City of Ashland bond issue for sewage treatment improvement project fails
ASHLAND, Mo. (KMIZ)
A bond issue asking if the City of Ashland should combine its waterworks and sewage system revenue bonds failed on Tuesday.
The measure failed 138 votes to 117, with a 7.86% voter turnout. Voters went to the polls to decide if the revenue bonds for $40 million for purchasing, constructing, extending, and proving the combined waterworks and sewage system.
“The results are unfortunate and disappointing. The City put forth a lot of effort to educate the public on these wastewater issues. Our largest hurdle was getting the public to understand some of these more critical improvement needs are not to address future needs, they’re to address here and now needs that don’t go away because the ballot measure failed,” Ashland City Administrator Kyle Michel said in Tuesday night email to ABC 17 News. “As was stated throughout this entire process, expansion of the wastewater treatment facility is a critical need and will advance regardless of the results of the ballot measure. That continues to be true.
"Some adjustments will now need to be made to the proposed Fiscal Year 2025 sewer budget, which will likely mean a larger immediate increase to customer bills as we will no longer be able to take advantage of the Planning and Design Loan offered through the Missouri Department of Natural Resources.”
The city said earlier that using bond financing is a common utility practice to pay for expensive infrastructure over time. Revenue bonds provide the least-expensive method to pay for the project. according to the city.
The bonds would have allowed the costs to be spread out over the "useful life" of the projects and would minimize the rate impacts on current customers according to the City of Ashland.
The city said earlier, "By spreading these costs out over the useful life of the project, future City of Ashland wastewater customers can help pay for costly, long-lasting projects that they will benefit
from."
If voters approved the bond, the city would have moved forward with the project under the Missouri Department of Natural Resources' State Revolving Fund. This would allow the city to subsidize interest rates at approximately 2% - while also making the improvements eligible for certain grants that could reduce the total cost of the project.
The project will still move forward even with voters rejecting the bond. The city said the project would be funded under, "traditional financing means." Meaning that the improvements could be subjected to market-rate interest rates and less flexible repayment terms.
“We will be sitting down collectively over the next few weeks to develop the plan of action for the next year which will include moving forward with the engineering design to expand the wastewater treatment facility from 600,000 gallons of treatment a day to 1.6 million gallons of treatment a day,” Michel wrote. “We anticipate this engineering effort to take 10 to 12 months and cost over $500,000. Once completed, the plan will require DNR review and approval before the projects can go out for bid. We anticipate, between design and review, 18 months before we will look to go out for bid.
“With any luck, interest rates will come down substantially between now and when we bid these projects as we will be using conventional financing to pay for these projects as opposed to the 2% interest offered through the Missouri DNR State Revolving Fund.”
