Akron is borrowing another $10 million for its multigenerational plan to repay more than $1 billion in citywide sewer upgrades.
“This is another 45-year bond that we’re issuing to fund some of our CSO [combined sewer overflow] sewer projects,” Steve Fricker explained to City Council at a public meeting last week.
Council is expected Monday to approve the $10 million issuance of bonds, which will be purchased by the state’s Water Pollution Control Loan Fund to help pay for the next project.
The money will be put toward the $8 million Uhler Conveyance CSO Rack 27 and 29, one of two dozen projects designed to separate sewage and rainwater or, in the event of heavy flooding, send it all to the wastewater treatment center north of Akron.
The combined sewer overflow project is now priced at $1.2 billion, down from the $1.4 billion estimate from the days when federal Judge John Adams ruled in favor of state and federal Environmental Protection Agency officials concerned about gray water finding its way to Lake Erie via the Little Cuyahoga River.
So far, 14 of 23 projects are completed. Five are underway. The city’s engineers continue to explore less costly alternatives, hoping to bring this “unaffordable” cost closer to $1 billion.
To date, the city has borrowed $541 million. The debt is to be repaid by generations of sewer customers. Mayor Dan Horrigan has pledged not to consider another rate increase until 2020.
The city collects about $90 million annually from sewer customers to fund the operation and service debt for this and other related infrastructure improvements. Annual repayments are projected to climb as high as $44,553,563 by 2021.
Other than engineering cheaper projects that still satisfy the EPA’s mandate, the city has turned to stretching out loans with competitive interest rates.
“It’s much more affordable in terms of the debt service to repay those bonds than a 20-year traditional loan would be,” Fricker said.
“Exactly,” agreed Mike Freeman, who chairs City Council’s Budget and Finance Committee. “That does defer some cost to a next generation. I just want to congratulate my grandchildren on the sewer system that they are going to be paying for for the next 45 years.”
Freeman said the city has reviewed loans with repayment plans stretched out for 100 years. This is second debt tied to the CSO project with 45 years to settle.
“And we’re still getting pretty good [interest] rates even on these longer bonds,” Fricker said.
The $10 million loan will carry between 2 percent and 3 percent interest. Rates are set weekly on money borrowed from Ohio’s Water Pollution Control Loan Fund.
Doug Livingston can be reached at 330-996-3792 or firstname.lastname@example.org.