MOUNT WASHINGTON — It was the news that no one wanted to hear.
Mount Washington probably won’t be receiving any of the federal economic stimulus funding for its state-mandated $15 million sewage treatment plant project.
That’s not good news for city sewer customers who are preparing to pay a 17.5 percent increase on bills for the rest of 2009 to subsidize Louisville water rate increases, system improvements and the new plant.
As previously predicted by City Engineer Dave Derrick, no stimulus money most likely means customers will again be facing a 17.5 percent rate increase by June 30 of 2010 to finance the project.
Mayor Joetta Calhoun shared the sobering information with city council members and several citizens at Monday’s regular meeting. She claimed she did everything that she could to convince the state authorities in charge of allocating the funds that the project was costly and essential for the residents. The current plant runs at 80 percent capacity on a day with no rainfall.
She said the city still has a very slim chance of receiving some stimulus money if a project awarded funds fails to progress properly during its allotted time table.
“I haven’t given up. They’re going to have to keep telling me ‘No, no, no,’” Calhoun said.
The city has $3.5 million it can apply toward the project and the mayor has only been able to secure $1 million in state grant funds.
Fortunately, Calhoun said the city has been approved for a $10.5 million revolving loan with a 20 year term through the Kentucky Infrastructure Authority. The loan was awarded to the city with 3 percent interest with a .2 percent administration fee. Without it, the city would have had to seek a loan from private lenders with interest rates around 4 or 5 percent.
Calhoun said the KIA approved the revolving loan with the stipulations that the city would make an additional 17.5 percent rate increase in 2010. She said KIA determined the city would be unable to repay the loan without the increase.
“It’s rather sobering,” Calhoun told the council.
Councilman Dale Walter said he hoped the city could identify additional funding before June 2010 because he didn’t feel comfortable passing another 17.5 percent increase to the customers.
“I just can’t see putting that type of burden on the people,” he said.
But councilman Barry Armstrong reminded the council that without the stimulus money the need for another increase in 2010 had already been discussed. “This is not anything that we didn’t know,” he said.
Armstrong also added that the city’s alternative — not moving forward with the project — was much more costly. If the city fails to proceed with construction, it faces fines from the Kentucky Division of Water for as much as $25,000 a day.
“I’d love to find some (additional funds) myself but I don’t know what other course of action we can take,” Armstrong said.
Why the city didn’t receive any stimulus funds is somewhat of a mystery when neighboring city Shepherdsville received $3 million for a similar project. “There were a number of things. I’m not exactly sure where we came up short,” Calhoun told the council.
Calhoun said she was told by several state officials that Mount Washington’s median household income — $43,812 — was rather high to be awarded funds. She was told project readiness was also considered. Derrick said the project is ready to be bid out pending the Kentucky Division of Water’s approval of the city’s 201 sewage treatment facilities plan.
Calhoun said she felt that the KDW has been slow to respond when the city needed its approval of the plant’s preliminary and final design.
Derrick estimated it would be about two more weeks until the state approved the facilities plan.
The 18 month project could start as soon as July pending the state’s action. The city is under a state mandate to have the project completed by 2010. Although Calhoun said the city might miss the completion deadline, she felt the KDW would not fine the city if the project was nearing completion at the end of 2010. She said she felt that the city could argue that the state took excessive amounts of time to approve the plans.
Calhoun and the council agreed they would brainstorm to find other funding sources to help offset the additional 17.5 percent increase in 2010, but no money has been identified yet.
“We have spent countless hours . . . and we’ll continue to seek funding,” Calhoun said.