December 11, 2008 in City

No decision on financing for plant

Ideas for sewage treatment project: bonds, Valley help
By The Spokesman-Review
 

Funding options

Finance experts said the county could raise the money needed for the treatment plant by selling revenue bonds backed strictly by money from sewer fees, or general obligation bonds backed by the county’s general fund

Spokane County commissioners had a novel idea Wednesday about helping to pay for the new sewage treatment plant the county’s trying to build: Perhaps the city of Spokane Valley, whose residents would represent about three-fourths of the facility’s customers, could be on the hook for some portion of it, if money gets tight.

The suggestion caught Valley officials “like a deer in the headlights,” City Manager Dave Mercier said.

It was the second surprise from the county to the city officials in two days. On Tuesday, county commissioners voted to stop snow removal in Spokane Valley after this winter, a decision that caught city officials off guard Tuesday evening.

There was no decision Wednesday on getting help with the financing of the sewage treatment plant. County officials floated the idea during a special commissioners’ meeting, but had trouble keeping it from sinking.

The county needs to raise about $145 million if, as expected, it goes ahead with the treatment plant. Commissioners could approve at least the principles of a contract with CH2M Hill as early as next week. On Wednesday, county staff went through a list of concerns raised verbally and in writing during or after the most recent round of hearings.

Finance experts said the county could raise the money by selling bonds or borrowing money from a bank. It could sell revenue bonds backed strictly by money from sewer fees, or general obligation bonds that have the county’s general fund to back up the sewer fees. The county would get a better interest rate on the latter, but that also would use up a significant portion of its bonding capacity, financial adviser Alan Dashen said.

County Utilities Director Bruce Rawls said the county could “look to the city of Spokane Valley to back this up in some way.” The arrangement might be similar to the one the county made with the city of Spokane nearly 20 years ago when the Waste-to-Energy Plant was built, but Spokane Valley doesn’t have a sewer utility so it would have to set up some mechanism to bring in the money.

Neither Mercier’s nor Spokane Valley Mayor Rich Munson’s response was favorable.

“This is a major policy decision. I can’t give you an answer,” Munson said. County officials know sewer rates will go up, but they don’t know by how much; they think county bonds would have a high rating, but they can’t be sure, he added.

“We are concerned that we get ourselves into a situation where we can’t pay for it,” Munson said. “We don’t know what it’s going to cost us.”

The county isn’t even sure it can get a permit, he said.

Commissioners suggested a joint session with Spokane Valley officials to discuss the options further. They also decided to defer until Tuesday their approval of staff responses to public questions about the county’s plans to negotiate a contract with CH2M Hill Constructors Inc. rather than Veolia Water North America to build the facility.

The decision was delayed in part so commissioners could have more time to study the county’s options if it can’t get a permit to discharge into the river.

While some members of the business community had praised the county for the process of studying different technologies and systems, environmental groups argued the county should not sign the contract until state and federal officials settle on standards for a discharge permit the plant would need to put its treated water into the Spokane River.

If it can’t meet those standards and get the permit, the county would need a more expensive process or put the water elsewhere, which would also add to the cost.

“There is some risk” to signing a contract without a discharge permit, Rawls said. But “it’s in the public’s best interest to proceed.”

Jim Camden can be reached at jimc@spokesman.com or (509) 459-5461.


Thoughts and opinions on this story? Click here to comment >>

Get stories like this in a free daily email