Note: This story was updated at 8:30 p.m.
The Oak Ridge City Council voted 5-0 Monday evening to approve an initial debt resolution worth up to $45 million for the construction of a new water treatment plant and related infrastructure.
The five members voting in favor of the resolution were Oak Ridge Mayor Warren Gooch, Mayor Pro Tem Rick Chinn, and Council members Jim Dodson, Chuck Hope, and Ellen Smith. Council members Kelly Callison and Derrick Hammond were absent.
The water plant would be built near the city’s water intake on the Clinch River in south Oak Ridge. The cost of the new plant, which could produce about 16 million gallons of water per day, is currently estimated at about $42.9 million.
City officials have been discussing the new water plant for several years and have had an engineering firm study the project.
The current water plant is about 70 years old, and it is located on a ridge top above the Y-12 National Security Complex. The current plant is larger than it needs to be—it is capable of producing 28 million gallons of water per day—and city officials have said aging facilities require more expensive repairs. There are security concerns because city workers have to enter Y-12 to get to the plant. There are also concerns about slope instability at the current site, where the city is repairing a landslide that occurred next to the access road in February.
The resolution approved by Council on Monday was an initial debt resolution that allows up to $45 million in general obligation bonds. Oak Ridge doesn’t plan to go to the market to sell bonds, but the city hopes to use a type of loan offered through the U.S. Environmental Protection Agency that, under state law, is required to be in the form of a bond. Some of the discussion on Monday suggested the debt would be paid back by water rate payers and not by the property tax rate.
The bond resolution approved by Council on Monday includes “sufficient authorization” to complete the water plant project, Oak Ridge City Manager Mark Watson said in a July 2 memo to City Council. The resolution allows for inflation and other market factors that could affect costs when bids are solicited for the construction projects in about 14 months, Watson said.
Rehabilitating the existing plant and associated infrastructure could cost $46.5 million, according to an evaluation by Jacobs Engineering Group presented to City Council in October 2016. The mechanical equipment at the Pine Ridge plant is aging, the electrical system doesn’t meet current code, and there are geotechnical issues, including a requirement to stabilize slopes, Oak Ridge Today reported at the time.
The existing plant was built between 1945 and 1945 and expanded in 1955. It was originally built and operated by a predecessor to the U.S. Department of Energy, and DOE gave the plant to the city around 2000.
The initial debt resolution approved by Council on Monday is expected to be followed by a bond resolution and loan agreement, which both require City Council approval.
To help with the new water plant project, Oak Ridge officials are finalizing a request for a Water Infrastructure Finance and Innovation Act, or WIFIA, loan through the EPA, with that portion of the project estimated at $21.3 million, and the city has applied for an $18.4 million construction loan through the Tennessee State Revolving Fund. In addition, Oak Ridge has been approved for a $3.29 million design and engineering loan for the project.
The issuing of debt can be challenged if at least 10 percent of registered voters in Oak Ridge petition for a referendum.
The water treatment plant provides water to the City of Oak Ridge and U.S. Department of Energy facilities: Y-12 and Oak Ridge National Laboratory.
You can see the agenda for the City Council meeting on Monday night here.
More information will be added as it becomes available.
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