Council approves loan for wastewater treatment plant

During last week's session of Clatskanie Town Council, City Manager Greg Hinkelman made a presentation regarding a Wastewater Treatment Plant Funding Plan to Council. This was to set up Resolution 2025-16, or a State Revolving Fund (SRF) loan for a new sewer plant. Using a 16-slide Powerpoint presentation, Hinkelman gave the current plant's history, including its inception in 1977. Though the plant was "state of the art" at the time, increased environmental regulations, according to Hinkelman, "have made the plant obsolete."

The city manager also noted the plant started having operating issues in 2019, as well as DEQ (Department of Environmental Quality) violations. According to Hinkelman, the plant has seen six Class 1, four Class 2, and three Class 3 violations since 2021. "When we did the Facility Master Plan in 2020, one of the findings was that the existing plant is experiencing structural failure," said Hinkelman. "That alone warrants us to build a new plant. The existing plant, built in the 1970s, was built without redundancies, which was the design standard at the time. The plant, being built in the 1970s, is operating beyond its design specifications."

During his presentation, Hinkelman noted the 2020 Facility Master Plan "estimated a new plant would cost just under $10 million." In 2021, $10 million in ARPA funds were granted by legislature. Later, a CDBG (Community Development Block Grant) was awarded in the amount of $720,000 in order to "conduct the design and engineering for the new plant." During this design, according to Hinkelman, soils were found to be "liquifiable," resulting in an additional $6 million cost in construction.

Having conducted an RFP (Request for Proposal) for plant construction, the lower of the two bids that came in was for $26 million. This was due not only to the liquifiable soils but also a nine percent rate of inflation since the Facility Master Plan was conducted in 2020. Noting he has "tried for the past two Oregon Legislative sessions" to get the additional funding for the plant, Hinkelman admitted both attempts failed. Seeing options for funding were limited, Hinkelman began talks involving the SRF in 2023.

"We are having to fund the new plant with a loan from the State Revolving Fund," said Hinkelman. "The loan amount is $20 million. That amount, divided among all the sewer plant hook-ups, will equate to $120 per month for 30 years. We will work to ease into that with a slow increase to be implemented over the course of two years so it is in place by the time we are ready to begin paying the loan back."

The SRF loan's terms are for 30 years with an interest rate of 2.06 percent and a service fee of .05 percent, resulting in an annual debt service of approximately $900,000 per year. Hinkelman noted the loan will "kick in one year after the completion of the project," which, according to Hinkelman's presentation, is projected to be December 2027, meaning the 30-year repayment of the loan will start December 2028.

Following Hinkelman's presentation, Council approved Resolution 2025-16. Following the motion, Hinkelman said to Council, "That's probably the biggest bill you've ever signed off."

While the servicing of the loan will begin taking place in late 2028, Hinkelman, during his presentation, said they'll have "one more crack at the Legislature during its 2027 session. For more info, visit cityofclatskanie.com.