Macon Municipal Utilities Web Site > Sewer Improvements - August 4, 2009 Ballot ( DNN 3.0.12 )

Sewer Improvements - August 4, 2009 Ballot

Overview

Macon Municipal Utilities (MMU) is required to disinfect its effluent at the wastewater treatment plant per our Combined Sewer Overflow Long-Term Control Plan that was recently negotiated with the Missouri Department of Natural Resources (MDNR) and United States Environmental Protection Agency (EPA). This project must be completed by December 2010. Currently, the most economical method of financing is through the MDNR Clean Water State Revolving Fund (SRF).

What are the Requirements?

To protect human health, MMU must comply with regulations set forth by the MDNR and EPA to disinfect effluent from the wastewater plant to the receiving stream.

Why is a vote of the people required to comply with federal and state mandates?

In order for a municipality to receive bond financing through the SRF program a vote of the people is required per the Hancock amendment, Article X Sections 16-24 of the Missouri Constitution.

How is the bond interest rate determined?

The SRF’s interest rate is 30% of the conventional interest rate for revenue bonds. Therefore, there is a 70% interest rate subsidy. The interest rate for this type of preferred financing currently ranges from 2.0% to 2.5%.

Are there other financing options?

An interest rate of 4% to 5% can be achieved through private financing without a vote of the citizens.

Is the city eligible for grants through the federal economic stimulus funds?

This economic stimulus was signed into law on February 17, 2009 and MMU’s application was confirmed on February 27, 2009. However, the applications received for funding has far exceeded the $108 million granted to Missouri for wastewater project improvements. MMU has been placed on a “contingent” list for grant funding. In the event that the MMU moves to the “funded” list, efforts are continuing to be shovel ready in order to receive grant awards. To address the necessary improvements to the Combined Sewer System (CSS) and minimize the financial burden on the system users, MMU has and will continue to make applications to various State and Federal funding agencies for financial assistance in the form of grants. To be eligible for these grants and SRF low-interest loans, however, MMU must indicate its ability to contribute to the cost of construction. This indication is accomplished through the issuance of bonds. The amount of bonds issued will be based on what is needed to successfully complete the necessary improvements. MMU will only be obligated to debt expense for bonds that have been issued.

How is grant eligibility determined?

For most Federal and State grant options, sewer fees for a 5,000 gallon per month user must be 2.0% of Median Household Income (MHI). Currently, MMU’s rate for a 5,000 gallon per month user is 1.16% of MHI.

If no grant funding is received, what affect will the disinfection project have on monthly user bills?

Currently, a 5,000 gallon per month user within the city limits pays $32.30 per month for sewer fees. For this project, this consumer is expected to realize a $2.16 increase in their monthly bill or $25.92 annually. Sewer rates will be based on the cost of repaying the loan and any operating costs associated with the system. It should be noted, MMU may increase rates periodically for the purpose of proper maintenance and operation of the system in order to assure residents are provided with a regulatory compliant sewer system.

What happens if the ballot issue is successful?

The City of Macon, Missouri has retained the services of Benton & Associates, Inc. a licensed, professional, Missouri engineering firm to assist in developing economical solutions that will provide the least amount of financial burden on MMU’s customers. These solutions will address the disinfection design, function, capacity, and assure the City’s sewer system meets the environmental standards of the MDNR and EPA. If the ballot issue is successful, MMU can immediately commence with the required improvements.

What happens if the ballot issue fails?

As mentioned earlier, MMU is required to proceed with the disinfection of wastewater plant effluent project. Therefore, MMU will be required to obtain private financing and sewer fees may increase up to $32.04 for annual fees instead of $25.92 noted earlier.

IN SUMMARY

The following amounts are the anticipated increases to sewer fees in relation to the disinfection project:

Yes Vote

Monthly User Fee Increase $2.16
Annual User Fee Increase $25.92

No Vote

Monthly User Fee Increase $2.67
Annual User Fee Increase $32.04

Life of the Loan Savings Using the SRF Low-Interest Loan Program: Almost $300,000!

Please find below proposed language for the August 4, 2009 ballot:
Shall the City of Macon, Missouri, issue its combined waterworks and sewerage system revenue bonds in the amount of one million three hundred thousand dollars ($1,300,000) for the purpose of acquiring, constructing, extending, improving, furnishing and equipping the City’s combined waterworks and sewerage system, the cost of operation and maintenance of said system and the principal of and interest on said revenue bonds to be payable solely from the revenues derived by the City from the operation of its combined waterworks and sewerage system, including all future extensions and improvements thereto?

YES __

NO __

For futher information, please contact:
Stephanie Wilson
General Manager
Macon Municipal Utilities
106 W. Bourke Street
Macon, MO 63552
(660) 385-3173