$40M in wastewater facility and infrastructure updates to impact Huntingburg utility rates

The Huntingburg Common Council, Huntingburg Rate Advisory Board and the Huntingburg Board of Public Works and Safety met in a special meeting and ultimately made several decisions to move forward with a complete update of the wastewater treatment facility.

Those included issuing up to $50 million in bonds and stair-stepping wastewater rate increases to pay for the updated facility and operations.

Eric Parsley, with Commonwealth Engineers, gave an overview of the multiyear process to this point and reviewed the issues with the existing wastewater treatment facility. 

He explained that the facility’s age was a large factor in pursuing the needed update. The last upgrade to the plant occurred about 30 years ago, and some of the units at the plant were put in service in 1957. 

“So number one, we identified that we have an age issue,” he said. 

He added that although the wastewater plant had been well maintained, as a rule, these types of facilities usually have a lifespan of 20 to 30 years.  

“You have equipment that just doesn’t doesn’t survive beyond that point,” Parsley said.

Additionally, Parsley explained that the wastewater plant is operating above its rated capacity. During studies conducted in 2019, the plant operated at 127 percent capacity on a rolling average over 30 days. He added that they rechecked the data about two years ago when they created an updated design, and it was consistent with the 2019 study data.

“The design of that plant was a little over one million gallons a day,” he said. “We were seeing an average months around 1.4 (million gallons) when we looked at that 30-day average.”

With the capacity issues caused by the influx of rainwater, the Indiana Department of Environmental Management 9(IDEM) is also pushing the city to increase capacity and update the system. Huntingburg has been working under an interlocutory agreement with the state since the early 90s that allowed them to create capacity for the influx of excess rainwater. It is a unique agreement–one of only two in the state–that has allowed the city to continue to operate with new homes still being able to tap into the system. 

Parsley said IDEM will usually stop that from occurring if a wastewater treatment plant is operating at about 90 percent capacity.

Parsley and Mayor Neil Elkins both affirmed that many communities are facing similar circumstances and will have to make major updates to their wastewater systems based on IDEM’s operational requirements. Parsley added that the amount of work on wastewater plants in Southern Indiana impacted the small number of bids the Huntingburg project received.

He stated that demand and the continued increase in construction costs drove the price of the project up considerably.

The new plant design would have a 3.5-million-gallon treatment capacity to accommodate the city’s existing flow and new growth. Parsley stated this capacity was projected to be enough for the next 20 years of growth with some contingencies built into the design. He told the council he expected it would be enough for 40 years. 

“If it doesn’t last twenty, it’s probably a good thing because that means you’ve had that much growth and you’re getting that much more use out of the plants,” Parsley told the council.

The three groups then heard the financial considerations for the project.

Buzz Krohn of O.W. Krohn and Associates, the city’s financial advisor, reported that the 40-year bond amount based on the project’s cost and the consolidation of existing debts would total about $40.7 million. 

This amount included the accepted bid of $34.7 million from Reynolds Construction, LLC of Orleans for the new plant, $3,591,533 from Cooper Contracting to update infrastructure outside the plant, and included contingency costs as well as the refinancing of $2.8 million in existing wastewater utility debts. All this, with interest and closing costs, put the total amount up to about $48.9 million. With the $8.2 million grant that is set to expire this summer, the amount to be bonded was reduced to $40.7 million.

Wastewater utilities are required to charge rates to cover their operations and debt costs. So, along with the financing package, Krohn recommended the city step up a wastewater rate increase to pay for the bond and maintain operations.

He stated customers currently pay $6.30 per 100 cubic feet plus a $31.74 monthly base charge. To pay for the new wastewater plant and continued maintenance of the existing infrastructure and wastewater plant operations, he recommended the city increase that rate to $7.40 per 100 gallons with a $37.29 base rate that would go into effect in July and then increase it again in January of 2025 to $8.15 per 100 gallons with a $41 base rate.

When asked if they would have to increase rates again in one to two years, Krohn admitted he couldn’t predict that but stated if things remained stable, he thought those rates would be good for the next four to five years.

After Krohn’s presentation and recommendation, the Huntingburg Board of Public Works and Safety unanimously accepted the $3,591,533 bid from Cooper Contracting to update the wastewater infrastructure on the city’s southside and along First Street as part of this project. Mayor Elkins remarked this bid came in near the estimate for the work.

Then, the Huntingburg Rate Advisory Board voted three to one to approve a recommendation from the Board of Public Works and Safety to increase the wastewater rates as outlined by Krohn.

“I wanted to thank all of you,” Elkins said before ending the special meeting. “This is not an easy thing to do.”

When the council returned to its regular meeting, it unanimously approved the first reading of the ordinance increasing the wastewater rates. However, this was not an approval; a public hearing on the wastewater rate ordinance will be held on May 14, 2024, at 5:30 p.m. in the council chambers at Huntingburg City Hall before the final approval.

The council then approved an ordinance for issuing a bond of up to $50 million. Attorney Phil Schneider stated that the ordinance gave the council leeway for any contingencies, though Krohn estimated the bond amount would be $40.7 million. The council unanimously approved the ordinance on the first reading. 

You can watch the entire meeting here.