Baldwin City to seek KDHE loan for old-town water line upgrades

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August 11, 2015

The Baldwin City Council approved action Aug. 3 that should lead to better water service for old-town customers.

The council authorized city staff to make final application for a revolving loan program the Kansas Department of Health and Environment is offering for water system improvements. City Administrator Chris Lowe said the revolving loan offered the city an attractive funding option for a long-planned water system upgrade in the city’s older neighborhoods.

The loan would provide financing for the replacement of outdated, undersized 4-inch water mains the city has long wanted to replace. Lowe said it was first thought the $2 million cost of replace all those old cast iron water mains with 8-inch PVC pipe would be bonded and the project was placed on the water department’s capital improvement list. It was later decided the replacement could be done in phases, and $100,000 was budgeted in 2015 for water line replacement.

However before any work was done, Baldwin City public works director Bill Winegar became aware of the KDHE loan program and sent in an application for those sections of the water main upgrades that qualified for the loan, Lowe said. The city was notified last week that it has been approved for a $1.47 million loan.

Although the letter ensures the loan is available, the city must submit further technical data before receiving money. Before committing staff time to submit that additional information for the final application, Lowe sought and received the city council’s commitment to incurring the debt.

Lowe said the loan was an attractive way to finance the work because of its low 2.21 percent interest rate. Unlike bonds, which accrue interest from the date bonds are sold, the city will only have to pay interest on the loan when it borrows money to pay for work on the upgrades.

The work would include replacement of 4-inch cast water mains on:

• High Street from 11th Street to the Santa Fe Depot.

• Fifth Street from High to Dearborn streets.

• Fourth Street from Dearborn to Ames streets.

The project would also install new meters, fire hydrants and isolation valves and create a loop in the old-town system that would minimize disruption when lines fail.

Winegar said it was also much harder to repair the outdated cast iron pipe than the PVC pipe that will replace it, he said.

Another benefit of the project was the installation of additional valves, which would allow crews to isolate service disruptions to one block instead of the five or six they currently shot off when repairing water main breaks, Winegar said.

Lowe said the money borrowed would be considered in the city’s ongoing rate study for the water department. However, it shouldn’t have a big impact because the cost of the upgrades were among the projections already considered in the rate study and because of the loan’s favorable terms.

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