The preliminary design work on a planned $34 million upgrade to Detroit Lakes' wastewater treatment facilities is done, according to the city's public utilities department. Now all they're waiting on is the go-ahead from the state of Minnesota.
But in order for the bid opening to proceed as scheduled in September, three things need to happen, says Vernell Roberts, general manager of Detroit Lakes Public Utilities (DLPU).
First, the Minnesota Pollution Control Agency (MPCA) needs to approve the plan that was submitted March 3 by Short Elliott Hendrickson, the engineering firm hired by the city to design the project.
"It should take between 30-45 days for them to complete their review," Roberts added.
Secondly, the Detroit Lakes City Council has to approve the final plan and authorize the DLPU to advertise for a Sept. 1 bid opening. This seems likely to happen, as the council was very receptive to Roberts' presentation on the project at its regular meeting on April 11.
And finally, the 2017 Minnesota Legislature has to approve a bonding bill that includes authorizing between $12 million and $17 million in Public Facilities Authority (PFA) grant funding for the new wastewater plant.
It is this last part of the puzzle that is the most crucial, Roberts noted.
"Without the state's help, we can't do it," he said simply; the $34 million projected price tag is well beyond the city's means, without at least some grant funding from the state.
Roberts says the project would far exceed the "affordability threshold" that the PFA sets on determining the available funding for such projects, which is 1.4 percent of a community's median household income.
"Detroit Lakes' median household income is $39,783," says Roberts, which would put the "affordability threshold" for the community's sewer rates at an average of $46.40 per month.
Currently, the PFA has a cap on grant funding for such projects that includes a maximum of $7 million from two different sources, the Wastewater Infrastructure Financing (WIF) grant program and the Point Source Implementation (PSI) grant program.
"The Senate's proposed bonding bill would raise (the cap on) WIF grants from $3 million to $5 million, and point source implementation grants from $4 million to $7 million," Roberts said.
That would make Detroit Lakes eligible for up to $12 million in PFA grant funding, with the remaining $22.5 million to be paid by a low interest loan from the PFA.
But even with $12 million in grant funding from the PFA, the cost of repaying a $22.5 million loan would raise local sewer rates to an average of $60 to $70 per month - still well over that affordability threshold, Roberts said.
So the city is seeking to raise the cap on PSI grant funding to 80 percent of the cost for phosphorus reduction, which in Detroit Lakes' case is about $12 million.
That would make DL eligible for up to $17 million in PFA grants, Roberts added, which would leave the other $17 million to be paid by a low interest, 20-year loan.
That would put sewer rates for DL utility customers right at the affordability threshold, he said.
If the bonding bill includes the funding that Detroit Lakes needs to make the project affordable, bids would be let this fall, and construction would start in the spring of 2018, with projected completion in 2020.
"It's a two-year project," said Roberts.