The Little Rock Board of Directors next week will consider approving $11 million in bonds to pay for improvements to a sewage treatment plant, which would boost the system's capacity and reduce sewer overflows.
Bond proceeds would primarily go to a project replacing 35-year-old equipment at the Fourche Creek water treatment plant, which will increase daily capacity from 36 million gallons to 52 million gallons, Little Rock Water Reclamation Authority CEO Greg Ramon said.
Improved capacity will help the authority fix sewer overflows that are the center of an Arkansas Department of Environmental Quality consent decree and the wastewater utility's court settlement with the Arkansas Sierra Club in a 17-year-old lawsuit, Ramon said. Mandates require Little Rock to fix the overflows citywide by 2023.
"The intent is to increase its capacity for storm-related events," Ramon told city directors on Tuesday. "If you folks recall, we're in a consent administrative order to prevent wastewater overflows from occurring. By allowing for additional capacity, it reduces the amount of overflows that can occur."
Little Rock will pay down the debt with a portion of the monthly fees it collects from ratepayers, and the borrowing will not require a rate increase, Ramon said. The estimated interest rate for the 30-year bonds is 3.6 percent, he said.
City directors in 2015 gave the sewer authority approval to raise rates by 4.75 percent a year between 2017-2021. A customer who paid $30 per month in 2015 will pay $39.64 monthly in 2021. That same customer will also see an increase in the franchise fee -- which is 10 percent of the usage bill -- from $3 to $3.96.
Those annual increases are expected to raise nearly $213 million in new revenue, according to previous utility estimates.
Directors on Tuesday placed a resolution to authorize the borrowing on the agenda for the board's 6 p.m. meeting on Sept. 5 at City Hall, 500 W. Markham St. The board is scheduled to vote on the matter after a public hearing.
The Little Rock Water Reclamation Authority does not need voter approval to sell revenue bonds, which are tied to a specific revenue stream, City Attorney Tom Carpenter said.
At the current schedule, the utility could receive bond proceeds by the end of October, and work could begin in early 2018, said Jean Block, the utility's chief legal officer.
The Little Rock firm Friday, Eldredge & Clark has been selected as bond counsel.
The sewer authority in 2016 began the construction phase of a $157.6 million rehabilitation of its aging pipe infrastructure, a project scheduled to last through 2023 that also aims to fix overflows caused by storm water breaching the pipes during heavy rain.
The Sierra Club lawsuit, filed in 2000, alleged that human waste, toilet paper and disease-causing agents spew from overflowing sewers too often in Little Rock and that the sewer utility didn't have a proper plan in place to clean up the mess, as required by the federal Clean Water Act.
Metro on 08/30/2017