After more than an hour of discussion, the Oak Ridge City Council on Monday approved the borrowing of $18 million in low-interest state loans to help pay for a $23 million project to fix the municipal sewer system.
Council voted 6-1 to borrow the money at a 1.23 percent interest rate through the State Revolving Fund program, which is administered by the Tennessee Department of Environment and Conservation.
The work is being done to comply with a U.S. Environmental Protection Agency order that requires Oak Ridge to repair all sewer system overflows by Sept. 28, 2015.
Oak Ridge City Council member Trina Baughn voted against the borrowing. She said the city has already spent $24 million to rehabilitate the 70-year-old system, but it is still “in trouble” with the EPA.
Baughn said Oak Ridge residents can’t take on more debt, and she unsuccessfully proposed several alternatives to the borrowing, including delaying the loan resolution by one week and having other experts review the city’s remediation plan to try to identify savings.
“We’ve been spending money at a rapid pace, and we are at our maximum,” Baughn said.
But other council members said the EPA has lowered the city’s potential fines—they could total $750,000 in periods of heavy rainfall—and the repair work could cost more if the city delays it.
“The EPA has given us as much time as they can,” Oak Ridge City Council member Charlie Hensley said.
“I’d, frankly, like for us to get on with it,” Council member Anne Garcia Garland said. “It has to be done. The longer we take to do it, the more it’s going to cost.”
The loans can be used for engineering and construction costs. Oak Ridge has received two earlier loans, one in 1998 and 2002.
The sewer system project will start in east Oak Ridge and move west. Besides the loans, it will also be funded by a $2 million Tennessee Municipal Bond Fund Loan and about $3 million in future debt or an amendment of the state loans.
Council actually approved two loans Monday. One was a $4 million subsidized loan that includes a 10 percent principal forgiveness, and the other is a $14 million unsubsidized loan.
The SRF project will include about 18 sewer and manhole projects.
The sewer system rehabilitation project included one rate increase effective May 1, 2012, and a second on Jan. 1. Ninety percent of customer bills increased $5 to $25.80 per month, and large commercial bills increased about 30 percent.
Prior to the September 2010 EPA order, Oak Ridge had been spending about $1 million per year to repair its aging sewer system.
Note: This story was updated at 10:25 p.m.