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Sewage utility rates in Berne and Monroe will rise by more than 20 percent to pay for an upgrade to the Berne waste water treatment plant as mandated by state environmental officials.
The city is under orders from the Indiana Department of Environmental Management (IDEM) to reduce the amount of ammonia contained in waste water effluent that is being discharged from the plant to area rivers and streams. Improvements must be completed by 2015.
Ben Adams of Commonwealth Engineering told members of Berne City Council on Monday evening that the cost of the project has now been estimated at $3.9 million. That figure was included in a preliminary engineering report outlining how the city will approach its ammonia reduction efforts that was submitted to IDEM last month.
Of that total expense, approximately $490,000 will be paid by the Town of Monroe, which sends its sewage and waste water to Berne for treatment. Under the terms of an agreement reached between the two municipalities, Monroe will pay approximately 12 percent of improvement costs at the Berne plant. Adams said it has yet to be determined how Monroe will finance its share of the project.
Adams on Monday evening also updated the Berne council on financing options for the improvements, which call for the installation of a new bio-filtration system at the city's lagoon-style waste water plant.
The engineering consultant said he met last week with a representative of the United States Department of Agriculture's Rural Development program to discuss loan and grant options, and called that meeting "a real eye-opener."
"We were told that unless Berne's (average monthly) sewer rate reaches $65, there are zero grant funds available from Rural Development," Adams said. "They will not look at your total (utility) rate, and will not consider storm water utility rates as part of that number" when determining loan eligibility.
Berne residents currently pay approximately $60 monthly in combined sewage and storm water utility charges. Adams said an increase of between 20 and 23 percent in the city's sewage utility rate would still be needed to meet the Rural Development's financing threshold.
The consultant recommended the city take a dual approach and apply both for Rural Development financing as well as seeking funding through the State Revolving Loan Fund.
Also at Monday's council meeting was John Julien of the Plymouth-based Umbaugh and Associates rate consulting firm. Julien said the city "is facing a significant investment, and the challenge is to do that in a method that is best for your rate-payers."
Julien said Rural Development loans carry interest rates of less than 2 percent, and can be financed over a period of 40 years.
"It's inexpensive money, but the challenge is: When will that money be available?" Julien added, noting that funding cycles for Rural Development loans are unpredictable at best.
"The best solution," he said, "is to try and get Rural Development funding, but not to put all your eggs in one basket. The state's RLF remains and option. The interest rates are not quite as good and that money has to be repaid over 21 years, but the money is available."
Adams said he has prepared application for both types of funding.
The council also entered into a $7,500 contract with Umbaugh and Associates for the preparation of a sewage rate analysis as required by IDEM. Julien said he will return to council in approximately 45 days with that analysis and other financial options.