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Water District accepts $2M offer

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By Kellie Parkin

The Cedar Key Water and Sewer Board of Commissioners voted 4-1 Tuesday night to accept the $2 million grant/loan offer from USDA’s Rural Development agency. 

“This is a very large step, and I’m very pleased to report it,” Community Redevelopment Agency Director Greg Lang told the CRA Board in a meeting held later that night.  “(Water District Chairwoman) Thelma McCain voted no, but publicly stated that she was in favor of the project.” 

The CRA spent $40,000 for engineering reports which allowed CKWSD to make the application.  The USDA grant/loan includes funds to reimburse the CRA.

McCain said she was supportive of the project, but would prefer to do the work piece meal rather than accept a large amount of debt, fearing that water rates may need to be raised in the future to pay for it. 

Board members Maurice Hendrix and David Beach expressed their support of accepting the funds and moving forward with the project.  More than 15 residents turned out for the Water District meeting to show their support of the project. No residents attended who were against accepting the loan.

Background:

USDA representatives visited Cedar Key March 29  to present its offer to the District: a grant for $789,800 (40 percent) and a loan for $1,180,000. The total equals $1,969,800, the amount that the District applied for in its application late last year. 

The loan will be at 3.25 percent interest and amortized for 38 years, bringing the annual payment to $54,528 (or $4,544 per month). 

By Choosing to accept the offer, the Phase III project is expected to begin in November and last for nine months. The project will include a new water main from the water treatment plant, located on SR 24 and CR 347, to the intersection of Whiddon Avenue and SR 24.  “The existing water main is worn out,” said Water District Attorney John McPherson. It’s also positioned up under each of the bridges, entirely exposed to the elements, he said, allowing for the possibility that a storm could take out the city’s water supply temporarily. Phase III would install a new, larger water main and bury it in the soil underneath the water at the bridges. Other concentrations will be on water system and fire water improvements, as well as road reconstruction and resurfacing work, in the Kiss-Me-Quick area and also the Hodgson Avenue area. One focus would be to create a continuous water service loop from the airport area to the Hodgson Avenue area, completing an island-wide loop in the water system, McPherson said. Currently the water main comes to an end, creating poor flow and limiting fire protection. CRA Director Greg Lang, whose agency provided the planning funds and assisted with the USDA application for Phase III, said the project addresses important community needs.  “The old water main slated to be replaced is undersized for the city’s needs,” Lang said. “Needed repairs and upgrades are also scheduled for the water treatment plant that was built in the 1960s, which will allow the District to continue providing high quality water for drinking and fire protection.”  Lang said that after funding Phases I and II, the CRA will not have the budget to fully fund Phase III, making this grant and loan essential to complete the necessary repairs and improvements to the city’s water system.  “The natural reaction may be to hold back in a recession, but the needs are still there regardless of the economy,” he said.  USDA’s 40 percent grant and 3.25 percent interest offer is historical, Lang said. “In the past we would never have seen this, but the stimulus funds and the favorable environment have made it possible – we’re in a time of historically low interest rates.” The stimulus funds come from the American Recovery and Reinvestment Act of 2009 (ARRA).  “Another benefit of doing the work now is that bids are coming in lower because contractors need the work,” Lang said. “Part of the American Recovery and Reinvestment Act is to get Americans back to work – and area businesses stand to benefit as well by having some of that money spent locally.” If the District accepts the stimulus funds from USDA, there are certain guidelines that must be followed, Lang said. Projects paid for with these particular federal monies can only use iron, steel and manufactured goods made in the USA, and workers must be paid wages no less than those prevailing in the area. The city’s engineering firm, Mittauer and Associates, would be responsible for working with the contractors and the Water District to provide complete documentation of compliance to the federal government. The Water District board can change its mind and not accept the finds without penalty until the final paperwork is filed for the project to begin.