The utility commission has been working on locating funding sources to upgrade the system on Kentucky Avenue and the surrounding area at the least possible cost to customers. After meeting twice on their own to discuss available options, a recommendation was sent to the city council to accept $1,703,000 from the American Recovery and Reinvestment Act. The money would come to the Pineville Utility system via the Kentucky Infrastructure Authority as a loan, 52.1 percent of which will be forgiven and 47.9 percent repaid at an interest rate of 1 percent. After searching diligently for other grants, contacting legislators and coming up short, the commission decided that accepting the KIA loan was the cheapest way to fix the problem.
The conditions of the loan, however, caused concern among the commission as well as the city council. To receive the funds, the sewer utility must have enough money allotted in the budget for this year and up-coming years to repay the $815,000 debt. Based on the data available at the time of the last meeting of the utility commission, lack of money in the budget meant that customers could see a 70 percent increase in sewer rates by October 1 to meet KIA requirements. Since then, the commission has been seeking ways to reduce that percentage.
Utility commission member and Kentucky Avenue Utility Replacement Project representative Bill Bunch, Pineville Mayor Sherwin Rader, and Bell County Judge Executive Albey Brock spoke with KIA officials on Tuesday. They learned that the large initial increase could be reduced only if the utility could prove that it had enough money available to begin repayment of the loan with a lower increase.
Bunch began by checking paperwork for ideas on how to save money in the utility budgets and came across some errors that reflected a lower budget over the next five years than should have been projected. With a new budget projection no longer in the red, the utility will now have some money allotted to use toward repayment of the loan. In addition, cuts were made to items that had been budgeted for the sewer, including cutting the purchase of a new excavator to replace an older one.
Judge Brock also assisted by allowing the reallocation of funds from an industrial park project to assist with part of the project originally covered by the KIA loan.
“In order to assist the city of Pineville and citizens that would be negatively affected we prioritized allowing part of the industrial park project funds we already have to go toward the sewer project, freeing up approximately $300,000 for the sewer utility budget,” said Brock.
The council questioned commission members about all possible options including postponing the Kentucky Avenue Project. As reported earlier, pollution is currently going into Cumberland River at an un-checked rate, violating regulations of the Environmental Protection Agency. If left uncorrected the city may be fined $3,000 per day, resulting in a higher deficit for the utility. Also, having unpaid fines may prevent the city from being granted other types of government assistance in the future. The council agreed that accepting the KIA funds was the best option if the rate of increase could be lowered.
The groups are hopeful that KIA will approve the new plan for repayment which could allow the cost increase to drop drastically. The original projection of 70 percent, which would take the average bill from around $17 to $29 for sewer customers could become closer to an increase of about $1.20 increase on an average sewer bill and $1.60 on water bills, after revising budget plans for both utilities. Members will continue to work with KIA officials over the next week in hopes of keeping future utility bills from sustaining drastic growth.
The utility commission will meet again with the city council on Tuesday, September 22, to discuss the issue further.
Lorie Settles is a correspondent with The Daily News. She can be contacted by e-mail at editor@middlesborodailynews.com
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