Wasilla council takes up $6 million state loan to expand its wastewater plant

The Wasilla City Council holds a public hearing Monday on taking a $6 million state loan to expand the city's wastewater treatment plant, which city staff say Wasilla has outgrown.

The state Department of Environmental Conservation would forgive $1.4 million of the loan. The city would repay the other $4.6 million over 20 years with a 2.2% finance charge, according to the loan agreement in Monday's council packet. A city estimate puts the interest at about $1.3 million over the life of the loan, which works out to payments of roughly $285,000 a year under its schedule.

The plant was built around 1989. Every property on the system has a septic tank, and city trucks pump them and haul the septage to the plant, where it's treated in a single 143,000-gallon digester and then dried in unlined beds. That system "is also operating at capacity," the city said in a project update last year. "The City has experienced significant growth since the facility was constructed causing the facility to be inadequate," project manager Rick Antonio wrote in a memo to the council.

The loan would help pay for two new digesters, piping and a new operations building for blowers and dewatering equipment, which squeezes water out of sludge. The whole project is estimated at nearly $13 million. The city is also using grant money, including a federal EPA grant, and city capital funds.

The project has grown during design. The city decided to make the new digesters 200,000 gallons each instead of matching the old one, and the operations building grew from about 3,020 square feet to 5,375, according to a letter from Stantec, the city's engineer. A separate item on Monday's consent agenda would add $199,625.25 to Stantec's contract for the extra design work and help with bidding.

The city would repay the loan from its wastewater system's net revenue, with other city money as a backup, and the ordinance lists the general fund as the source for the estimated interest. Water and sewer rates haven't gone up since fiscal 2014, according to the city's budget for this year, which projected a 20% increase from a rate study then underway.

Stantec says the bid schedule isn't set but assumes bidding this fall and a construction contract by the end of the year. The first loan payment would be due a year after the project is substantially complete.

The ordinance would let Mayor Alina Rubeo sign the loan agreement. The project cleared a state environmental review in July. The hearing is at 6 pm at City Hall.