Truth or Consequences will take on a $7.5 million water system replacement project in addition to the nearly $10 million water infrastructure project that will probably break ground in January 2022. As T or C finally addresses some of its long-neglected infrastructure problems, the city’s indebtedness mounts with limited public disclosure or discussion.
City Manager Bruce Swingle espouses greater transparency in the future.
The city commission never formally approved the $7.5 million project, about which little information has been presented in public meetings. The commission did, however, unanimously approve applying for the needed financing in the form of a loan/grant from the U.S. Department of Agriculture at its March 24 regular meeting.
A public hearing on the grant application was held at the meeting in advance of this vote. Because the application was not included in the meeting packet, it was impossible for the public or the city commission to make informed statements or judgments. Three members of the public spoke, including civic activists Ron Fenn and Susan Crow. Both pointed out the need for more information about the project. Mayor Sandra Whitehead cut off Fenn’s comments, claiming they were irrelevant to the grant application.
As the then acting city manager, Traci Alvarez presented a bare minimum of detail about the water infrastructure project and the grant/loan at the public hearing. Alvarez related that the project would replace about 4.9 miles of water lines and would “greatly diminish the amount of service disruptions due to water line breakages caused by pressure surges.” She also stated the request to the USDA would be for more than $7.5 million, but the grant and loan amounts would be unknown until the award was given. She told the commissioners that their acceptance of the loan/grant award would be placed on a future agenda as a discussion/action item. That never happened.
During his regular report to the commission at its Aug. 25 meeting, City Manager Swingle confirmed that the city had been awarded the USDA financing, which consists of a grant of about $2.7 million and a loan for about $4.8 million.
Discussion and approval of the $7.5 million grant/loan was not on the agenda, however. According to the meeting minutes, Swingle informed the commissioners that they had already approved the acceptance letter for the USAD award. This was not the case; the commission was never asked for its approval.
At last week’s commission meeting on Oct. 27, the city commission was asked to approve a contract for the project engineering, not the grant/loan. With no discussion, the commission unanimously approved a “Professional Services Agreement with Wilson and Company for Water System Performance Improvements Phase 1,” as the contract was identified on the meeting agenda.
Before the vote, Alvarez, who is now the assistant city manager, informed the commission that Wilson & Company had already completed a 300-page preliminary engineering report on the project, “which is available.”
The performance services agreement, which was included in the meeting packet, states Wilson will receive more than $1.1 million, or about 14 percent of the $7.5 million grant/loan, for engineering and construction management services.
Also included in the Oct. 27 packet was the USDA “letter of conditions,” dated Aug. 24. It states that the payback period for the $4.8 million loan will be 40 years and advises the city to “plug in” an estimated 1.375 interest rate until the actual rate is determined.
Alvarez told the Sun in a phone interview on Oct. 26 that the loan will be paid from water user fees, but that water rates will not have to be immediately increased again. The city increased water rates about 50 percent last year to fulfill a requirement to receive the $10 million grant/loan from the USDA. That USDA award also required yearly rate increases. Consequently, the city has announced that it will increase water rates each year consistent with the annual increase in the Consumer Price Index. Early last month, the city raised water rates by 5.4 percent.
City Manager Bruce Swingle, in a phone interview on Oct. 27, said the USDA “continues looking at our rates,” and “if they continue going up each year,” the user fees will be sufficient to cover the debt from both the $10 million and $7.5 million grant/loan awards, in addition to the other long-standing debt the water department carries.
“Adding debt to the water utility is the only way to deal with the infrastructure problems,” Swingle said. “We discovered there is no free money out there, only grant/loan combinations. We are going to incur more debt. All we can do is make sure we are using the money in the most efficient way. We have to get these 15 to 20 water line breaks a week under control.”
The Sun asked why the city had no master plan in place before taking on two big water projects and whether the city should have addressed the water pressure problems first, since they are causing newly repaired and older pipes to break repeatedly, according to a report given to the city commission by Water and Wastewater Departments Director Jesse Cole several months ago.
The pressure problems are not citywide, Swingle responded, but “isolated” in Williamsburg and the southern and northern parts of T or C. The $10 million water project will replace water lines downtown. It will also add a second, larger chlorination-treatment tank at the Cook Street Station.
A master plan is soon to be completed by Wilson & Company, Swingle said. Begun about a year ago, it “will be very comprehensive.”
Asked why Wilson’s preliminary engineering report on the water pressure project was not presented to the public and city commission, Swingle said: “What was shared in the past [before his tenure began the first week of May], I don’t know. I think we could do a much better job of articulating these projects. We could have the engineer explain each project so the public and commissioners understand them to a much higher degree.”