State panel OKs $61.6M loan for Little Rock to rein in sewage

Glen Hooks, director of the Arkansas chapter of the Sierra Club, is shown in this photo.
Glen Hooks, director of the Arkansas chapter of the Sierra Club, is shown in this photo.

The Arkansas Natural Resources Commission will issue a loan of $61.6 million to the Little Rock Water Reclamation Authority for the final stage of its infrastructure improvement project designed to prevent sewage overflows.

The authority, Little Rock's wastewater utility, will use the funds to assess sewer lines throughout the city, determine whether lines need to be expanded and then replace the ones that do, said John Holloway, the utility's director of engineering services.

Pipes that are too small are susceptible to leaking when rainwater infiltrates them. Such leaks led to a lawsuit in 2001 from the Sierra Club, which eventually prompted the $263.1 million infrastructure improvement project.

Before the improvements, which have taken place for a few years, sewage leaks were common after heavy rainfalls, said Glen Hooks, director of the Arkansas chapter of the Sierra Club. The leaks don't happen as much anymore, Hooks said, and the pipe replacements will reduce them further.

"It's definitely worth it to get this done for public health reasons," Hooks said. "It's taken longer than we thought to fix it, but it's a long-term fix and we're pleased about it."

The loan's terms have not been set, but the repayment schedule will not exceed 30 years, according to officials of the commission, which is a state agency that establishes policy and makes funding and regulatory decisions regarding soil conservation, nutrient management, water rights, dam safety and water resources planning and development.

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Little Rock Water Reclamation Authority factored the estimated cost of future loans into customer rate increases approved in 2015. Sewer bills have risen annually since 2016 and will continue to do so until 2021 as part of the 2015 rate increase approved by the city Board of Directors to pay for infrastructure improvements.

The loan approved Wednesday will not lead to additional rate increases, Chief Financial Officer Debbie Williams said.

"There will not be another rate increase associated with this loan," she said.

The commission's nine-member board approved the $61.6 million loan with no dissenting votes and two commissioners absent.

Commissioner Roy Reaves questioned the $4.5 million cost of engineering, which he said seemed high.

Authority CEO Greg Ramon said the high cost was because of the inspections required to identify worrisome pipes before replacing them. That process will prevent rainwater from entering sewer pipes in the first place, rather than continuing to have treatment plants process rainwater, he said.

"We wouldn't be doing it if we didn't think it was the best option for our treatment system," Ramon said.

Little Rock Water Reclamation Authority has funded previous parts of the project through bond issues and two other Arkansas Natural Resources Commission loans approved in 2013 and 2016.

Those loans were for 20 and 30 years, and much of the work -- including upgrades and replacements at wastewater treatment facilities -- has been completed. The combined interest rate of those loans is 2.72 percent, which is lower than a bank would offer, Williams said.

The authority estimates repairing and replacing sewer lines will cost $171.4 million, while upgrades and replacements at wastewater treatment facilities will cost $91.7 million.

"At the end of this project, I think we'll be in much better shape," Hooks said.

Metro on 07/20/2017

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