(Sage Smiley / KSTK)
Half a decade ago, Wrangell started to collect federal grants and loans to help fund a much-needed drinking water plant upgrade. But the plant hasn’t been built yet, or even designed. To avoid losing the funds, Wrangell’s assembly approved spending around a million dollars to begin engineering a new water plant.
Since it came online more than two decades ago, Wrangell’s water treatment plant has been troubled. Sometimes, it struggles to keep up with peak demand. At other times, it fails to treat Wrangell’s drinking water to regulator’s standards, potentially increasing cancer risk in the community or leading to other health problems.
In 2018, Wrangell’s 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 off the surface.
At the time, officials estimated the new plant would be ready in three years.
But it’s been almost four years, and the plant hasn’t moved past preliminary engineering.
Between 2017 and 2019, Wrangell’s local government secured millions of dollars in federal grants and loans from the U.S. Department of Agriculture’s rural development program and the Economic Development Administration to help pay for the plant’s design and construction. The borough already got one, one-year extension on funding from USDA, which totals about $7 million.
Borough manager Jeff Good told the assembly at a meeting last month that they’re applying for another extension for some of the federal funding from the U.S. Department of Agriculture’s rural development program. But for that to happen, they need to commit $1.1 million towards engineering to design the plant, by mid-February.
“This is part of the first phase of the water treatment plant,” Good explained, “And it’s a requirement from the USDA, a kind of stipulation for the grant funding extension that we’ve asked for.”
$119,000 of that $1.1 million price tag 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 federal pandemic relief.
The assembly committed to replenish the $385,000 from the general fund within 10 years. That caused some concern among Wrangell’s elected leaders, including Mayor Steve Prysunka, because it’s essentially a loan with no interest.
“My point is not that I have any problem with the expenditure on this part of the project, none whatsoever, and I don’t want us to lose our funding because [the engineering is] delayed,” Prysunka explained. “I just really want to make the point that I don’t want to be in the habit of lending interest-free money out of our community chest.”
Assembly member Anne Morrison said she agreed, and added that the community should establish a clear policy for replenishing funds, with interest. But that doesn’t change the immediate need for a new water treatment plant.
“We are in a place where we have no choice but to do this,” Morrison said, “And I have heard from several community members questioning when we were going to get this done. It’s only been how many years?”
The assembly unanimously approved spending the $1.1 million at its January 25 meeting. That will get Wrangell through the engineering design and bidding process for a new plant. Then, there will be construction and administration costs, estimated to be at least $14 million.
The total cost of the plant was originally projected just shy of $10 million. But that was in 2018, and costs have increased in the past four years. More recent estimates have pushed the price upwards of $15 million, the majority of which could be reimbursed with federal grants or low-interest loans.
How much would this cost Wrangell’s ratepayers? Borough finance director Mason Villarma told the assembly during a work session last month he estimates a rate increase of at least $10 (an almost 20% rate increase) per month for most customers to pay back a $3.8 million federal loan. But that may not be the only debt Wrangell will need to take on to build a new plant.
That $10 figure was a welcome revelation for assembly member Dave Powell, though, who said he thought the cost to Wrangell residents would be a lot higher.
“In actuality, it’s far less than I thought it was going to be,” Powell said after the work session.
The $3.8 million loan comes from the U.S. Department of Agriculture. Under the terms of that loan, water rates would actually have to be raised higher than what is needed to pay off the loan within two years of construction on a new water treatment plan. That’s because the loan requires that water rates eventually represent 1.5% of the median household income (which is $50,389 in Wrangell).
Re-thinking water rates will also be a time to re-think Wrangell’s rate structure, Villarma told the assembly. While the island’s largest water customers – fish processing plants, harbors, and the marine service center – have metered water rates, residential customers pay a flat fee.
Over the years, Villarma told the assembly that Wrangell’s system of water rates for businesses has become too complex. As of early this year, there were 42 different water rates paid by water customers, many of those different types of businesses, governmental agencies like the U.S. Forest Service, or the public schools.
Wrangell’s most recent water rate increase went into effect in July of 2019.
Even with the eight-month engineering process for a new plant kicking off, a new plant could take years to come online. Some parts of the plant need repairs before then.
In recent months, Wrangell’s assembly has approved $75,600 for cooling systems to try and address problems with ozone generators, one of the first steps in the water treatment process.
Wrangell officials say they’re hoping to solidify an agreement with Anchorage-based DOWL engineers for the plant design process by February 18. Once they’ve taken that step, USDA has committed to add another year to the funding timeline.
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