated with supply chain issues and material cost inflation.

“Anything that has sewers right now is so much more expensive, even compared to water,” White said.

The Water Commission has had to increase its budgeted amount for sewer rehabilitation each of the past two years to try to keep up with rising material costs.

The Jackson Thorton study posited the possibility of borrowing money to meet funding goals, rather than sticking sewer customers with a rate increase of up to 80% to cover costs.

The water commission will explore the idea.

Board members Johnny Honeycutt and Doug DeBusk asked White to contact Wiley Brothers, a Nashville-based company that deals in utility bonds, about the possibility of issuing a bond of up to $10 million. of dollars.

White said that in preliminary discussions with the company, it was estimated that a 20-year bond could be secured at a relatively low interest rate of 1.2%.

White thinks it makes sense not to pay for every project upfront and avoid a massive rate hike.

“What we want to be able to do is pay for these projects and assets over the life of the asset rather than paying for everything now. People are going to benefit from these rehabilitated pipes and plant improvements. of waste treatment for 30 plus years. We don’t want to burden our current customers with the full cost of these things while future customers who move here will reap the benefits,” White said. “We can spread that cost .”

It is estimated by Jackson Thornton that each million dollars borrowed will cost approximately $60,000 in annual debt service.

“Things in this plan are things that we cannot eliminate. Sewer line replacements need to be done. When we fix one, there are 15 more lined up right behind it,” White said. “It’s not a wish list. It’s something we have to have and do to work.

Comments are closed.