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October 15, 2012

$50 million in sewer bonds approved by Jeffersonville City Council

JEFFERSONVILLE — The Jeffersonville City Council approved up to $50 million in bonds that can be sought for wastewater projects throughout the city at its meeting Monday night.

The bulk of the bond money — about $34 million — would be used to install a combined sewer overflow interceptor to bring the city into full compliance with an Environmental Protection Agency consent decree.

Wastewater Utilities Supervisor Len Ashack said the city would look to issue three series of bonds, beginning with a $7.5 million bond to construct a south — or Lentzier Creek -- pump station and a north wastewater treatment plant in River Ridge. The cost to complete the north and south pump stations and the force mains for the sewers is about $11.4 million.

The second bond would be for the combined sewer overflow interceptor at about $34 million. And the third series of bonds would be to cover any unintended or unforeseen costs in the projects. The cushion is being sought because of the costs changes that could and have occurred.

Sewer Board Member Dale Orem offered an example and said that when the north and south lift stations began, the project estimate totaled about $3 million, but the actual cost is nearly $12 million.

But he added, “we’re not asking for the money, we’re asking for the authority to issue the bonds.”

And without the completion of the north pump station, Orem said economic development would be slowed.

“Without that plan, River Ridge is stymied and cannot move forward,” he said.

The money to pay for the bonds would be paid back through the city’s current sewer bill rate structure. City council members approved an ordinance in 2009 that set rates on a 200 percent increase to be incrementally adjusted throughout 2015 to help fund the projects. The sewer board has repeatedly pledged not to raise those sewer rates beyond the rate structure in place through 2015.

“We’re not going to go beyond the present rate structure,” Orem said.

City Council President Ed Zastawny asked Ashack about the rate structure and whether or not it will be enough to cover the costs to pay for the project.

“It’s a function of where we get the money and the interest rate on the money,” Ashack said.

Bonds are being sought through Indiana’s State Revolving Fund and carry a “conservatively” estimated 3 percent interest rate, he said.

To pay back the bonds, Orem admitted, will take a long time.

“We’ve invested almost $10 million in the newly annexed area and we’re still going,” he said. “It’s going to be a long time before we get that money back, but we have to do that,” he said of extending sewer service.

But he added the sewer board plans to recover some costs by pursuing those who have not paid their sewer bills or are late on payments, as well as forcing those who are in the newly annexed areas to tap onto the city’s sewer system.

“We just never forced connection, now we are,” Ashack said.

The city council unanimously approved on its third and final reading the city’s sewer board allowance to seek up to $50 million in bonds to complete the sewer projects.

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