The city of Millwood has until Oct. 1 to decide if it will accept a Drinking Water State Revolving Fund loan from the Washington State Public Works Board.
The $448,208 loan would fund the entire Buckeye Avenue water main replacement project, tentatively planned for next year, from design to construction.
“This water main is cast iron,” Necia Maiani, engineer at Welch Comer and Associates said during Tuesday’s City Council meeting. “It’s over 60 years old so it’s beyond its useful life and needs to be replaced.”
The project would replace 2,700 lineal feet of waterline, replacing the 6-inch main with an 8-inch for fire flow requirements.
“This would take about 30 percent of the city’s remaining cast iron mains in your system out,” Maiani said. She said the project would improve overall water flow.
The 20-year loan gives the city a four-year deferral period. Construction must be completed within the deferral period. The annual interest rate is 1.5 percent for 24 years, with an annual loan payment of $26,106.
“Public works trust fund zeroed out in the state budget,” City Attorney Brian Werst said. “And that funded a fair amount of water-related, sewer-related projects. These moneys are going to be highly competitive in the next couple of years.”
Maiani estimated that with the loan, water rates would increase $2.56 per month per account. As a comparison, if the city decides to decline the loan and raise water rates to pay for the project within 10 years, the city would have to increase rates immediately to an estimated $4.88 per month per account.
City Planner Tom Richardson said the city is planning to conduct a water rate analysis next year.
The council decided to wait to decide on the loan to clarify a special term requiring the city to maintain a 12.5 percent operating reserve.
“Is that water only or is that all enterprise?” Councilman Kevin Freeman asked about the reserve account. “Does that count sewer as well?”
Maiani thought it was water only, but would seek clarification from the Washington State Department of Health.
The council plans to hold a special meeting later this month to vote on the loan agreement.
In other business:
• The council passed a resolution granting the city a six-month moratorium on implementing Initiative 502, legalizing marijuana.
Before approving the moratorium, the council opened the floor for a public hearing. None was given.
The moratorium allows the city time to research options on how the effects of I-502 fit into the zoning requirements and regulatory framework.
The state has until Dec. 31 to have the framework completed to begin selling business licenses.
• The council awarded McKinstry a contract to serve as the city’s energy services company.
“We had an energy audit done by Avista in 2009 and they recommended replacing the boiler at that time,” Richardson said in an email. “We are asking McKinstry to evaluate boiler replacement versus a roof-mounted heat pump system which would also replace the old air conditioners and leaky ducts.”
McKinstry is evaluating the city’s heating and cooling systems and will present an “investment grade audit agreement” at the October council meeting. This proposal will include a defined project with cost estimates.