The City of Vernonia is close to completing an agreement with the United States Department of Agriculture (USDA) for funding to complete construction of the Wastewater Treatment Upgrade Project. The funding package includes a large grant award and refinancing of current debt at a lower interest rate.
City of Vernonia Finance Administrator Angie Handegard confirmed that the USDA funding package the City has negotiated includes a grant for $2,230,704. The funding package also includes a loan in the amount of $5,577,000 of which $2.8 million will go towards project construction and $2.7 million will be used to refinance existing debt.
“This funding package will allow the City to finish the Wastewater Upgrade Project without having much, if any, effect on current sewer rates,” said Handegard.
According to Handegard, by securing financing through the USDA’s Rural Development Program at a 1.13% rate, the city will see a reduction in current debt service in the sewer account of approximately 20%, lowering annual payments from $465,000 to $390,000.
The City is refinancing part of the debt they owe to DEQ that was incurred during initial construction of Phase I of the project, construction of the headworks, the flume upgrade, and project design. The interest rate on the DEQ debt was 2.93% plus a .5% annual fee.
The total funding package from USDA totals $7,807,704, including the $2.23 million dollar grant. “The grant portion of the funding package is a huge bonus for the City,” said Handegard. “We don’t have to pay for almost half of the new construction.”
According to Handegard the USDA funds do not become available until the project is complete. The City has secured Interim Financing through DEQ at a rate of 1.06% while the project is under construction, which will be paid off with the USDA funding package at the completion of the project.
Now that project funding is secured, Handegard says the City is preparing to release a Request for Proposal (RFP) for construction work, which is ready to go out to bid and is only awaiting a final review of compliance from USDA.
It is anticipated that the project will begin in early March 2015, weather permitting.