Half a decade ago, Wrangell began raising federal grants and loans to help fund a much-needed upgrade to the drinking water plant. But the factory has not yet been built, or even designed. To avoid losing the funds, the Wrangell assembly approved the expenditure of approximately one million dollars to begin designing a new water plant.
Since it was commissioned more than two decades ago, the Wrangell sewage treatment plant has been struggling. Sometimes it struggles to keep up with peak demand. At other times, it fails to treat Wrangell’s drinking water to the regulator’s standards, potentially increasing the risk of cancer in the community or leading to other health issues.
In 2018, the Wrangell assembly approved a plan for a new water plant, with a technology called dissolved air flotation (DAF), where contaminants are clumped together with chemicals and floated with air bubbles, then skimmed to the surface.
At the time, officials estimated that the new factory would be ready in three years.
But it’s been almost four years, and the plant hasn’t gone beyond preliminary engineering.
Between 2017 and 2019, the local government of Wrangell secured millions of dollars in federal grants and loans from the U.S. Department of Agriculture’s Rural Development Program and Economic Development Administration to help pay for the design and construction From the factory. The borough has already secured a one-year extension of USDA funding, which totals approximately $7 million.
Borough Director Jeff Good told the assembly at a meeting last month that they were applying for another extension of a portion of federal funding for the U.S. Department of Agriculture’s Rural Development Program. Agriculture. But for that to happen, they need to commit $1.1 million in engineering to design the plant, by mid-February.
“It’s part of the first phase of the water treatment plant,” Good explained, “and it’s a USDA requirement, kind of a stipulation for extending grant funding that we asked.”
$119,000 of that $1.1 million prize comes from the Borough’s water fund reserves, supplemented by a $385,000 loan from the community’s general fund and just over $600,000 in relief federal in the event of a pandemic.
The assembly pledged to replenish the $385,000 general fund within 10 years. This has caused some concern among elected Wrangell leaders, including Mayor Steve Prysunka, as it is essentially an interest-free loan.
“What I mean is not that I have a problem with the expenses of this part of the project, not at all, and I don’t want us to lose our funding because [the engineering is] delayed,” Prysunka explained. “I just really want to point out that I don’t want to be in the habit of loaning money out of our community vault without interest.”
Assembly Member Anne Morrison said she agreed and added that the community should establish a clear policy to replenish the funds, with interest. But that doesn’t change the immediate need for a new water treatment plant.
“We’re in a place where we have no choice but to do this,” Morrison said, “and I’ve heard several community members wondering when we’re going to do this. It’s only been how many years?
The assembly unanimously approved the $1.1 million expenditure at its January 25 meeting. This will allow Wrangell to move through the engineering design and tender process for a new plant. Then there will be construction and administration costs, estimated at at least $14 million.
The total cost of the plant was originally expected to be just under $10 million. But that was in 2018 and the costs have been rising over the past four years. More recent estimates have pushed the price up by $15 million, the majority of which could be repaid with federal grants or low-interest loans.
How much would that cost the taxpayers of Wrangell? Borough CFO Mason Villarma told the assembly during a business session last month that he estimates a rate increase of at least $10 (a rate increase of nearly $20 %) per month for most clients to repay a $3.8 million federal loan. But that may not be the only debt Wrangell will have to incur to build a new factory.
That $10 figure, however, was a welcome revelation to Assemblyman Dave Powell, who said he thought the cost to Wrangell residents would be much higher.
“It’s actually a lot less than I thought,” Powell said after the work session.
The $3.8 million loan comes from the US Department of Agriculture. Under this loan, water rates would actually have to be increased beyond what is needed to repay the loan within two years of the construction of a new water treatment plan. This is because the loan requires water rates to ultimately be 1.5% of median household income (which is $50,389 in Wrangell).
Rethinking water rates will also be an opportunity to rethink Wrangell’s rate structure, Villarma told the assembly. While the island’s largest water customers – fish processing plants, ports and the marine service center – have metered water rates, residential customers pay fixed charges.
Over the years, Villarma told the assembly that the water pricing system for Wrangell’s businesses had become too complex. At the beginning of this year, there were 42 different water rates paid by water customers, many of these different types of companies, government agencies like the US Forest Service or public schools.
The most recent water rate increase in Wrangell came into effect in July 2019.
Even with the start of the eight-month engineering process for a new plant, a new plant could take years to come on stream. Some parts of the factory need repairs before that.
In recent months, the Wrangell assembly has approved $75,600 for cooling systems to try to fix problems with ozone generators, one of the first steps in the water treatment process.
Wrangell officials say they hope to reach an agreement with DOWL engineers in Anchorage for the plant design process by Feb. 18. Once they pass this milestone, the USDA has committed to adding another year to the funding schedule.
Contact KSTK at [email protected] or (907) 874-2345.